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September 01, 2020 1:43pm
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Tullow Oil share price outlook ahead of first-half earnings

By: Invezz

Tullow Oil (LON: TLW) share price has staged a strong recovery in the past few months as investors watch several important corporate news. The stock’s recovery has also accelerated as the price of crude oil continued rebounding. It was trading at 37.06p on Friday, ~68% above the lowest level this year.

Tullow Oil earnings ahead

Tullow Oil, the FTSE 250 mid-cap oil company, has made several headlines in the past few months. First, the company recently sold its Guyana project for $700k. According to the agreement, Tullow will receive an additional $4 million in the event of commercial discovery in the country. It will also get 1.75% in royalties. 

Second, the company continued its focus on its Ghana project, where it is producing over 100k barrels of oil every day. It brought its second well in the country in July as it seeks to boost production in the country.

Most recently, Tullow Oil provided an update about its operations in Gabon, a country that went through a coup recently. Despite the uncertainties, the company continued to operate as usual. Gabon is one of the company’s key countries.

The next key catalyst for Tullow Oil share price will be the upcoming half-year results set for Wednesday. In its trading statement, the company said that its revenue for the first half was $0.8 billion, with the average oil price being $81 per barrel. 

Tullow Oil spent $200 million in capital expenditure and had a negative free cash flow of minus $100 million. It also reduced its gross debt by $266 million. 

Most investors will focus on the company’s plans for its mountain of debt. In a recent note, analyst at Stifel noted that the company needs to restructure or refinance its $2.1 billion debt maturing between March 2025 and May 2026. The broker recommended that the company should issue equity in the coming months.

Tullow Oil share price forecastTullow Oil share price

My last Tullow Oil stock price forecast was accurate as it hit the target of 40p on September 6th. On the daily chart, the shares flipped the important resistance at 34.20p (April 5th high) into a support. It has moved above the 100-day volume-weighted moving average (VWMA).

The stock has formed an ascending channel shown in green. I believe that the stock’s upside is limited. As such, it could retreat and retest the key support at 34.20 ahead or after earnings.

The post Tullow Oil share price outlook ahead of first-half earnings appeared first on Invezz.

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