Member Info for Flavius

Today's 20 M share volumes look impressive, but at the end of the day it is equivalent to just 3.5 MM GBP. Unfortunately this share is manipulated with ...peanuts, literally. The negative news-flow (3 bad news in a few hours, and all of them just ...bull*hite) allowed the usual ones to upturn the applecart and find a way out of the ditch. It goes without saying, only material achievements (read: debt re-financing, positive outcomes from drilling campaign and 4D seismic ...) can put an end to this crapshow.

Everything is really fishy here. Announcing a "collapsing deal" where nobody even ever heard about such a "deal" is a no-news in itself and it cannot be otherwise explained as a mere market manipulation. The "news" was based on undefined "sources" and still by this morning no press agency has been able to verify such "news". For example, "Reuters was not able to independently confirm the news; TLW did not immediately respond to a request for comment".

In the absence of an RNS by TLW or Meren, one can only guess that a deal is actually still under discussion, and the "news" is just part of the ongoing negotiation aiming at lowering the SP to facilitate the take-over.

The umpteenth think-tank whose opinion counts zero.

Just part of the negative news-flow started as shorters went underwater.

Never heard in my life of a potential merger announced just seconds after "collapsing". Bleeding shorters are fabricating narratives to find a way out.

...the market is missing that Brevarthan is short.

What these shorter's gentlemen do not understand is that flooding the reader with sophisticated analyses and micromanagement considerations is totally useless in the current environment. Should Iran suffer an irretrievable damage to its producing and exporting facilities (highly likely, considering Israel's stance), the production loss would be non-recoverable in the short term. We should then expect high OP for quite some time as the spare capacity of OPEC producers is much less than what they declare (as it is evident from the extremely sluggish production increase in spite of their "big announcements".

In this scenario, TLW position would be much, much stronger than what the shorters' numbers tell. Add the imminent refinancing (under more favorable conditions, considering the energy environment and falling rates) and here they are: scre*ed up. Happy for them, happy for myself.

I stopped reading here: "The author has a short position in the companies mentioned below".

They must be bleeding. Their bleeding is our joy.

A scenario is unfolding where good news for TLW could pile up quickly and let shorts go bust. We cannot actually rule out that the Iranian crisis spirals out of control with OP skyrocketing in the triple digits. In the meantime TLW could reach an agreement for refinancing of debt. The (not so unlikely) timely combination of such events could easily bring the SP in the 30s. Interesting times.

Shorts decreased from 2,28% to 2,12% in the last two trading days...

Volumes increasing, smells like something big is brewing in the kitchen. Overall it looks like a rotation is ongoing on the markets, with oil & gas sector increasingly in the spotlight in spite of OP still depressed. My personal hope is that a takeover offer is popping up soon, for a SP significantly higher than the current. More realistically, in a more favorable scenario for O&G shares, short covering is gaining steam.

Some (the usual ones) might say it's just lipstick on a pig. But I'd rather think the frog is turning into a prince. Finally.

Don't honestly know how much of this movement is due to short covering, but it actually smells like... Volumes are not especially high in fact, which suggests that someone is buying small chunks, relentlessly. Whether this is due to insiders building up positions or shorters silently exiting, who knows... Overall the good news is that in spite of an OP stll extremely low, this keeps going up nice and smooth.

I've just added some more 40,000. In my opinion all the recent rns point to the same direction: debt decrease and rationalization of the portfolio. IMHO the driver behind these actions could very well be a merging or a takeover by a bigger fish. Should this be the case, there is significant potential for an upside of the SP. Worth an opportunistic buy.

There's obviously two big issues here. One is debt, and the other is the OP. Unfortunately they're interrelated: the lower the OP the more expensive is debt refinancing. TLW management did very well by selling marginally profitable assets (read: gabon) while retaining the most valuable one (Jubilee, with a break-even price around 35 USD if I'm not mistaken). The 65$ /bbl was indicated as minimum OP for cash flow guidance, it's not a break-even price for the assets themselves. Moreover, the 60$ hedging offers a decent floor in case of further OP drop.

In the short term there's no point in expecting a change in the current downward trend of OP, unless someone in Israel decides to dramatically escalate with Iran (unlikely). Refinancing of debt would definitely provide some opportunity for a SP spike up, but in the absence of a dramatic change in the OP scenario I fear we will just keep floating in the current trading range.

Vintage TLW: as soon as it spikes up, in a few hours an assist is provided by a rating agency to depress the SP and throw a lifeline to shorters in trouble. Unfortunately this will always be an easy target as long as the 2026 note is remaining there, unaddressed.

All in all, the back-in right allows TLW to enjoy the profits of the initiative only once the investors have recovered their investment capital through "cost oil" revenues. TLW would step in enjoying the profits when the Project enters "profit-oil" mode. It's a very wise approach as it allows TLW to enjoy potential rich profits without supporting the financial burden of the associated CAPEX. This means that the agreement between TLW, Kenya and Gulf underpins a much bigger potential profit than the 120 million $ announced, potentially in the more-than-one-billion order of magnitude. It will take years, true, but that income is potentially already in the balance sheet of years to come.

Umpteenth copy and paste on the subject:

"In the oil and gas industry, the term “Back-In Right” holds significant importance. It is a contractual arrangement that allows the original owner of an oil and gas lease (assignor) to regain a portion of the working interest in the lease, once the new owner (assignee) has recovered specified costs from production. This article aims to explore the facets of Back-In Rights, their implications in lease agreements, and their strategic importance in the oil and gas sector.

What are Back-In Rights?

Back-In Rights are a type of reversionary interest in an oil and gas lease. This right is typically reserved by the assignor during the assignment of a lease to another party. The essence of a Back-In Right is that it becomes effective after the assignee recovers their investment and specified costs from the production of the leased property. This arrangement ensures that the original owner retains a stake in the potentially lucrative venture of oil and gas production"

Unfortunately the OP action is just terrible. The US wants a cheap oil and is blackmailing Saudis & co. In the meantime Kazakhstan is acting as a US-led OPEC-sabotaging actor (not by chance, Tengiz field expansion is led by Chevron). OPEC is reacting with (legitimate) fury at Kazakhstan saboteurs by letting the OP collapse, and hit accordingly also shale production. This is a perfect storm and the current TLW SP is reflecting this disastrous environment. Much more than TLW-specific strengths and weaknesses we've been talking about for the last...several years. Just to put things in their most appropriate context, current OP is in line with the COVID mayhem period, and this is more telling than anything else.

In a day of record-low volumes unsurprisingly shorters got the upper hand. Rather than shorters, we had better talk about algos: in fact, as usual, when John Wood tanks also other small caps in the energy sector of LSE tank as well, sold by algos. Today it was no exception: TLW and ENQ closed red when 99% of oil companies worldwide are shiny green.

Personally I did not miss the chance to top-up. I had previously 60,000 of my shares about one week ago under the assumption that a scenario was developing potentially bringing the SP down to 7-8 with re-test the historical lows by COVID time. But then the Kenya agreement came and in spite of some understandable disappointment, the fact remains that thanks to that agreement debt has been further reduced by 10%, and Kenya remains an asset potentially bringing significant FCF in some years from now.

Add that the overall stocks scenario (read: tariffs) is actually turning into a typical American (clown-)show: every time the stocks go red, here it is a "statement" from someone in the US Administration "we are dealing with.." "there's improvements", "here you get a discount" and accordingly everything turns green. I've already seen this movie before: it stinks of blatant market manipulation, but to the upside (comically, EXXON is just 10% shy of the SP ahead of the "end-of-the-world" tariff mayhem).

All in all, I can see only space for SP growth from now on. Sooner or later news will come about 4D exploration outcomes, debt-refinancing, future infilling campaigns, and possibly even about a takeover (linen is clearly cleaner now, after Kenya and Gabon settlements).

Accordingly I bought back the 60,000 pieces I sold one week ago. Feels better to be in rather than out. Hope to be proved right by the market.

All in all, a good agreement. TLW does not currently have the resources to invest in the development of the Project, at least as of now, and accordingly back-in rights are definitely the best way forward as TLW will not have to participate in the (arguably massive) development CAPEX expenditures, but will just step-in once the project is completed and relevant costs reimbursed to the investors. At that stage, TLW will have the opportunity to step back in, participating in OPEX and (maybe) additional CAPEX (e.g. infilling campaigns, additional exploration campaigns whatsoever), and gaining access to relevant "profit-oil" revenues.

Of course this will not happen before 5-7 years considering the time needed for developing such a project and the time needed to extract the "cost oil". But overall, Kenya has now become a real asset rather than a potential liability and this for sure is one more piece of the puzzle supporting a refinancing of debt at decent conditions.

What we need now is a higher OP, as under the current scenario the company is in "survival mode" and it's obviously extremely complicated to produce the FCF necessary to repay the debt and proceed with new investments.

Just wonder why the market reaction is so... unimpressed let's say... The SP did not move much... I would have expected a different reaction honestly...

Dear Anton, that "subject to market conditions" doesn't bode too well for us LTH. Too many uncertainties here: production, refinancing, reserves (read 4D seismic), actual receipt of proceeds from Gabon, delayed payments from Ghana, Kenya FDP... It's actually very stressing this feeling that nothing is firm and consolidated at this stage. Holding this share at this point in time is just some kind of gambling. Plenty of potential upside ahead, but the same plenty of uncertainties. Hopefully in a couple of months there will be more clarity about many of these subjects.