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#Prefabsprout
Dont worry about Tullow.... We are doing just fine!
You might want to keep an eye on your Pmo investment.....
LOL Camkite polishing the proverbial.
"if Tullow can really unlock value,"
becomes
"Tullow can really unlock value,"
remind me the breakeven for Ghana once the hedges runs out?
Slift your comment
“Tullow can really unlock value, then this company will really become a low cost and be very competitive even in todays low price market.”
And this seems to me the tact the CEO is taking hence why the 30/40p near term predictions hardly seem pie in the sky numbers.
Raise organic (all be it from sales) funds, maintain/manage debt, restructure, expand & cut costs.
The man with the plan seems to be well on the case imo.
The CEO is very good. I'd suggest you to listen to the half year results webcast if you haven't already.
Everyone here seems to be focussed on portfolio management to raise $1b. But with the way things are going and if Tullow can really unlock value, then this company will really become a low cost and be very competitive even in todays low price market.
For example, Tullow's Kenya assets which is currently undergoing review is already very competitive. I believe the breakeven for developing this project was c. $35/barrel (including the pipeline tarrif and OPEX of c. $10/barrel).
So even in today's market with Brent at c. $42, Tullow will be able to profit from this project.
Tullow is seeking to reduce the breakeven for this project even more with the help of the CEO's expertise. Even a $5-10/barrel reduction would be huge to make this asset attractive to the point where Tullow may withdraw the sell sign.
What's more any further CAPEX recovery Tullow gets approved by the Kenyan government for this project would make this project even more viable.
https://www.petroleum-economist.com/articles/upstream/exploration-production/2020/tullow-seeks-state-agreement-on-turkana-costs
Uganda = resolved.
Resolving Kenya will certainly add more value to this company. At least the Kenyan government is currently somewhat a little supportive of Tullow following confirmation that tax incentives will continue to apply to this project. Also, with the extension provided, the Government is also supportive of a lower breakeven (or that's how I perceive it).
ALL IMO. GLA.
Slift
So rather than just “Reducing debt of course” servicing debt & not drawing down MORE debt to bring forward or enhance the NPV and future growth of tullow portfolio / improve income / cash flow or further asset sale of the company could be the tactic being taken.
Seems bloody likely imo!
Reducing debt alone isn’t going to “ build Tullow into a competitive and successful business once again.”
Especially when growing involves capital expenditure.
Wtfdik.
“ Uganda
Following the announcement on 23 April 2020 that Tullow had agreed the sale of its assets in Uganda to Total for $500 million in cash on completion, $75 million in cash following FID, plus post first oil contingent payments, the transaction is progressing as planned with completion expected before the year-end.”
So transaction (almost) complete ahead of schedule... will this bring the below forward ?? Very early Q1 2021 ?
“ South America
In Suriname, the Goliathberg-Voltzberg North well in Block 47 is now planned to be drilled in the first quarter of 2021, testing dual targets in the Cretaceous turbidite play in approximately 1,900 metres of water. The well will be drilled by the Stena Forth drillship.”
Timescale set in relation to completion sale of Ugandan asset ?
“ Data reprocessing and evaluation continues in Guyana to support future drilling activity. In Peru, Tullow has been awarded blocks Z67 and Z68 in the Trujillo basin, targeting a completely new petroleum system and new plays.”
“ In Namibia, Tullow is awaiting the outcome of the Venus-1 well which is expected to be drilled by Total in the fourth quarter of 2020 on a block to the south of Tullow's PEL-90 acreage before deciding next steps.”
Lots to muse over & all reasons why there’s no reason given the debt is manageable this could hit 40p sooner than we think.
Time will tell.
Slift - exactly, which was the point to me question. Debt reduction & a level of growth for the long term viability & ultimately success. Ceo seems hungry to succeed to me.
"Despite the very tough conditions in the first half of this year, we have successfully delivered reliable production and major, sustainable reductions to our cost base. We are also close to completing the important sale of our interests in Uganda. The quality of Tullow's assets remains robust. Since my arrival as CEO, we have been developing new plans for our business, with the support of our Joint Venture Partners and expert advisors. These plans will deliver enhanced value from our assets to benefit all our stakeholders including our host countries and investors. We will host a Capital Markets Day towards the end of 2020 at which we will update the market on these plans to deliver on Tullow's true potential."
Well.. reducing debt means less finance costs.
So it would be more favourable for the long term viability of the company. But ofcourse there has to be a balance. Best option is to both refinance and make use of sales proceeds for debt as well as CAPEX, IMO.
@maxplus.
As a last option. Tullow will look at raising cash via investors (wealth funds etc.) and refinancing debt first before rights issue.
I wouldn't rule it out.
Since becoming CEO on 1 July, I have been impressed by the quality of Tullow's people and the potential of our assets and I am confident that we can build Tullow into a competitive and successful business once again. Despite the challenging external environment in the first half of the year, Tullow has performed well; delivering production in line with forecast, agreeing the sale of the Ugandan assets and re-shaping the Group's structure and cost base. In the second half of 2020 our focus will remain on continuing to deliver safe and reliable production from West Africa, reducing debt and building a cost effective and efficient organisation that can compete in a low oil price environment."
All of which requires capital, slimlining & restructuring HENCE the reason for my question.
ROCKLAWN - not always the wisest move to Reduce debt with cash flow & sales proceeds provided it can be serviced over a period of time.
Using that money to reduce costings (for example) could prove much more favourable for the long term viability of company.
REDUCE DEBT OF COURSE - no s**t it’s a business.
Is there a possibility the company may issue a rights issue?
Where have you been ..... REDUCE DEBT OF COURSE.... are you for real or taking the ****ssssssss
Apart from the big elephant of debt in the room... any one know how tullow I tend on using the $500m ?
Spd
I believe the impairment loss of £1.3b booked in H1 has already takes into account reduction in MV or net realisable value of the asset. Therefore, the loss on disposal has already been factored in the sp as part of H1 results. However, the sale of asset was not factored in due to many uncertainties around disposal, but this has been removed now. I believe there is more upside from here. Let’s see the momentum over next few days. GLA!
Also. It’s a 5 as it stands. The market is ever evolving & things change quick based on what we know atm I’d say 4 weeks 30/35p
New management, turnaround has begun. Imo
If / once we break 23p & hold we will see it pretty swiftly... how long it takes to break & hold we have to wait and see.
@Camkite so I guess it's a 5 from you.
30p why is this so hard to believe ? Lol.
They have debt but debt can be manageable, if it’s manageable then it matters less... read accounts much of debt was for one offs not ongoings.
In the next few days will have more money put into the bank than the current market cap with an added $75m and royalties ongoing (no overheads on those) looks like a damn savvy play by mgmt to me.
Short term oil will drop a little bit over all against a weaker dollar its going up!!
say in 1-2 months (by the end of 2020 is what I consider short term)
Depends what you define as ‘short term’ but yes. 5.
How confident are you the SP will hit 30p short term? Vote on scale 1 ... 5
where 5 - very confident, 1 not at all.
Tbf mate.
Slim lining, disposing & getting cash in the bank at this critical time despite the loss on disposal is clearly a needed move.
Businesses do similar all the time and theres no reason why the market wouldn’t start pricing in a more stable company & future growth.
Oil price in the medium term looks positive & they have less debt now than 12 months ago, alone it with a lower oil price.
Looks good for 30/35p in the near term imo.
I'm in for the long game, just removing the wool from my eyes.
Good luck to you
$500M + $75M + royalty payments will all be coming as CASH.
Sorry for your loss today and any further looses to come.
Yes it is Goodnight. Filtered.
May I suggest you read your own blog,
''Today's RNS is the sale of a Ugandan asset for $500 Million + a further $75 Million at FID + also production royalty payments from Total.''
The sale of an ASSET in exchange for cash.
If the asset is sold at less than the MV = loss on disposal
''You don't need to be a professor in maths''
It takes more than maths to play this game,
goodnight!