Member Info for InJamesweTrust

Marvin
They're not reshooting the seismic, they are using what they've learnt from the fields to adjust the extrapolation.parameters and tweak their understanding of how the field works.
Incidentally, an email from Tullow IR states "While it may have appeared there is reduced focus on Guyana in 2020, there is still plenty of work going on. This work is focused back on the seismic and calibrating results, opposed to jumping straight back into drilling. Further analysis of the Jethro, Joe and Carapa discoveries, including important updates to our petroleum system model will form a key element of our 2020 activities. The results of this will play a major part in defining our 2020 / 2021 drilling campaign in Guyana, which remains firmly in pursuit of better quality oil in this section of the basin as now demonstrated by Carapa. There are always options to change or bring forward drilling plans."
Certainly not ruling out a 2020 drill but not committing either. I remain of the opinion drilling will take place.

Whatever the 30% is struck at wont necessarily reflect Ecos value but by moving the exploration dial forward and giving an indication (through offer of carry) what the assets are worth if still bit proves them up the it is indicative.

Look at the Apache deal in Suriname - they dont necessarily pay out $4/5bn until the asset proves the need to do so. There they will pay $3.75bn over Apache in the first spend from memory with a $100m bonus for finding oil and all.past costs paid.
If Tullow get such a deal with some prior drilling costs reimbursed having written them off it is out performance to 'base case'.
News here isnt finished in my view but these things do take time hence moving the financial results back to March.

EAS10
Yes, I can see and hear the wording of what was said and indeed was called a liar yesterday for quoting the Suriname potential delay.
They have said they are unlikely but it is more cashflow driven and problems elsewhere than anything else - as you say Ghana has major issues.
Partners will be displeased that progress is halted because Tullow have wildly over stretched themselves and as such I dare say some pretty robust discussions are being had.
It isnt beyond the wit of man for management to do something they didn't indicate on the conference call.
For me, drilling Kumaka and splitting the costs among the partners on both Orinduik and Kannuku licences (it straddles both licences) would reduce Tullows costs below $20m for a drill that can drastically improve market perception of both licences.

EAS10
Clearly not a positive update from Tullow but they have booked reserves and been clear that the drills are not considered a complete write off as some would suggest. Taking as much of a loss now when they are going to make one anyway allows them to manage their tax position efficiently going forwards and improves cashflow as a result.
They did say they were unlikely to drill for today's update but were clear operationally they are seeking ways to out perform on the base case laid out today. The reaction of the market will have surprised them I think and perhaps made them realise they need to pull a rabbit out of the hat to get the mojo back for the company.
Moving their annual results was an interesting move and makes me wonder if multiple things are afoot which need time to come to fruition.
I'm not ruling out a drill and indeed think on balance of probabilities there will be at least one to facilitate farm down but it certainly isnt nailed on.

GB
It is on the RNS and Tullow website.

LC have you had time to listen to the call then?
If no response it will confirm my initial assumption about the superfluous O in the 2nd part of your name.

Phoebus
Bugger, sorry didn't see it hit 50p.

10% Phoebus - this may show them the market expects more and I expect there to be new details in the March call that are alluded to today and some that are entirely new.
This is the base and they were clear they now need to find ways to outperform the base case.

LC - think you may be confusing Suriname and Peru you utter moron. Listen to the call and the tell me they dont say it may be this year or next year. I await your retraction but they say late H2 may be next year very clearly for the Suriname drill and they may yet farm out pre drill.

Just got an opportunity to listen:
Tullow believe Guyana very important area for them.
The write off on drilling is just a conservative accounting approach near term, not a marker of their belief in the potential.
Their Contingent resource number includes an upgrade attributable to drilling results in Guyana - they have booked resources in Guyana as a result of 2019 drilling.
They will interpret the numbers and then decide their approach. Suriname well may be pushed to next year.
They believe there are ways they can make meaningful improvements to today's guidance but that will work through in time as strategy becomes clearer.
CeO search will look at internal and external candidates. If the current team can move the dial materially on the SP that will help their chances....how might they do that I wonder.

Tullow has written off the drill costs, this is a kitchen sink announcement to rebase expectations and also the incentive package of the interim-CEO.
Sulfur is a factor used to determine price by off taker in terms of refining cost and discounts price by $5 a barrel give or take. A big concern for many is the engineering needed to lift the heavy oil which is not expected to be an issue given the high temperature, reservoir over pressure and good viscosity mean the oil is likely mobile. However, near term it is not a priority for Tullow. That doesn't mean it has no value.
Let's be clear, Exxon would know Hammerhead was heavy with sulfur content before sticking 3 drill ships on there for 3 months to test the field. That let's them confirm mobility and guide the FEED strategy for how to develop the field.
The Cretaceous prospects are being high graded and have excellent productivity this creates opportunity for players with cash ready to drill.
Given Tullows asset position it would be almost criminal to farm down significantly without further drilling and I would expect they know this.
There are 4 or 5 FPSO fields going in next door yet luck counts tries to call Guyana a bust. Apache added $2bn of market cap with a dual layer Cretaceous still yet we have no prospects.
Tullow have a mountain to climb but some strategy decisions can make that journey easier. Finding 600m barrels net to them with one drill is a good start.

Pro
60 days is sufficient for flow testing and the well is guided as taking 60 days. Suriname should take a similar period and transition between them is likely 10-14 days.
One can spin things a number of ways but there are 239 days between 25/1 and 20/9 so there is a gap there.
There is.nothing concrete to say how it will be used at this juncture. FWIW, I think Suriname will move to Q2 and they will decide in March any further action after meeting with other participants in the licence.

Pro
It is quite clear we come at this from different angles.
Tullow has assigned Stena Forth to Karoon at Tullows cost for first $28m to drill Peru.
She sails to Ghana in Sept presumably to drill for Tullow.
So there is a gap of c.6 months to be part filled by Suriname which will presumably use Stena Forth for 60 or so days.
Looks like Tullow have options/rights over the vessel so what do they do with these? They have filled out where they can, the remaining gap is as yet unclear and further investment decisions are still to be made between.now and March.
In the meantime, Eco has low G&A and will release a CPR to reflect the Cretaceous results in Carapa, Suriname and the continued success in Stabroek.
While I wondered about the prospect of a drop today following Tullow update, I am more interested in the value potential in 6 months time.
Trading in/and out isnt really for me.

Think different players have different horizons - lots of shooters selling the bad news story and usual suspects popping up to do so.
Easy also to forget Hammerhead is commercial.
Between Exxon and Total even at 1.50 a share we are a rounding error on a purchase of the licence - 50c a barrel for the Cretaceous which likely now has 35-40% plus CoS. Given the size of the 3 or 4 biggest prospects a hit in just one is an elephant field.
Tullow and Exxon know this, as do others. They are likely watching with interest.

That would be the write offs kitchen linked now for Tullow. Regardless of Tertiary commerciality it will not be drilled soon and writing off now may allow write backs later when the judgement really comes in. For now everything remains McDades ****show.
The remaining investment decisions will be taken between now and March results.
They talk about high grading the Cretaceous prospects - this indicates pretty strong confidence here and with a share of 3bn on old CPR (likely to rise given porosity experienced on licence) then Eco still has very strong intrinsic value.
That gap in Stena.Forth activity will be filled with something and given it will be sitting 10 miles from Orinduik whether Suriname is drilled first or second I.still expect activity on Orinduik.
Devil is in the details, if Tullow dont drill who will...

On Namibia Total signed a Maersk contract for 250 days drillingbstarting end Jan this week.
I note the wording reported is it is unlikely WE will drill Guyana this year. I also wonder if operatorship will be relinquished. I still see that gap between Peru and Suriname and when Stena Forth goes to Guyana and it is almost too good to turn down......

Phoebus
DJ and Kumakka would essentially be a single multi layer target drill much as the recent Apache one in Suriname. Targeting 2 layers of Cretaceous. Cost of this would fit in the remaining CapEx budget and in the CPR they are in excess of 800m barrels.

I wonder if Suriname may come forward to Q2 and Guyana would be late Q2/Q3.

I think they can squeeze one well in realistically, 2 would be tight with Stena Forth. Kumakka is a billion barrel prospect as it straddles across licences for both fields and would potentially allow drilling of DJ both Cretaceous prospects.
Perus results are due end of March and Suriname was indicated to be drilled in H2. So 50-60 days per drill from end Jan to late Sept gives about 235 days.
Their CapEx budget is tighter than indicated in Dec call as Africa has filled out, mainly the $80m non operated. Karoon well in Peru likely to cost $30m with Suriname likely to be $18m (50% WI) that leaves $27m - a drill targeting DJ and Kumakka would cost around that for their 60% holding. If it hits (DJ would give them an early indicator) it may be 1 firm plus 1 option. As confirming the Cretaceous play worked would be a major boost and may encourage another drill. Time is available not clear budget is but if POO/production surprise on upside cash may be available.
Looks like Joe/Jethro costs written off.