Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Big investors have a lot of advantages compared to us small investors or day traders aka speculators. But one big advantage that should not be underestimated is the fact that the small ones can react much faster to an opportunity. Big investors are like oil tankers that take forever to make a decision and especially if it is done in the UK Jurrasic Park.
In the case of Tullow oil, one could literally watch live how confidence was lost more and more every day until the share price almost approached junk level. The creditors probably no longer believed that they would get their money back.
But the game has just fundamentally changed. Tullow will probably be able to service its debts, and the chances are not bad that this will happen even without a capital increase.
In the medium to long term, Tullow oil will become a highly profitable, low-debt company and will return this to its investors.
You have a choice now, you can swim with the oil tanker (and believe me the timing to get in will always be wrong) or you can take a little risk like me and profit fully from the changed conditions.
A very interesting Finacial times article:
https://www.ft.com/content/15ed681e-71db-427f-b562-b8c48e1c9b43?ftcamp=traffic/partner/feed_headline/us_yahoo/auddev
I checked it and it hasn't changed much in the 2022 report. As I said, this is a worst case scenario that usually takes several years to resolve and under normal circumstances it certainly won't be eaten as hot as it is cooked.
Negotiations about part of this will take place soon (October 2023) and hopefully we will have more certainty.
I speculate that the increased trust that can be observed in the rising bond prices will soon be reflected in the share price.
Maybe not today or tomorrow but soon.
Tullow Oil PLC 7% 18/25 low 52 currently 78
Tullow Oil PLC 10.25% 21/26 low 72 currently 87
Because what are Tulow's main problems? Debt and a steadily declining production rate. Point 1 seems to be solved faster
than expected and point 2 was solved by jubilee.
We currently have an oil price of $95 (including the dollar's half-year high) and under normal circumstances this should
also be reflected in the share price, but the stock market in the UK seems to be very dry at the moment compared to the
USA and continental Europe . The volumes traded recently have been truly subterranean.
This could possibly have something to do with the Fed's interest rate decision (September 20th at 18:00 GMT).
Respectively BoE Interest Rate Decision is taking place on Thursday, September 21 st at 11:00 GMT
But I could well imagine that once the decisions have been made and the expectations of market participants will prove to
be correct.
That the Fed will leave interest rates unchanged and likely wait until the April-June period of 2024 or later before cutting
them.
That the volume will then increase again and we will hopefully benefit from the good conditions: interest rates, oil prices,
etc.
Another small note: In my opinion, the LSE is a Jurasic parc anyway, no one wants to take a risk anymore, just a few old
sacks on their carpeted floor (Muppet-like, what were the names of the two old farts again Statler and Waldorf?)
sit around and can't get anyone up anyway.
If we were listed in the USA, under comparable circumstances we would certainly already be at one pound.
In my opinion, the best thing they can do now is, like last time, to place another public tender offer for a portion (e.g. $75 million) of its 2025 senior notes.
Better would be $100 million for 75 and reduce the amount of the outstanding bonds to about $500 million (current 633 million)
This would be another slap in the face to everyone who has made destructive bets against Tullow.
Unless everything goes wrong, and it really doesn't look like at the moment, a free cash flow of $100 million should be
achievable for the entire year.
If I'm not wrong, there should even, for the second half of the year a free cash flow of $150 million (at $90) be possible.
If next year, as J. Bond so aptly pointed out, an exchange into a new secured bond should be possible, this would of
course be fantastic.
J. Bond
"They will cancel more than $2bn of bonds and issue a new longer 1.5bn ish secured at 12-14% area, feasible and
sustainable, especially if it includes an ambitious amortization schedule."
(Thanks J.Bond. Very informative)
With an expected free cash flow of about $400 million at 80$ ($500 million at 90$???) for 2024
and for 2024 -2025 a total of $800 million at $80 ($1000 million at 90$ ???) this should be actually possible.
For me it seems that everything turns out well and in the end we will be rewarded for our patience. But we will see.
There appears to be no end in sight for the current oil price rally or for the bullish catalysts driving it as tightening supply
combines with the apparent return of Chinese demand growth.
https://oilprice.com/Energy/Energy-General/An-Apparently-Unstoppable-Oil-Price-Rally.html
Energy transition represents a clear opportunity for innovation and value creation
https://www.petrofac.com/media/stories-and-opinion/energy-transition-represents-a-clear-opportunity-for-innovation-and-value-creation/
In my opinion that is far too pesimistic.
At the moment it is more about stabilization, it should be noted that we are in a price environment of (approx. $90) and a
free cash flow of 800 million ($80) is expected during 2024 -2025.
This offers Tullow plenty of opportunities to grow organically or inorganically through acquisitions.
Declines in Ten are likely to be compensated for by the new gas deal.
It is also planned to maintain jubilee production at 100,000 barrels per day for the next few years and beyond.
Based on the things described, this should actually soon be reflected in the share price under rational conditions.
After this odyssey you've had to go through for the last 7 years, I think now is a really bad time to get out.
Oil prices have just passed $94 and are heading towards $100. Inflation is slowly coming down and is expected to normalize at a slightly higher level next year.
The Jubilee production reaches >= 100000 Barrels per day and a new gas revenue stream is added.
CAPEX expenditure will be further reduced:
Expenses for hedging, decommissioning and investments in Jubilee will be significantly reduced, which should be reflected, among other things, in increased free cash flow and net income.
If we could be lucky, we will see a doubling or even 1 pound by the end of the year, even without Kenya. Kenya is just a bonus anyway.