RE: Bond price18 Mar 2026 10:53
Buying Tullow shares right now is a classic "high-risk, high-reward" play. Whether it’s a "good" buy depends entirely on your risk tolerance and your outlook on oil prices.
Here is how a professional analyst would weigh the two sides of that trade:
The "Buy" Case (The Bull)
Deep Value: The shares are trading at a massive discount to the value of the oil in the ground. If Tullow successfully pays down debt and stabilizes production, the "re-rating" could be 2x or 3x from here.
Survival is Secured: The bond rally you noticed is the market saying "bankruptcy is off the table" for the next few years. Usually, when the "death risk" disappears, the equity eventually follows.
Cash Flow Potential: At $80+ oil, Tullow is a cash machine. If they use that cash to aggressively buy back their own (cheap) debt, the value of the remaining equity jumps.
The "Avoid" Case (The Bear)
The "Value Trap": Cheap stocks can stay cheap forever. Without a dividend or massive production growth, there is no "catalyst" to force the share price higher.
Operational Risk: Tullow has a history of technical issues at its Ghana fields (Jubilee and TEN). If production dips further than expected, the debt becomes a mountain again.
The "Lenders First" Rule: In a turnaround, the bondholders (lenders) always eat first. Shareholders only get the "crumbs" left over after interest and debt repayments, which are currently very high.
The Verdict
Buy if: You believe oil will stay above $85 and you want a leveraged play on a recovery story. Treat it as a "speculative" slot in your portfolio (small position size).
Avoid if: You are looking for steady growth or income. There are safer oil majors (like Shell or BP) that pay you a dividend while you wait for the oil price to move.
Pro-tip: Watch the drilling results from the Jubilee field in the next quarterly report. If they beat production targets, that is usually the trigger that finally moves the share price.
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