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Bravo!
Your posts bring knowledge and intelligence to a forum mostly lacking in both. Don’t be discouraged.
Please!
Enfin,
Thanks, although most of what I post is just my opinion and analysis on factors that may affect the share price on a forward basis.
Only part intelligence/knowledge though haha :')
GLA.
I still have 20% on the table in Tullow. I do appreciate your inputs. I am concentrating my time more on Covid therapies as I believe it may front load what happens in the oil sector. I do question again about my decisions as one day Tullow looks like the Titanic and then suddenly you think China is recovering why can't the west follow them, but then we are different or so we think. TT
Tony,
You may be right in looking at covid therapies for the time being. COVID will continuously impact the oil sector until restrictions are removed.
Vaccine is starting to play a bigger role for the recovery of oil, but I don't believe oil will drop to lower lows again during this pandemic.
Tullow is still a risky investment until approval of January RBL redetermination, but there's several actions that will de-risk it along the way:
- Uganda sale
- Lender talks
- Capital Markets Day
- Further asset sales
- Oil price
- COVID19 vaccine
Good luck with your investments!
Slift, you won't believe my bad luck, guess where my other major investment is? TLW!!
I know all the background having been in here on and off the past few years. I know the 1 billion asset sales commitment to get the RBL. My question is what if Kenya can't be sold, where will shortfall come from? Is there a risk of RI, and how dilutive? Or could farm downs in Guyana Suriname be sufficient? What does new CEO have in mind for CMD??? Many thanks.
Slift
The K mortality rate of Covid-19 in the first six months was 0.85% on 8% community infection rate. The new and a few old therapies around used as toolkit of prescription need in most cases phase 3 clinical trials. I believe the reduce the mortality rate down to 0.17%. A normal influenza year has a mortality rate of 0.09- to 0.12% and a heavy year would match the levels they might get Covid-19 down to. The irony of a second wave in October and November is that it supplies patients for those trials. The good news is that we may have a proven therapeutic defence for early 2021. Getting a vaccine would then be a cherry on top. Tony
Ooops UK not K
Bransonbull,
"Slift, you won't believe my bad luck, guess where my other major investment is? TLW!!"
Whether good luck or bad luck, I don't think we'll know just yet. If Tullow is able to survive and restructure/refinance the debt in January, I think most holders here will benefit. That's the risk you're going to have to take if you're in here, forget the 3% up or down on daily basis.
So far, oil is keeping good but there's still stages Tullow has to accomplish between now and then.
"1 billion asset sales commitment to get the RBL. My question is what if Kenya can't be sold, where will shortfall come from?"
The $1b portfolio management was probably just a decision made by Tullow to delever and reduce net debt so that they are able to meet financial commitments and liquidity tests.
It would have worked or given Tullow enough headroom in normal circumstances with oil at $65+/barrel.
But COVID19/Saudi War happened plummeting oil prices.
What's happened now is Tullow has delevered a little (i.e. YE20, net debt will be c. $2.3-2.4b with Uganda). This will give Tullow some room for negotiation with lenders to restructure/refinance some debt or seek new investment with whatever Tullow's plans are (folllowing CMD).
"Is there a risk of RI, and how dilutive?"
Tullow is exploring all options. There's always a risk to RI in these circumstances.
Tullow cannot keep selling/farming down assets. This isn't sustainable. They will need to either
1. Raise cash (through investors, selling assets, RI, etc) or
2. Restructure/refinance debt (in some cases restructuring debt involves raising cash if lenders feel that the company isn't delevered enough).
"Or could farm downs in Guyana Suriname be sufficient?"
I posted a while back regarding RBL and what the likely shortfall in liquidity is. Farmdowns in Guyana/Suriname will probably give Tullow maybe 6 months (if oil price/production doesn't improve).
"What does new CEO have in mind for CMD?"
Improve production, continuous improvement, increase value, attract investors at a best guess!
Tony,
"A normal influenza year has a mortality rate of 0.09- to 0.12% and a heavy year would match the levels they might get Covid-19 down to."
This kind of shows how powerful media is in hyping and making issues bigger than they actually are..
Obviously COVID19 has to be taken seriously, but where is the cut off point? Are you willing to risk your future (i.e. your job, your house, etc.) because of a virus that has similar mortality rate of flu?
"The good news is that we may have a proven therapeutic defence for early 2021. Getting a vaccine would then be a cherry on top."
Will be interesting what Trump has got up his sleeves just before the election. He has been tweeting for some time now that vaccines will be available sooner than expected.
Heck, isn't there already vaccines available? I think Russia already has an approved COVID19 vaccine?
JUST IMO.
Thanks Slift. Really appreciated..
bransonbull,
Regarding your question about the CEO and the CMD, it all comes down to future strategy I suppose.
My interpretation (IN MY OWN OPINION and JUST MY THOUGHTS) of the future strategy from the Interim Presentation: Tullow will focus on producing assets and exploration portfolio that have highest potential, and then develop them to increase their value.
IMO, this is crucial for Tullow to develop and "grow". Here's why:
Ghana
1. Rahul talks about recovery of oil in TEN and Jubilee. i.e. tapping into STOIIP (oil initially in place) which was previously deemed non-recoverable due to economics.
These findings and ideas to tap into the STOIIP has probably come from the last competent persons report from YE19 (which determined the reserves/resources of Tullow's assets).
Increasing Tullow's current 2C resources through this method obviously adds "material" value to the assets. Furthermore, turning these 2C resources into reserves through drilling wells and producing from these "harder to recover oil" further increases the value of the Ghana assets due to increased cashflow.
One setback here is that these "harder to recover oil" resources/reserves Tullow are looking to tap into from STOIIP will be at a higher production cost to current reserves (Remember, Ghana OPEX atm is $9/barrel). However, as Rahul mentions - since the infrastructure is already there, it will still be economical. Also, from a balance sheet perspective it will still add material value to the assets.
2. Drilling further wells in Jubilee South East in 2021 will convert current 2C resources into 2P reserves. Tullow owns 35.48% of Jubilee SE, this will add material value to the assets on a balance sheet perspective. Furthermore, any new wells will add to production and provide cashflow. (Phase 1 of Jubilee SE and Ntomme-9 (from TEN) added material value to Ghana assets, this has pretty much offset depreciation costs to assets for H1)
3. Completing and drilling further wells in TEN in 2021 will again add material value as Tullow owns 47.18% of TEN. Depending on forecasted production of Ntomme-9 well, further resources --> reserves allocation here.
All the above could be done whilst being able to take advantage of higher oil prices (and recovering impairments). And so, the negative net assets can quickly be turned positive and increased.
Also, IMO there is an investment case for this as reserves/resources could be increased and hence production. Also be able to borrow more from RBL if reserves increased. Basically, growth potential is high.
Kenya
I don't know what Tullow's strategy for Kenya is, but if they are really able to make Kenya more valuable, Tullow might end up keeping Kenya or reduce their stake for sale.
ALL JUST MY INTEPRETATION. Wait until CMD.
Hi Slift
Both influenza and Covid-19 are serious diseases for the elderly. Covid-19 does cause long Covid symptoms in some young patients which do not lead to mortality but carry morbidity. These arise from an over-stimulation of their immune system. Hopefully this group may be protected by a vaccine at some point. I do think it worth while to collect blood samples from those with long Covid and find where common biomarkers if any exist. At this very moment in time the treatment in hospitals has started to reduce mortality rates but we are still a long way from that 0.12-0.19 mortality range. Shutting down the economy is based upon a seven fold rate higher as of April this year.
The Russian vaccine has come into question regarding the earlier science and has so far not satisfied buyers probably relating to its efficacy. So it basically may need more evidence. I would not expect a vaccine being available in 2020.
Tony
Thanks again, I've watched half of the results presentation and was impressed by the new CEO. Right experience and confident. Will watch the other half soon.
ATB Slift!
Tony,
Immune systems do become weaker as people get older, so it's not surprising that COVID (or any other virus related illness) would be deadly on the elderly.
I wonder if economy would be shut down if influenza's mortality rate was seven fold higher one year?
Still think overreaction by government and professional "experts".
As with everything, prevention is always better than cure.. It's too late to prevent. It will likely come back with new strains again and again. Always the case when the population is large and when the virus is contagious. Although there will be some immunity I guess provided by vaccines/immune systems.
I think we may see a vaccine approved this year. But one may not be available to everyone until maybe late 2021.. I certainly will not be having a vaccine :')
Slift
Slift
The Guardian and 4 scientific papers have discovered the genetics on why folks get very ill with Covid and others not affected .Check out Synairgen board night.