61%less than 61%, is the price of Tullow Oil shares a possible offer for opposite investors?

He Tullow oil (LSE: TLW) The price of the shares has fallen to only 14P while writing. That is less than more than £ 10 in the first part of the 2010, and around £ 2 before the pandemic. Purchase and withholding investors in the last 15 years would have seen their investments reduced to almost nothing.

A different business model

Tullow Oil's business model is different due to its focus on border hydrocarbons economies, largely in Africa. The company sought to take advantage of local skills and invest in its development, with hundreds of Ghanaian workers who rotate their Chiswick offices to gain more experience. The logic was that using local employees and suppliers was cheaper and returned to the economy. In fact, I wrote my doctorate on the subject and studied the company's operations in Uganda.

Tullow hoped to position himself as an agile operator with a unique growth strategy adapted to emerging markets. However, things have not gone exactly in planning. Operating in border economies can be a challenge and take Uganda as an example, progress towards the first oil simply took too long. Uganda awaits the first oil this year, about 20 years after the discovery of commercial amounts of crude oil in the Albertine Graben basin. Tullow has left the market since then.

What is happening now?

Tullow Oil made progress in 2024. The company returned to profitability with a gain of $ 55 million after the tax, reversing a loss of $ 110 million in 2023. This change was driven by strategic delivery, production optimization and debt reduction efforts. The income decreased slightly to $ 1.54 billion of $ 1.63 billion, but Ebitdax adjusted remained stable to $ 1.15 billion. The net debt was reduced to $ 1.45 billion, lowering the gear to 1.3 times Ebitdax, while the free cash flow reached $ 156 million.

Operationally, Tullow optimized production in his jubilee and ten fields in Ghana, achieving an activity time of 97% fpso, the time that the fpso was operational, and brought five new wells in the stream before the schedule and under the budget. This represented a savings of $ 88 million. The company also resolved a fiscal arbitration of $ 320 million in Ghana and extended its renewable credit line in mid -2025.

Clearly, many positive aspects such as the company seeks to put its balance under control and rationalize its operations. Looking to the future, Tullow plans to sell its Gabon assets for $ 300 million and expects the 2025 production between 50,000 and 55,000 barrels per day.

A slave to global markets

I am not perfectly sure of what Tullow's equilibrium point is in 2025. However, the estimates I have found online puts it around $ 45 per barrel. Regardless of the exact figure, we cannot ignore the general weakness in oil prices at this time. President Trump's commercial policies have pressed down the oil, and this, if it is maintained, will probably feed the profits later in the year. This worries me a bit when we consider the enormous position of Tullow's net debt.

Personally, I think there is too much risk here. Trump has promised to keep oil prices low throughout his presidency. This could damage indebted producers as Tullow more than others. That's why I'm not buying.