Tullow Oil share price has underperformed the market in 2022 even as oil and gas prices jumped. The TLW stock was trading at 48p on Friday, which is in the same range it has been in the past few weeks. It is also about 22% below the highest level this year, giving it a market cap of over 738 million pounds.
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Tullow Oil lags the oil market
Tullow Oil is a small cap oil company that focuses on countries in Africa and Asia. It has operations in countries like Kenya and Ghana. Earlier this week, the company published its results for the first half of the year. The company said that its revenue rose to $846 million in the period. Its gross profit rose to $620 million while its after-tax profit jumped to more than $264 million.
However, the company’s free cash flow for the period was minus $205 million. Its capital investments for the first half of the year was over $156 million while the company’s net debt increased to $2.33 billion.
A key reason why the Tullow Oil share price has lagged is its decision to merge with Capricorn. In a recent statement, Capricorn said that it was committed to the merger. However, it hinted that there were more companies interested in it. In a statement, Tullow said that it was still committed to the original deal.
“We firmly believe that the proposed merger has the potential for material value creation by implementing a combined business plan which accelerates investment in key projects and delivers very significant synergies.”
Tullow Oil share price forecast
The four-hour chart shows that the TLW share price has been in a consolidation phase in the past few days. In this period, it has formed a descending channel that is shown in black. It also moved slightly below the 25-day and 50-day moving averages while the Awesome Oscillator has moved below the neutral level.
Therefore, the outlook for the stock is bearish, with the immediate target being at 45.66p. A move above the resistance point at 50p will invalidate the bearish view.