As of May 28, 2025, Tullow Oil PLC has a Discounted Cash Flow (DCF) derived fair value of $179.28 per share. With the current market price at $13.58, this represents a potential upside of 1220.2%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $155.15 |
| DCF Fair Value (10-year) | $179.28 |
| Potential Upside (5-year) | 1042.5% |
| Potential Upside (10-year) | 1220.2% |
| Discount Rate (WACC) | 7.7% - 9.9% |
Revenue is projected to grow from $1535 million in 12-2024 to $1615 million by 12-2034, representing a compound annual growth rate of approximately 0.5%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 1535 | 6% |
| 12-2025 | 1279 | -17% |
| 12-2026 | 1291 | 1% |
| 12-2027 | 1335 | 3% |
| 12-2028 | 1393 | 4% |
| 12-2029 | 1439 | 3% |
| 12-2030 | 1479 | 3% |
| 12-2031 | 1513 | 2% |
| 12-2032 | 1544 | 2% |
| 12-2033 | 1583 | 3% |
| 12-2034 | 1615 | 2% |
Net profit margin is expected to improve from 4% in 12-2024 to 17% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 55 | 4% |
| 12-2025 | 217 | 17% |
| 12-2026 | 219 | 17% |
| 12-2027 | 226 | 17% |
| 12-2028 | 236 | 17% |
| 12-2029 | 244 | 17% |
| 12-2030 | 251 | 17% |
| 12-2031 | 257 | 17% |
| 12-2032 | 262 | 17% |
| 12-2033 | 269 | 17% |
| 12-2034 | 274 | 17% |
with a 5-year average of $298 million. Projected CapEx is expected to maintain at approximately 20% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 263 |
| 12-2026 | 266 |
| 12-2027 | 258 |
| 12-2028 | 255 |
| 12-2029 | 267 |
| 12-2030 | 275 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 5 |
| Days Inventory | 67 |
| Days Payables | 15 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2025 | 766 | 51 | 253 | (21) | 484 |
| 2026 | 775 | 51 | 256 | (4) | 472 |
| 2027 | 784 | 53 | 264 | 7 | 460 |
| 2028 | 803 | 55 | 276 | 5 | 468 |
| 2029 | 834 | 57 | 285 | 3 | 488 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 155.15 | 1042.5% |
| 10-Year DCF (Growth) | 179.28 | 1220.2% |
| 5-Year DCF (EBITDA) | 11.55 | -14.9% |
| 10-Year DCF (EBITDA) | 70.77 | 421.2% |
Is Tullow Oil PLC (TLW.L) a buy or a sell? Tullow Oil PLC is definitely a buy. Based on our DCF analysis, Tullow Oil PLC (TLW.L) appears to be significantly undervalued with upside potential of 1220.2%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $13.58.