Member Info for AA2020

@ Tony, exactly, so post-ramp up and on a full year basis, at $100 oil thats actually $59m net to Tullow (e.g. for 2027 production, received 2028). Of course won’t stay at plateau forever and oil likely to go below $100, but c. $50m per annum for a good few years is highly probable.

That is a very nice update indeed.

Anyone know if the Uganda contingent income trigger has any dependency on timing of first oil? Like if first oil slips beyond X date, the contingent consideration steps down a notch? The only trigger I’ve got in my notes is the oil price band (2.50% of revenues if Brent is above $70/bbl). First oil expected this summer, first contingent income payment received by Tullow expected in 2027. This is most likely going to be c. $50m annual income stream at “new world” elevated oil prices. That’s worth at least $250m added on to any EV calculation by a bidder.

Re: EV/2P multiple, a previous poster was comparing to some comps on recent deals where it was low single digits. Note the latest reserves report values Jubilee at north of $17/bbl, albeit at an (overly optimistic) NPV10.

FCF breakeven is basically just under $70/bbl. I’m assuming they sell at Dated Brent and will average probably a little over $100 for the year, as I think flows through SOH is basically screwed for most of this year. 16m barrels produced for the year, ENQ more or less clears nearly all the net debt in 2026.

I’m surprised this didn’t have a bigger drop today. IIRC, previous flare ups between Israel/Iran saw a sharper fall in GMS share price.

Hi 4C, indeed it seems there’s some strong resistance around 24p. That will pass in time. Such impressive fundamental value here. What’s interesting also is whenever Iran tensions flare up, GMS sells off. I’m anticipating the gloves to come off between Iran-US very soon, at which point would like to top up and add some more here.

If I were Meren I’d have ruled it out a year ago as well. Oil price back then was expected to be dire - the start of the supply glut narrative. Results of 4D and the OBN not yet available, so the geological picture was still unclear. License extension, tax issues, and unpaid gas all then (and somewhat now) an issue. And of course why not wait until closer to May deadline when TLW is more desperate and can extract better terms. Just saying circumstances and situations evolve. It could very much still be a scenario the companies are looking at.

And of course they were previous partners in Kenya. Now with Kenya progressing and unlocked, a tie-up with Meren’s deep pockets/brazilian bank behind them could enable the combined company to execute on those back-in rights TLW has on the project. I mean those back-in rights are worthless to TLW without some sort of inorganic M&A deal which transforms its balance sheet (just a refinancing wouldn’t cut it). And there’s Venus/Namibia later this decade, albeit smaller now given the Total transactions which cut them down.

I do wonder if a tie up with Meren Energy (formerly Africa Oil Corp) could be on the cards. Their CEO left the other week somewhat abruptly, COO is taking role for time being. They were supposedly in talks with TLW last year. They have a big Brazilian bank behind them as a core shareholder who could be part of the debt solution. Both sides looking to grow and are somewhat stuck. TLW has the people and team, Meren more of a shell holding co. It does sort of make sense on paper and could be a win-win.

Smells like something might be stirring?

This government basically already has equity in our Kraken. Just in another name. It’s called EPL. :-)

Would be interesting if the next escalatory step by Trump against UK/Europe would be a halt in energy exports. He might also frame the move as keeping said energy at home inside the US to help drive down domestic prices. Could force a re-examination of UK energy policies/North Sea. Ahh…one can hope.

Https://www.timesofisrael.com/liveblog_entry/report-argentina-halts-jerusalem-embassy-move-over-falklands-drilling-dispute/

Hopefully this is just noise and contrived protestations on the part of Argentina.

Well, they are targeting $200m EBITDA by I think the end of the decade. Assuming they get there, that should be an EV of $1.0-$1.2bn based on a 5-6x multiple. Make your own assumptions about future debt (i.e. do they need to issue debt to grow fleet or acquire vessels to get to 200m EBITDA), but do the maths and that could equate to north of 80p per share in very early 2030s.

No reference to “transformational” acquisitions or growth then….

Steveo, ah, got it re: the tax, thanks.

Re: pre-emption, there is still change of control at the TopCo / ultimate parent company. If that’s why pre-emption is not applicable, then everyone would acquire in that fashion to get around it. I’m convinced it still applies, unless either waived by ENQ or the JV agreement didn’t have it written in.

Still triggers a change of control though, so doesn’t matter, unless the shareholders agreement is horribly written

There is no mention in the RNS of preemption rights on Kraken. ENQ would surely have preemption rights to acquire on the same terms as HBR. Even if ENQ waived these, I would have expected this to be stated by HBR in the RNS. And why would ENQ waive, if not part of a bigger plan. Worth a question to HBR IR. We may yet be surprised.

Steveo, “ but will not have to pay core UK tax for close to field life. ”….but only after 5 years, no? HBR have no more tax losses themselves, so can’t use any against the acquired production. Of course they can use acquired Waldorf losses against acquired Waldorf production, but thats the case already with Waldorf or anyone else who would have acquired them. What am I missing? No tax benefits for 5 years, right?

-The deal is very weird and surprising. I thought HBR wanted to exit the UK NS.

-Re: a target on ENQ’s back, anything hostile is difficult. Amjad’s stake could block it. You need Amjad on board for any deal

-I wonder if HBR acquiring Waldorf is somehow more tax efficient in any future HBR-ENQ tie-up than ENQ acquiring Waldorf????? Hence why being done in this order?

-Nothing announced today stops a scenario of HBR and ENQ merging their NS assets into the same pot and each having a % stake in NewCo

- Or, ENQ acquires all of HBR UK assets, funded partly with shares, and HBR ends up with chunky stake in new ENQ? Would need BASF approval. Amjad’s % ownership would get diluted. HBR would loose some control. HBR would be riding along in NS via an equity stake in another listed group. Not sure if that sort of structure is consistent with HBR’s strategy.

-Or, it’s the other way around. ENQ bails out of NS, selling its assets to HBR in a clean break. ENQ uses the cash proceeds and new debt facilities to build out SEA. Hard to see that though, NS is embedded in ENQ’s DNA.

-bullet point 4 above, merging the NS assets and ENQ and HBR having stakes in NewCo seems most likely option and structure. Assuming obviously there is anything to happen between the two. The other scenario is there just isn’t anything to happen between the two, ENQ has missed out, not much left, and they need to navigate all alone, surviving as-is in UK and building out SEA organically long term