Is Tullow Oil stock a good buy ahead of earnings?

By:
on Jul 11, 2022
  • Tullow Oil share price has rebounded in the past few days.
  • The focus is on the upcoming earnings by the company.
  • Investors are concerned about the merger with Capricorn.

Tullow Oil (LON: TLW) share price pulled back on Monday morning as investors waited for the company’s upcoming results. The shares are trading at 44.26p, which is about 12% above the lowest level this month.

Tullow earnings ahead

Tullow Oil is a FTSE 250 company that focuses on emerging countries in Africa and South America. The company has operations in countries like Kenya, Angola, and Ghana among others. The firm, which was established in 1985, produces and sells almost 100k barrels of oil per day.

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Tullow Oil shares have had a difficult performance in 2022 even as oil prices have remained at elevated levels. Brent and West Texas Intermediate (WTI) are all above $100, which is higher than where it was when the year started. Therefore, Tullow has underperformed other companies like Shell and BP.

Tullow Oil’s stock has declined after the company unveiled a deal to merge with Capricorn, another Africa-focused company. The goal is to create a company with a significant scale in the oil and natural gas sectors in Africa. Analysts question whether the deal will be viable for long-term investors.

The next key catalyst for TLW share price is the company’s upcoming earnings that are scheduled for Wednesday this week. Analysts expect that the company’s revenue continued rising, supported by relatively higher oil prices. 

There will be other key data to watch in the company’s report. First, investors will be looking for the company’s update on Kenya. The company recently revised its development plan as it targets more production while reducing costs. It is also seeking to reduce its stake in the project. 

Further, the Tullow Oil share price will react to the company’s operations in Ghana and Ivory Coast. Most importantly, the firm will be questioned on its deal with Capricorn.

Tullow Oil share price forecast

tullow oil share price

The four-hour chart shows that the TLW share price has made a strong recovery in the past few days. The shares are trading at 44.52p, which is higher than the lowest level this month. It is trading at the 50-period moving average while the stock is now approaching the key resistance at 45.66p. This is a break and retest pattern, which is usually a bearish sign.

Therefore, the stock will likely resume the bearish trend after the company publishes its quarterly results. If this happens, the next key level to watch will be at 40p.

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