TQW – Tullow Oil Inc – Is It A Good Investment?

TQW Tullow Oil Inc (LSE: TLW). We will discover if the company will recover, its 104% gain over the year, and what is so special about Tullow Oil? Throughout the article, we will use the ticker symbol (TQW)

As traders and investors, we are always looking for emerging and profitable companies, so you might be asking yourself, is Tullow Oil Inc a good investment? If you look at the shares over the last year, the price increased by 400%, which could be a sign of the recovery from 2019. The broker’s ratings are somewhat cautious, though, with 10 buy ratings, 12 hold ratings, and 5 sell ratings. So, we did a little research into Tullow Oil to discover if it’s worth the investment and alternatives.

Features;

• Tullow Oil has 53 licenses throughout 11 countries and 28 producing wells.
• The soaring prices of TQW over the past year of roughly 400% could indicate recovery.
• Despite Tullow Oil’s mishaps, there is still some optimism in sight, with its debt being reduced and oil prices increasing.
• The share price is up to 53% from the last quarter, with the sector seeing significant moves as oil prices return to normal.
• When the industry experiences improvements, its cash flow will improve, meaning it will pay off the majority of its debts.
• Traders will expect significant moves to the upside before you can call it a Buy.
• We look at BP and Harbour Energy as possible alternatives, showing stability and growth for future research and opportunities.

(TQW) Tullow oil Inc is primarily an oil and gas exploration and development company throughout South Africa and South America.

Their portfolio comprises 53 licenses in 11 countries, and they have 28 producing wells. The company was formed in 1985 and is currently headquartered in London, UK.

The company’s share prices have been soaring over the last 12 months, Increasing from 11 pence up to 57.5 pence. That is quite a move of over 400%. Could this be an indication of recovery from the mishaps of 2019? We decided to take a closer look!

TQW Crash In 2019, And Why It Happened

We are all aware that the TQW share price suffered a major hit in 2019, and the pandemic did not help it either. But what happened?

The company may have had over expectations in the months leading to the price crash in 2019. What was meant to be the company’s dream discovery, with TQW hyping about their two new oil fields in Guyana, quickly turned into their nightmare.

The company soon discovered that the two new sites were actually contaminated with heavy oil. So why is that important? It’s because heavy oil can’t flow easily to production wells under normal conditions.

So, drilling or extracting the oil can be extremely difficult. It puts the two new site’s viability into question.

The pandemic was not kind to the oil industry and triggered a decline in oil prices. If you combine these two instances, it’s not difficult to determine why the share price of Tullow Oil dropped by 95% in 2020; it was the largest drop for over two decades.

So Where Does This Leave TQW?

In 2020 the pandemic impacted the business, with the company’s total revenue dropping by 19% and reporting a loss of $1.22 Billion.

The company also had to shut down one of its main sites, bringing the production levels down to roughly 60,000 barrels.

Despite all these setbacks, there are still reasons to be optimistic. TQW loss was not as big as 2019 of $1.69 billion, and thanks to negotiations with creditors, the overall debt is falling. Now that travel restrictions and lockdowns are easing; oil prices are increasing, reaching $70 per barrel. The company also expect their assets in West Africa to significantly boost production in 2022.

It is great news for the company, with its share price increasing to prices before the pandemic levels. But Tullow Oil still has a long way to go before recovering completely.

Picking the right company is essential to most investors.

The most you can lose on a given stock is 100%, presuming you don’t use leverage. But if you can pick the right asset, you can make more than you can lose.

If we look at TQW, the share price soared to 104% in just one year, and the share price is up to 53% from the last quarter. But on the other hand, most long-term investors have had a tough time with the stock falling by 75% over three years.

You could assume that the loss is due to the market being more focused on revenue and revenue growth for now. It is true that when a company does not make a profit, it is often expected to see revenue growth. Fast revenue growth that is maintained can often lead to quick profits.

TQW revenues have shrunk over the last year, reducing by roughly 17%. It would not have been expected at this point for the share prices to rise to 104%. It is a prime example of how the buyers can push the prices up before the fundamental data shows growth. But it could also be a possibility that the market expected the revenue to drop.

Is TQW A Good Investment?

Oil prices have been increasing recently. But are investors worried about driller’s returning to their rigs? Or do they wonder if the exploration and production sectors are due a rebound? Is Tullow a Buy, Hold Or Sell right now?

The oil sector has indeed been experiencing significant moves already. TQW oil shares are up by 118% from the January lows and break above the 200 moving average. But the golden cross of late April is not accepted by most chartists as a proper one.

So, is Tullow Oil In A Rally?

The company does look overvalued with an earnings ratio of 208. But it also good to consider the subsector, with its averages being at 206.

It could mean that Tullow is on track to profit. If the bottoming of oil prices we have witnessed during the pandemic, Tullow could be the first in the queue when prices recover.

An indication that Tullow could survive the lower and current oil prices, lye with its Ghanaian assets with operating costs of $8 per barrel. When things start to improve, the company’s cash flow will improve, meaning it will pay off the majority of its debts.

Most analysts are cautious about Tullow Oil presently, with 10 Buy ratings, 12 Hold Ratings, and 5 Sell ratings. The overall consensus from brokers, the shares possibly falling 6% during the next 12 months. Still, traders would expect a significant move to the upside before we call it a buy opportunity.

BP has demonstrated earning of 4.33% per year, but the earnings do not cover the dividend at 4.7%. It is good to note that BP’s prices have been stable throughout the year, moving at the rate of 45% each week. The stock is underperforming with the oil and gas sector average of 12.5% per year.

Analysts have forecasted steady earnings growth of 4.3% annually. Bp could be an excellent alternative for closer study.

Harbour Energy (HBR)

Harbour Energy has increased share prices by 35.64% over the last year. Analysts forecast an increase of 32.10%, and the consensus for earnings per share is estimated at 0.023 over the next financial year. You might want to research Harbour Energy, as it could be a potential alternative with several opportunities.

TQW has indeed had a tough time, with the broader market losing roughly 19% and shareholders losing 91%. It could be worth reviewing fundamentals for the time being and any good opportunities on the horizon. Unfortunately, the performance last year may indicate many unresolved challenges for the company.

Tullow Oil’s long-term price weakness could be a bad sign, but many investors may want to research the stock for a potential turnaround.  It can be fascinating looking at the price over the long term to give us an idea of future performance.

TQW could be on track to return to its 2019 levels. Still, if you weigh up the reduced production forecasts, the recovery process could take multiple years. For now, it is best to see how things develop throughout 2021.

It is excellent to see that shareholders have been rewarded with returns of 104% over the last 12 months, which certainly beats the losses. As investors, we put more weight on the long-term performance over the short term. The improvement could be positive within the business. But it is always good to consider the various impacts of the current market conditions and their effects on overall share prices.

Looking at the alternatives of BP and Harbour Energy, they do present more need for further research. There are many companies operating in the energy sector, which will offer investors excellent potential, so further research is necessary.  BP and Harbour Energy have been stable performers offering growth potential in the future.

When investing in any asset, it must fit with your trading strategies and risk tolerance. So, taking a little time to do further research will enable you to discover more opportunities and the risks involved.