Also just noticed......Lapsett have put out 4 tenders. Not sure I'm reading too much into it, however I'm wondering if these are the consultants Rahul referenced in the H1 results presentation. Timelines seem to fit as tenders close 22nd Sept and deadlines for the outputs appear to be before March 2024.
https://www.lapsset.go.ke/index.php/tenders/
INDIVIDUAL CONSULTANCY SERVICES UNDER TRANSACTION ADVISORY SERVICES AND RELATED TECHNICAL ASSISTANCE ON THE LAPSSET CORRIDOR PROJECT- LAMU PORT DEVELOPMENT
null
1. Individual Consultancy Services for a Demand and Comparative Analysis study for the Port of Lamu and Lamu Special Economic Zone.
null
2. Individual Consultancy Services for the Port of Lamu and Lamu Special Economic Zone Marketing Strategy.
null
3. Individual Consultancy Services for development of a Communication Strategy for the Port of Lamu and Lamu Special Economic Zone.
null
4. Individual Consultancy Services for the development of an Infrastructure Components Sequencing Plan and Utility Requirements Study.
Interesting reading....
https://www.gem.wiki/Lamu_Port-South_Sudan_(LAPSSET)_Pipeline#LAPSSET_Corridor_Program
Pipeline is o the Lapsett website.....
https://www.lapsset.go.ke/index.php/projects/crude-oil-pipeline/
And was mentioned again today as part of Kenya Vision 2030 on Twitter (see bottom of the post in the link below)
https://twitter.com/KenyaVision2030/status/1704225935686287587?t=fEWMaIVEtO3sEJF6waVXJQ&s=19
Made headlines again today....
https://twitter.com/standard_ngr/status/1704072381566771418?t=yJi9a7QJ1g24HxNTth1m1A&s=19
They really can't leave that oil in the ground now....surely???
You do need to remember that it's an average for the year and some of the oil is hedged with a ceiling of $70 something ..... so we can't get too carried away. Also, I'd prefer we smash the guidance than fall short, as if we fall short we know what happens. We dropped 10% on H1 results just by narrowing the guidance down even though it was still within the original range.
How do you tell your people you're leaving billions of oil in the ground when the price of fuel is skyrocketing????
https://www.pd.co.ke/news/cabinet-shuffle-writing-is-on-the-wall-201916/
https://www.youtube.com/watch?v=PTe7sBSG3SE
https://ntvkenya.co.ke/news/dp-rigathi-gachagua-dismisses-ndii-kuria-remarks/
https://kiss100.co.ke/exclusives/2023-09-17-khalwale-to-ruto-sack-kuria-and-chirchir/
Some on here have said institutions short the share and go long on the bonds. So what happens when/if the bonds get to around par ..... do they close their short positions, only do that when the bonds are repaid or just repeat the process with the new bonds issued?
"If TLW wants to get oil out of the ground, its going to have to pay the Kenyan government to do it. TLW has no leverage."
NOC of Kenyan own a 20% stake. Tick
"Of course they're going to say that. You'd trash your stock price if you said "No one's interested in this field. We're left on our own!"
You do know that if the Board say they have interest parties and it was found that the situation was the opposite and they knew no one was interest that they'd all go to jail right? Even you must know that lying on your financial statements is a no no.
The share price is taking a hammering today being down over 12% at one point and we've seen a few of the usual suspects pop up. However, to me it seems that despite all this and given the size of the drop there hasn't been a lot of doom peddling, fear mongering or gloating. I suspect this is because even the doom mongers now know this is set to go back up and are taking long positions. This could well be the last hurrah for the shorters. Let's face it, 2023 is a year of two very different halves for Tullow and H2 will be a whole different kettle of fish to H1. As will 2024 and 2025.
However, the Group has identified the following uncertainties in respect to the Group's ability to realise the estimated VIU; receiving and subsequently finalising an acceptable offer from a strategic partner and securing governmental approvals relating thereto, obtaining financing for the project and government deliverables. These items require satisfactory resolution before the Group can take a Final Investment Decision (FID). The Group continues to progress with the farm down process.
Due to the binary nature of these uncertainties the Group was unable to either adjust the cash flows or discount rate appropriately. It has therefore used its judgement and assessed a probability of achieving FID and therefore the recognition of commercial reserves. This probability was applied to the VIU to determine a risk adjusted VIU and compared against the net book value of the asset. Certain risks have increased since 31 December 2022, predominantly around farm down and project financing. This has been partially offset by an increased equity interest in the project.
Based on this, the NPV has been revised to $246.7 million and an impairment of $9.1 million has been recognized as at 30 June 2023.
Should the uncertainties around the project be resolved, there will be a reversal of a previously recorded impairment. However, if the uncertainties are not resolved there will be an additional impairment of $246.7 million. A reduction or increase in the two-year forward curve of $5/bbl, based on the approximate range of annualized average oil price over recent history, and a reduction or increase in the medium and long-term price assumptions of $5/bbl, based on the range of annualized average historical prices, are considered to be reasonably possible changes for the purposes of sensitivity analysis. Decreases to oil prices specified above would increase the impairment charge by $31.6 million, whilst increases to oil prices specified above would result in a credit to the impairment charge of $37.0 million. A 1% change in the pre-tax discount rate would result in an additional impairment charge of $34.7 million. The Group believes a 1% change in the pre-tax discount rate to be a reasonable possibility based on historical analysis of the Group's and a peer group of companies' impairments.
Kenya
Following the withdrawal of its minority partners from Project Oil Kenya in the first half of 2023, Tullow is now the sole partner in the project (refer to Note 11 for more detail). This has created a more flexible proposition for a strategic partnership and discussions continue with several interested parties. The Kenyan energy regulator (EPRA) has recently engaged third party consultants to assist with the review of the Field Development Plan (FDP) and Tullow continues to work with the Government of Kenya and EPRA on the approval of the FDP.
11. Intangible exploration and evaluation assets continued
Since 1 January 2022, there have been ongoing discussions with the Government of Kenya (GoK) on approval of the Field Development Plan (FDP) submitted on 10 December 2021 and securing government deliverables. An updated FDP was submitted on 3 March 2023 and is being reviewed by the GoK before ratification by the Kenyan Parliament. Energy and Petroleum Regulatory Authority (EPRA), the regulator, has recently engaged third party consultants to review the revised FDP and extended the review period to Q1 2024. The Group expects a production licence to be granted once Government due process has been completed.
On 22 May 2023, Africa Oil Corporation (AOC) and Total Energies (TE) gave notice of their respective withdrawal from the Blocks 10BA, 10BB and 13T Production Sharing Contracts (PSCs) and the Joint Operating Agreements (JOAs), effective 30 June 2023, quoting differing internal strategic objectives as reasons. The withdrawal is ultimately subject to the GoK's consent, at which stage the transaction will be considered completed and Tullow will have full rights and liabilities under the JOA. Per the terms of the agreement, until such approval, the participating interest will remain in trust for the sole and exclusive benefit of Tullow, who is the only remaining joint venture partner.
In Management's view, in light of public statements and announcements made by AOC and TE to this effect, and in accordance with the terms of the Joint Operating Agreement, it is considered that the ownership of the 50% held by AOC and TE was passed on 30 June 2023, resulting in Tullow holding 100%. From that date, Tullow has the right to benefit from the participating interest and is liable for all costs incurred going forward. As the sole party, Tullow can control and direct the use of the asset from 30 June 2023. Tullow accounted for this as asset acquisition at nil cost.
The withdrawal of the partners is considered to be an impairment trigger, and in line with its accounting policy the Group has performed a VIU assessment. The cash flows were discounted using a pre-tax nominal discount rate of 20%. Oil price assumptions are detailed in Note 12. This resulted in an NPV significantly in excess of the book value of $255.8 million.
The chart looks impressive and I think charts tend to be self fulfilling prophecies, as so many people trade on charts. However, one thing here that I think is different is that there has been a step change in production in Jubilee and the new interim Ghana gas agreement. I don't believe any of that is in the charts, as charts use historical data. Then you also have to remember that the Kenyan parliamentary recess ends at the end of this week. So where we go from here remains to be seen. Perhaps we'll go back sub 30p, however I have my doubts as the oil price is strong and the company isn't in distress. In fact the only negative at the moment is the share price ..... and before anyone bangs on about the debt .... if we could refinance in 2020 we can almost certainly refinance now.