Member Info for Flavius

Plenty of selling positions in the 39p area. Chewing them up slowly. It goes without saying that selling in this SP area is an educated guess looking at the graph. But on the other hand, in case of a breakout above 40p it will be very difficult to catch it before it gets to 50 or 60p. Long term vs short term approach, as usual.

Actually this news is about the cost increase incurred by TLW in Kenya due to its holding 100% of the asset, namely withholding taxes and training expenses... I wonder if a possible driver of this SP movement is in the recent takeover proposal for Wood Group? Like Wood also TLW has an excessively low SP which paves the ground for an acquisition... Time will tell.

GILTS 10-year note fell by about 30 pts in the last few trading days. Like it or not, this is one of the key drivers in TLW SP. Hopefully this trend is confirmed and the 10-y note minimum set in January 70 points lower is re-tested. Not by chance, it was at that time that the SP reached 40p. At those very same level of interest rates, and in the current OP scenario, I would expect the SP to easily break the 40p resistance and go for the re-test of the 60p level.

Does anybody know anything about exploration wells planned in 2024? I understand an exploration well is going to be drilled by Perenco in Gabon on Simba prospect (unless the recent explosion has changed the plan, hopefully not) where Tullow has 40% interest. Don't know much about Ivory Coast though. Is there any commitment for exploration wells in 2024 as well?

@Smartbeer generally speaking hedging is meant to provide protection in case of OP collapse, and independent oil companies typically have their hedging strategies in place, and update them over time irrespective of debt exposure, bond issuance etc. Of course it goes without saying that hedging (in theory) helps placing bonds on the market at a "lower" interest rate. But unless a CPY is in very troubled waters and desperately needs a loan from specific entities for survival purposes, hedging remains just a choice and a financial risk mitigating tool, that's it. Overall I agree with Stumpfy that at the end of the day hedging is as risky as any other business decision. One thing is for sure: several hundreds of millions USD have been thrown into the fireplace in the last few years due to an unfortunate hedging strategy, and we're still throwing money into the same fireplace right now. Just look forward to getting rid of this burden in July, hoping the OP will still be high. I won't sell below 50-60 p , but I've been waiting for those 60p for too long.

@Bailiff hedging was key to survive back in 2020. Not really in 2024, with the "debt-is-no-longer-an issue" narrative. I tend to believe that someone in TLW BOD fell into the narrative fuelled by the Biden administration that oil price would collapse "because of non-opec producers", "because of US record production", "because of China" and all the rest of the BS that we've been reading on the media in the last few months. That was just plain BS. US "record production" numbers were just a fake, due to the "adjustment" of calculations by EIA (and recent updates just confirm this). Strategic reserves in the US had been depleted in the meantime, and geopolitical crises flourishing everywhere. How on earth did some strategic management genius decide to extend the hedging to the first 6 months of 2024? On which basis? Yes, 4 years ago it looked like a no-choice. In 2024 definitely not.

Deramping? Not really...I've been in since 2020 and even added up few more shares recently. One thing is clear to me: this company has wasted hundreds of millions in a suicidal hedging strategy in the last few years. This is fact and this is one or the main reasons why TLW is stack at COVID SP levels. For the rest, sorry for your meteorism issues .. Hope your issues will improve together with the SP...

Ahahah good point about our luck. Or maybe in July world economies will crash after the oil spike in April / May and OP will collapse as soon as we're out of this hedging nightmare. Jokes apart what is really making me nervous is the fact that OP is skyrocketing NOW and accordingly we're NOW burning money that would have helped further reduce the debt.

Oil prices skyrocketing towards 100$/bbl and here we are, back again with 40% of production capped at 77.5$ This brilliant hedging strategy is costing the equivalent of almost 10 million $ per month, from now to the end if June. I don't honestly think it's just 'bad luck'. I just think this is very poor management overall.

Slightly more than 1 million shares exchanged today, the equivalent value of a sports car. There's no point in talking share price with this ridiculous volumes. Retailers won't touch this share with a ten-foot pole as the board is doing nothing to support the SP. 28p with oil price above 87$ is saying it all. Hedging and debt costs are eating up most of the revenues produced and there's nothing left for the shareholders, that's it.

Every time oil price goes up here we are back again talking about hedging. Past hedging costs have already eaten up some 750MUSD of profits in the last two years as per the latest update: this makes almost two times as much as the current capitalization, just to give an idea of the bloodbath we have incurred as shareholders. Almost the same amout of money (almost 600 MUSD) was lost in the last two years only as debt financing costs. Currently there's still some 40% of production hedged at 77$ which is again significantly capping the profits (more than 7 MUSD lost per month at the current OP). We're getting out of this nightmare only in three months' time, by the end of June, hoping the oil price will keep increasing in the meantime. We can talk Kenya forever, but the amount of profits burnt due to debt and associated hedging strategies in the last two years is worth more than three times the current capitalization. Sadly.

This makes 5USD more than the 80 USD associated with the projected cash flow of 600 MUSD in the next two years. This is the equivalent of about 10 MUSD more revenues per month... And yet the SP is just... indifferent.

It's really puzzling the way TLW BOD is letting the SP sink without moving a finger. At this SP however much the debt has been reduced, the gearing ratio for TLW remains just insane. And this is one of the parameters affecting the debt rating, thus feeding a vicious cycle: the lower the SP, the higher the interest rates that will be paid by TLW to refinance the expiring notes in 2025 and 2026. It is definitely in the interest of the CEO to increase the share price, unless something is brewing up that retailers like us are not supposed to know. As I said before, 70% of shares are owned by significant shareholders, thus making totally insignificant the role of retail shareholders. The agenda is set by the same financial institutions that own the 70% of the shares. Sooner or later the SP will spike up as they will not lose their money. They're probably just cleaning the table from the rest of retail owners to part the future cake between them. Whatever, I won't give up.

Simple: a buyback plan. 60 MM GBP per year worth. The equivalent of 15% of today's capitalization. This would discourage shorters and attract retail investors. It would be perfectly sustainable considering the projected cash flow and it would not impact the debt reduction plans overall. So simple.

I had a look at the list of significant shareholders for TLW. Something like 70% of the whole capital is held by significant shareholders i.e. financial entities / investment banks and the like. This means that the actual amount of floating shares is extremely low (the ridiculous daily volumes speak for themselves). Even more, this exposes the company to major price swings in case of debt downgrades as some of those big hands might be forced to reduce their exposure to shares with debt issues ore which are dropped out of indexes like FTSE250. Only about 0.25% of the capital is exchanged on a daily basis for this unfortunate share: if any of such 70% big hands is forced for some reason to sell a significant portion of their holdings they will have close very slowly their positions to avoid a major price collapse and lose too much money. This is what is actually happening: on a daily basis "someone" is consistently closing positions depressing the share price accordingly. Let's consider that S&P downgraded in December the 2025 and 2026 notes to "Selective Default" and "Default". However ridiculous this derating might be, the outcomes of such a move cannot but be huge for a share with such a concentrated ownership issue.

Everybody (read almost nobody considering the volumes) was expecting a weak update due to the oil price and this explains much of the recent SP fall. It was in the cards, and the few ones interested in this share (short interest it goes without saying) just let their shorts run easily. The update has come, the quarter is obviously weaker than the previous but the outlook is definitely stronger due to OP, production optimization and lower capex. Sooner or later even algos will have to reflect this.

Clearly TLW SP is a joke considering the OP and the easing debt position. The overall value of this share is much less than the value of its assets. Clearly there is a daily orchestrated pressure on the SP as even with low volumes there is always a small lower ask added. It's death by one million cuts. There is no any "macro" or strategic explanation for what it's happening, this is just an orchestrated movement to the low. Why? Takeover brewing? Delisting? Whatever the "explanation", revenues, income, strategies have nothing to do with what it's happening here.

One of the very few O&G shares in deep red today worldwide probably... But look at the 10-y note (GILTS) today: a bump up in the rates and here you are your -2% served on TLW. Only interest rates are the driver for this share now, total manipulation by algos with no volumes. All other discussions in the short term are not impacting the SP unless something big happens (i.e. positive tax settlement). Long-term interest rates decrease will be the real mover. Time is of the essence here: rates must decrease before expiry of bonds in 2025: there's not much time left though, and this is probabily the main reason for the current price action.

4 million shares sold in the last few minutes? Did I guess it right?

This share has clearly become a proxy of the GILTS. It just reflects on a daily basis the movements of the UK interest rates. Not by chance the 40p were touched one month ago exactly by the minimum of the 10-year note in 3.4% area. Since then, the trend of the two assets (10-year GILT and TLW) has been just identical.

The reason is simple: there is no market for this share: volumes are ridiculous and the only trading here is based on algos. Algos are stupid by definition, but TLW falls in the basket of small caps exposed to interest rates increases due to the debt exposure. Like it or not, this is just what it is. We can take ages talking about Ghana, Kenya whatsoever, but at the end of the day algo-trading is playing the game with only one variable in the equation: GILTS.

It goes without saying, as the debt exposure decreases over time (the higher the OP, the quicker) also algos will lose interest in speculating against TLW on the basis of a high-interest rate scenario. It will take time. Patience will pay off.