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Tonadotony,
"The non- Ghana production value has asset value of around $260M.
The Ten and Jubilee field if sold tomorrow are $3.6B minus the tax considerations. Lets say $2.7B net.
Other plant assets etc may well take the value overall to $3B. 1.9B debt remaining after farms down Guyana and Suriname and selling Kenya blocks etcetera. Company say is worth $1B after decommissioning bills worth 70 cents a share or around 56p."
The asset values are more in line with $60-65/barrel. After impairments due to oil price, all assets would have been downgraded. Farm downs and selling Kenya (and Uganda) in today's market further devalues the asset profile..
Impairments affects assets, but doesn't affect liabilities as much. Hence the negative net assets for YE 2020.
"I do feel fair value for Tullow at this time is 37-43p range but the market is not always reflecting where a company actually is."
I think we may well see 37-43p range following H1 results if in line or better than expected.
Regarding coronavirus, sooner or later investors will dismiss increase in cases and will probably focus on death rates. If death rate rises in line with increase in cases, then I wouldn't be hopeful of a recovery short term.
'Its should already be at least 45p if it was not for share price manipulation.'
Maybe they will take it to 45p on H1 performance, if no surprises. Marshall Wace increased short slightly Is this to do with their Green fund strategy. New CEO might have something to say on 2021+ clean energy.
Slift
The non- Ghana production value has asset value of around $260M.
The Ten and Jubilee field if sold tomorrow are $3.6B minus the tax considerations. Lets say $2.7B net.
Other plant assets etc may well take the value overall to $3B. 1.9B debt remaining after farms down Guyana and Suriname and selling Kenya blocks etcetera. Company say is worth $1B after decommissioning bills worth 70 cents a share or around 56p. However the low oil price of $42 gives a lower equity price and the company needs $55 a barrel to get near the value I suggest. I do feel fair value for Tullow at this time is 37-43p range but the market is not always reflecting where a company actually is. The key is Tullow is surviving when quite a few oil companies are going under. Once the USA gets on to a recovery path again things will turn round globally. 16 States remain in recovery especially New jersey. The Northeast is doing well. The Midwest is a little bit down but can bounce back. California outside LA is holding up. Its really bad in Texas and Florida lost the plot along with Arizona. States around this area are struggling and surge is also now in the Northwest.
'Out of curiousity, how did you come to the value of $1.7b?'
Hi Slift.
$200m fcf being somewhere between your hi and low numbers. If I was buying an annuity that gave me $200m every year into the future and the discount rate was 12% , then 200/.12=$1.7bn (rounding). Just a paramater not a prediction.
It looks like we have very low interest rates at least until 2025 or maybe indefinitely, so maybe 10% is a better rate and $2bn or 1.14p per share.
Hi Longish,
Out of curiousity, how did you come to the value of $1.7b?
Regarding valuation on "income" and assets:
- Profit/Loss for year 2020 is likely to be negative
- Net assets for year 2020 is likely to be negative
I don't think that the company can be valued on net assets as will be negative for YE2020.
If tlw can average $200m fcf pa, that must value it c$1.7bn or c.95p average per share imo. If the deal is approved and H1 on track, the SP must move to the upside, surely?
Its an option to value upstream oil co's based on income. If the deal isnt approved, liquidity is tight but the value can be based on assets. What would that be, c55p based on, say, $1bn net assets?
Let’s get this deal done and Uganda sold. A bad deal trumps potential bankruptcy any day! Vote YES
"Uganda sale is disaster, you haven't got a stake stop pushing for the sale.
Please people vote against the sale it won't be lonf until we recieve a better offer.
Don't let Total tread on you!"
Vote what you want, but if Uganda fails, i'd imagine the following is needed for survival for 12+ months:
- Oil over $65/barrel
- Production over 85k
- No writeoffs this year
Even then, in 12 months time, very unlikely to get debt restructured and Tullow will consider bankruptcy.
Also, the 400m FCF you stated is assuming that EVERY barrel is sold (also assuming that as I previously posted that hedges are to included in the $35 breakeven). Tullow tends to only sell 85-90% of the production and keeps the rest in inventory. And as a result:
Method 1 FCF: +$300-350m
Method 2 FCF: +$90-95m
Canary, I don't think you understand Tullow's financial position currently if you think that Tullow will survive without Uganda sale...
Little room (and very unhealthy) for debt renegotiation at this current moment, even with extremely low market interest rates.
ALL IMO.
Uganda sale is disaster, you haven't got a stake stop pushing for the sale.
Please people vote against the sale it won't be lonf until we recieve a better offer.
Don't let Total tread on you!