RE: Relax5 Oct 2023 09:43
Rahul said we were at an inflection point and I think we certainly are in terms of the share price. It has taken a bit of a battering down from 39p to 30p after the HY results. However, we're still toughly 50% up on the 52 Week Low of 21.84p. Will we go back to the 20's ... possibly. So the gamble is do you top up at 30p or try get in later in the hope of getting in sub 30p. I however think we've dropped on sentiment due to those gambling on Kenya running out of patience and exiting. The MM's like to wear you down and take your money.
So what happens now ..... we know despite what is reflected in the share price Tullow is in a good position and currently producing 65k bopd and 7k bopde of gas sales. We also know that there is a much better hedging strategy in place to benefit from the upside of the oil price and that oil is still well over $80. This will eventually be seen in black and white in the 2023 HY2 results and 2024 forecasts and will get to the point where it can no longer be ignored. Also, it is still a remote possibility that we may get a positive outcome on Kenya at some point and we'll almost certain at a minimum get another interim Ghana gas sales agreement. Plus we have 2 more wells due online in Ghana this year.
On the flip side we have the Ghana tax dispute hanging over us, however looks like we won't see an outcome on that for at least 18 months. at which point we'd probably have the $300m odd to pay it if it went against us. Then there is the debt, which we've been assured is no longer an issue. What reason do we have to believe different, besides interest rates are higher. We have less debt to refinance than in 2020 and then it wasn't an issue, even though people thought oil was going to be worthless. So perhaps we may end up with an eye watering interest rate, however nothing we couldn't live with. If you're going to lend money to someone you want to squeeze them, but not to the point where you squeeze the life completely out of them.
So that's my take on it for what it's worth. Just me thinking out loud really and what happens remains to be seen, however it's a still a hold from me.
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