Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
Slift , I think it was the link i saw where the Kenya govt excepted the amount of money tlw have put into operations other than a couple of hundred mill if that even which would make a very big difference in the selling price , i may have thought the sale price was a lot more than i should have .i tried to look up the link which i thought i saved . cheers for your calculations .
Hi Jim,
Chances are Tullow will probably get more than what the assets are valued at by using their recoverables from Kenya as a bargaining tool when they do sell their stake. It's not easy for any of us to value the assets in these market conditions - it would require a professional who'll have inspected the site and estimated the reserves at the current market conditions.
I think any debt is manageable as long as interest payments and capital payments can be met without affecting CAPEX/OPEX.
Personally, I don't think debt isn't a problem for Tullow if Uganda is approved and sold.
What is a problem is the lack of explorations/operational improvement. You've got to invest to make a return. Same applies for Tullow, they need to invest more into CAPEX and OPEX. Hopefully Brent will recover steady until 2021 so Tullow can use these proceeds to invest.
All IMO.
Slift , thanks , your maths better than mine , i thought they would get a lot more than that for Kenya , saying that 1.5bil is far better than 2.8 bil debt , the size of tlw that is reasonable debt to be honest
Debt isn't all that bad.
From the accounts (2019), Tullow have the following:
RBL - $1357m, maturing in Nov 2024
$300m convertible bond - $278m, maturing in July 2021
$650m Senior Notes - $645m, maturing in 2022
$800m Senior Notes - $790m, maturing in 2025
Tullow have ALREADY paid (in April) circa. $200m ammortisation for RBL which was supposed to be due in Oct 2020. Thus, reducing their debt to $2.8b.
Their next two payments are the $278m of the $300m convertible bond maturing in July 2021, and another RBL ammortisation payment of $211m due in April 2021.
Tullow will likely use the proceeds from Uganda to pay BOTH of these off, totalling ~$500m if you take into account interest.
After these payments, the next payments will be another circa. $200m ammortisation in October 2021, April 2022 and October 2022 for RBL and the $650m senior notes in 2022.
- Tullow needs circa. $200m to pay off ammortisation in 2021
- Tullow needs approx. $1000m to pay off senior notes and ammortisations in 2022.
Now that Tullow is in a better position than end of 2019.. 2022 is the next hurdle.
It's not easy to pay off $1000m in 2022 without increasing portfolio through explorations and improving production. Also would need to hope for $60+/barrel oil price.
ALL IMO. GLA.
How can you have a "personal view" on debt without any explanation of how you've come to that?
Tullow's assets at Uganda was valued at $1000m at 31st Dec 2019.
Was sold for $575m recently.
Tullow assets at Kenya was valued at $679m at 31st Dec 2019.
Tullow are looking to sell 25% of the 50% stake it holds in Kenya (but could be more, could be less).
I'm going to make a very rough and not to be trusted guess of $200m for 25% of Kenya assets in the current market conditions.
Tullow are currently $2.8b in debt.
So how do you even calculate $500-700m total debt on the sale of these two assets lol.
On the sale of these assets, Debt (COULD) be reduced to $2b if Tullow decides to pay it off.
Furthermore, if Tullow uses ALL FCF from operations to also pay off debt (depending on oil price), they could pay off an additional $300m-400m.
The asset sales at Kenya (25% stake) and Uganda will provide Tullow $775m (using my very rough estimate that shouldn't be taken on board by anyone). Tullow will still need to raise $225m from stake sale in explorations (and it's non-operated portfolio).
If again Tullow decides to use those proceeds to pay off debt, TOTAL DEBT would be reduced to $1.5-1.6b.
But realistically, Tullow will look to use the proceeds to fund CAPEX and OPEX costs for 2021.
ALL IMO. GLA.
Debt in that range - only in my dreams
what sort of money do people think Kenya would sell for , ????
when Total give the money for Uganda , my personal view TLW will have debt of only $500 to $700 million on selling Kenya and Uganda ,
Say oil is $50 a barrel end of the year even $60 , TLW could crush the rest of debt or buy some back , or start to think of a divi again .
I Hope so. Could it go up like De la Rue today 200%. Been on my watch list for last month. All my cash in TLW unfortunately.
sleeping giant this one , just wait till the money comes in from the asset sales .