Tullow Oil (LON: TLW) share price has staged a strong recovery in the past few weeks even as the price of oil retreated. The stock rose to a high of 52.40p, which was about 32% above the lowest point in July. This rebound pushed the company’s market cap to about £750 million.
Tullow strikes Kenya deal
Tullow Oil is a relatively small energy company with operations in African and South American markets. The firm has made headlines in the past few weeks.
In July, Tullow published a relatively strong trading update as the price of crude oil rose. Precisely, the firm generated about £800 million in revenue in the first half of the year. Its average oil price was about $106.
Tullow Oil also announced that it will merge with Capricorn Energy, another small oil and gas producer with operations in the UK and Africa. The combined company will have the scale it needs to compete with other larger players.
Meanwhile, the firm is in talks to sell part of its stake in Kenya at about $3 billion to ONGC Videsh and Indian Oil Corporation. According to Bloomberg, leaders of the two Indian firms met with Kenya’s energy ministry to smoothen the deal.
A potential deal will be important for Tullow, which has struggled to export oil from the Turkana fields. Tullow owns 50% of these fields with the rest being owned by Afica Oil Corp and TotalEnergies. It expects that the cost of production will be about $22 per barrel.
Still, Tullow faces numerous challenges going forward. First, oil prices have declined sharply in the past few weeks as investors worry about a recession. Second, it is unclear whether
