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Soder, I think you are a bit to pessimistic on Tullow. Let's see what Suriname brings...
I think tullow will be forced to do a huge equity raise to accelerate balance sheet repair. It probably comes alongside a new convertible bond to rely the 21 convert. The only way to do that will be to give equity holders a carrot and some future potential upside and that carrot has to be Guyana.
At the moment tullow is being run exclusively for the creditors and balance sheet repair. It’s a ship floating on the o ran with no engines and no rudder. Unless they start drilling something, somewhere the annual production will keep declining and the equity will be eroded at the expense of repaying creditors.
Fwiw I think a decent proportion of tullow bonds sit with distressed debt funds who could pitch debt for equity or provide new financing at an asset level rather than corporate level. Again I think this will be Guyana.
I am small in eco at moment but the moment they announce a drilling plan it will double and I don’t want to miss that. So with oil at 67, tullow throwing off more cash, and the 21 and 22 maturities approaching I think a capital raise could come very soon. This is their window. As such I am going to be adding eco quite significantly over coming week.
Regarding Tullow's Ghana assets, ofcourse the assets are great.
I've always held the view that developing the Ghana assets to get out of debt was the best strategy forward following the downturn in 2019.
However, EG assets are equally as good (and definitely better than developing Kenya or developing exploration assets).
14% of STOIIP production is low, but fields become mature around the 20-25% mark. Obviously, Tullow can produce more oil should they wish, however OPEX will just increase.
By 2030, The Ghana fields will have mostly depleted of recoverable resources at very LOW OPEX costs. So what i'm saying is, Tullow needs something to replace Ghana by then. We'll see what happens between now and 2025!
I do hope Tullow succeeds, and will look to getting back into the company should the opportunity arise.
MarcelKrell,
Yes, I agree. However, majority of getting Tullow's debt under control is done. All that's left is a restructure and refinance of bond(s) and possibly RBL too - which following what's been said and provided, is a given.
I agree that there is share price potential as debt is paid off between now and 2025 (enterprise value is added to market cap as debt is paid off), but during this time, there is little potential to grow.
It's just a shame really as Tullow was always my #1 pick until the recent sale of producing assets (especially EG assets).
For a company of that size, future oil finds (minus Suriname Block 47) will not be significant due to the forseeable farmdown in exploration assets. But we'll see what Tullow does farm down and what sort of oil finds Tullow achieves.
As for Block 47, the ongoing drilI is important, not just for oil discovery, but for Tullow's other assets. I think a duster @ Goliath Voltsberg North will be very disappointing. I see Block 47 as Tullow's most prospective license in Suriname. It will be a shame should Tullow not find oil here. But hopefully they will.
Ofcourse ECO can wait, but I have a holding here for the forseeable future. I'm not fully invested here, but like to have this in my portfolio.
Slift, in a nutshell:
"That large resource base is Tullow’s Ghanaian acreage, where the company has produced just over 400Million barrels of oil (gross) from 2.9Billion barrels of oil in place (c.14%). This plan, alongside a rigorous focus on costs, is expected to generate material cash flow ***over the next decade***, which the Group anticipates will enable reduction of its *current debt levels* and deliver significant value for its host nations and *investors*."
https://www.energymixreport.com/tullow-counts-on-ghana-to-lift-it-out-of-debt/
Slift, In a nutshell:
"That large resource base is Tullow’s Ghanaian acreage, where the company has produced just over 400Million barrels of oil (gross) from 2.9Billion barrels of oil in place (c.14%). This plan, alongside a rigorous focus on costs, is expected to generate material cash flow **over the next decade**, which the Group anticipates will enable *reduction of its current debt levels* and deliver significant value for its host nations and *investors*."
https://www.energymixreport.com/tullow-counts-on-ghana-to-lift-it-out-of-debt/
Tullow's share price potential these days, imo, is all about getting control of the debt, in the minds of (large) investors. Once that firmly happens... I see (fwiw) a solid price around 70-80 p.
If I look at the position of Suriname block 47, I don't expect them to find oil there. There is a clear line where the oil is located, from Guyana in the direction of Suriname. Block 47 looks a bit to far north imo.
But again, TLW will be about getting control of the debt, imo. Once they (seem to) manage that, it's drilling the Cretaceous Kanuku and Orinduik prospects next year, and find oil probably. Imo.
Slift, I'm invested in both. But I don't see ECO do much for the time being. At Tullow there is more short term potential because simply there is regularly news and developments... ECO can only wait, for next year.
MarcelKrell,
As I said on the Tullow board, I do not see much growth potential in Tullow following the sale of equatorial assets. I'd still be in Tullow if they had kept EQ and farmed down exploration assets instead.. but sadly didn't happen.
I will potentially invest in Tullow again should they strike oil in Suriname, but i'm not going to bet on that just yet.
As for Tullow's exploration assets, I expect majority to be farmed down heavily - further reducing growth potential.
"We probably see TLW fly now soon, and ECO in a about year... :p"
I'm not too concerned about Tullow flying a few pennies from here.
We'll see at the Results in 9 days whether Tullow flies.
Good luck to you over there.
Yes, Slift, you sold Tullow and put it in ECO.... we know. lol.
We probably see TLW fly now soon, and ECO in a about year... :p
"so expect the same boring post to follow about not rushing in to buy yet for the twentieth time"
Lol, there is huge potential here, even if it's having to wait for it.
I think people are forgetting that ECO HAVE oil.
Jethro and Joe both account for approx. 45mmboe RECOVERABLE (subject to oil price) resources net to ECO.
At current oil price, sure maybe only 20-30% (at a guess) of it is economically recoverable (and therefore not economically viable), but let's not forget that ECO does have this oil. This is currently not on the balance sheet and makes ECO look very attractive for those who do know.
All it takes for the majority of this heavy oil to be economically viable is more oil finds (preferably light).
At current share prices, i'm willing to hold a portion of my portfolio here even if it's for 11+ months.
Having added last week I’m now thinking of another go having liquidated elsewhere. Bit of a no brainier, as they say.
it`s blue , so expect the same boring post to follow about not rushing in to buy yet for the twentieth time