The outlook for Tullow Oil PLC (LSE:TLW) is “pretty bleak”, that’s according to analysts at Panmure Liberum, repeating a ‘sell’ recommendation and nudging lower its target price.
Pitching a new bearish target price of 7.8p (from 9p) the broker sees quite significant downside to the current share price of 11.3p.
It comes after Tullow this week used its interim results to reiterate that refinancing its $1.6 billion debt pile, including $1.3 billion of senior debt due in May, was the oil firm’s priority.
At the same time, weaker operational and financial metrics didn’t help inspire confidence among investors.
In London, Tullow shares have given up more than 20% in the week.
“Production continues to fall due to Jubilee field underperformance,” Panmure Liberum analyst Ashley Kelty said in a note.
“The looming liquidity squeeze in 1H26 means refinancing is the top priority, but with falling production, softer commodity prices and negative FCF [free cash flow] the outlook is pretty bleak.”
Financial performance
Tullow reported a $61 million first-half loss, compared to a $196 million profit for the same period a year ago. First-half revenue was down to $524 million from $759 million in 2024.
Production averaged 50,000 barrels of oil equivalent per day, or 40,600 boepd, excluding the Gabon assets (which were sold in the period for $300 million).
Tullow’s net debt stood at $1.6 billion at the end of June, of which some $1.2 billion comprises senior loan notes due May 2026.
"In the second half of the year, we are focused on refinancing our capital structure, production optimisation activities and continuing to optimise our cost base, which, combined with the progress in the first half of the year, will help unlock Tullow's intrinsic value,” said Richard Miller, chief financial officer and interim chief executive.
Dilution threat
“While it is likely that a refinancing is achieved, we would anticipate the cost of borrowing to rise," analyst Ashley Kelty said.
The analyst added: “While management have indicated that further disposals are off the table (for now), the generation of FCF remains limited and we see this being a difficult process, and we would wonder whether this may see a debt-for-equity swap undertaken.
“If so, this would see significant dilution for current equity holders.”