Member Info for Akhtar234

Slift great analysis, double checked your maths and agree based on an average $60 dollar oil price on an annual basis, on a simplified approach.

Assume 80kbpd ($60 oil price, $12 Opex costs) = $1.4bn for the year
Subtract
Capex = ($0.3bn)
G&A = ($0.1bn)
Finance costs = ($0.2bn)
Decom = ($0.1bn)
FCF = $0.7bn

Problem is What is the impact on production? do they need to invest more for declining wells, I have not read too much into the work in Ghana but think there is a problem.

Longish i think the happy medium is $70, $80 sustained for a long time will bring the supply issue around again, i dont think anyone wants that, you can get spikes, and think one is coming as too much has come off the table, but we do not know how strong demand will be and if the green revolution is being accelerated. I am not saying oil is going away but demand growth may slow.

Tullow were unlucky that TEN did not come online a bit earlier and they enjoyed the high oil price, really think this is a great company, CEO makes no difference to me, he may bring in discipline and you wont see stupid dividend reinstatement. But I am hoping i am wrong and with his background can bring his relationships to the table to help Kenya move on.

Uganda as we acknowledged was sold cheaply but the companies hand was forced.

If they can replicate successes elsewhere in terms of oil find and restore the balance sheet and fast track projects, this price will be a lot higher in years to come.

https://www.argusmedia.com/en/news/2117990-tullow-calls-on-kenya-to-offer-greater-tax-certainty

Upper range will surprise market and be seen as a positive, as I have said previously this company has found some amazing oil finds and was caught out developing Ten recently in the 2016 crash and now covid if oil can stick to 60 to 70 range long term this company will do well.

Dont think you can Canary. most of the licences often are for a period and if you are not seen to be progressing they could impact renewals.

I think Tullow have been asked to accelerate deleverage here, delaying it would be crazy unless the banks are willing to underwrite the debt by this asset.

But it has taken ages to get to FID, should have happened already.

My opinion and hard to say, I think Total may have forced Uganda to have impacted the farmdown, it took far too long for a process and if this sells quickly, i think that would confirm that.

I think the sale of Uganda is proof that they have modelled scenarios and hence are reducing net debt to help with covenants.

Also with other companies and the state of the economies worldwide most banks will want to work with companies as they dont want to have bad debt write offs that will impact their own capital ratios.

Yes a farmdown is better, it reduces your upside but also how much you have to invest.

Tullow has a lot of debt and a low oil price environment would want to avoid adding more. Oil price wont stay around like this for long, will be higher as a price needs to be achieved to encourage investment which has been taken off.
When the oil price recovers hard to predict as air travel has been impacted and a second wave possibly happening.

Thanks Slift, you have misread the gain is $2.5bn, value is $4.4bn, as per below.
Also price is often valued at average forward price not a current price.

Value of sale

Although Mr Adam said the ministry could not tell the value of the transaction, two sources at the Ministry of Finance and the Ghana Revenue Authority (GRA), who asked not to be named, told the Daily Graphic that an estimate showed that the gains accruing from Anadarko’s operations in the Jubilee Field and the TEN project prior to the sale amounted to $4.4 billion.

Yes there is, but you offset with losses and you do not know how much the gain is?

Doubt early investment monies have been recovered, if they had Tullow wouldnt have $2.8bn net debt still

scaredy I would not expect a complete sale of Kenya, a farmdown could happen.

Yep Tornado but sale price was assumed as $4.4bn in the article, also Tullow being the lead operator does not carry all the costs, it is shared across all equity owners (Except governments)

So you would agree Ten and Jubilee you are probably looking at $6-7bn here then at least.

Tullow wont go bust, if the banks are supportive, they were deleveraging before but had a mountain to climb.

Who? not me?

I am making the point to him and asking for clarity if I misread his post, hence why i shared the percentages.

Thanks Tornado, i have not seen this article before thanks for sharing.

I dont agree with your analysis of the sale price if Andarko received $4.4bn for respective share of the following fields.

Ten - 17% (Tullow 47.8%)
Jubilee - 24.8% (Tullow 35.48%)

Would Tullow receive $3.6bn for a smaller share? also unlikely they would sell to Total as they would be a majority owner, most likely the chinese in Kenya and Uganda with the syndicate would buy.

Hey Jmax, was in this for a while and then sold out over a year ago have been trading this and Premier recently, think these times are good for trading.

There is a lot of pessimism around at the moment, I thought years ago Tullow could get taken over by Total or the chinese, still think they may. Surprised Total ended up just buying Uganda, they could have bought close to 100kbpd business with lots of reserves in Uganda and Kenya to bulk up what they already own.

I am interested to see where the rest of the $1bn is coming from as they stated that they are looking at rest of portfolio? could they cut there share of Kenya also?

It is hard to value the business, as oil is at the bottom of the cycle, yes Tullow debt hasn't helped and with the low oil price is forced to selling the family silver, Uganda would have commanded a higher valuation but the dog mire or the previous deal that didn't happen have forced its hand.

The previous CEO was nuts to have reinstated a dividend, good riddance he has left. You are forgetting that there are contingent after oil income potentially also and if a pipeline can be created that helps to transfer oil from Kenya, not sure as the previous route chosen avoided this, would help with the Kenya case.

Tullow has a lot of oil in Ghana and rights for more acreage and neighbouring Ivory coast. This share a few months ago was £2+ and in fairness this should be higher.

Breakeven is $35 and if oil can get back to $50 that will help Tullow a lot. I have always said Tullow would be a takeover candidate and still think it is, the company can always say it is difficult but it is nonsense.

Hi
I used to be invested in Soco and this has underperformed , i sold at a loss but not at these levels luckily and have bought in recently and traded back to a gain. if you looked at the share price it is cheap, need to understand why?

1) Doesnt produce much oil compared to others so rise in oil wont materially improve the business as compared to Tullow or PMO but it does help its profitability
2) TLW and PMO have a lot of debt compared to Pharos but they have a lot of assets that can be sold off which they are in the middle of.
3) Egypt deal here is not as great as management make out, but it gives it a second base to diversify a one trick pony which was Vietnam, but Vietnam has served the company well.
4) They keep living in the past and talk about $500m given back to shareholders, yes they may have compared to recent performance and shareholder destruction I would stop bragging about.

This will catch up but it is hard to judge when it will jump and what that means, if they find more oil in Egypt it will help for sure.

I agree, PMO is growing and did brilliantly after 2016. The oil price needs to settle down, but acquisitions will pay off.

The US begged Opec + to intervene and they have alongside the group outside. Shale being able to trade at $40 is a joke, they dont make money, they havent been profitable, they have been allowed to stay afloat from higher oil price, low debt costs and private equity. Most of the sweet spots drilling land has already been drilled, easy to switch back on those that were closed, but drilling new wells not so easy.

You seen the lay offs by the fracking crews?

How much investment has been taken off that will cause an oil spike in the next few years?

None of the brokers are ever right, they have positions and are protecting themselves.

Economy restart has helped and is quicker than most expected. Oil will retrace and PMO as previously will go down a little. but trend is higher if oil stays at these levels or move higher. Oil hitting $50 is the target, but will be harder to crack at the moment, until demand numbers warrant it.

A lot of supply coming off has helped.

Hi All,

Havent posted in a while and a lot of people speculating on impact of ARCM shares?

Positives,
1) Have brought our biggest/or one of our biggest shorted investors to be fully on board.
2) they have bought some equity to help fund the deal, which is a positive and they would be crazy to short again.

The cash upfront of the deal has helped and getting an asset that will be creative don't look at this as PMO pre acq.
Sometimes a rights issue help strengthen a company look at OTB.
Oil in high 30's low 40's now helps the case, PMO breakeven was $32 this year.

This will be up and down, but long term this will go up if oil rises back to levels that help deleverage.

Well the recapitalisation pretty much went into the construction business, and the margins are so poor i doubt they are making any money on it at all. The business is better off re routing working capital on those areas that generate a higher return. The company is susceptible to big losses on contracts poorly delivered or financially structured badly.

I do not get your last point if there is no money to be made (and i suspect they are losing money on construction) why pursue, coming out of contracts will be tricky and legal implications i suspect, might be easier for those that have not started yet, but in progress, they may have to finish.

It is beggars belief the directors were allowed to take such big salaries last year on poor performance, yes the business is profitable but you are rewarded significantly for keeping a tight ship and growing profitability, which they have not done, to receive c50% increase in remuneration is outrageous.