Member Info for Joek1

Sorry BRB, wondering where your 34,936 for Dec came from. Jubilee did 2,778,353 and TEN did 573,403. Tullow has 38.9% of Jub and 54.8% of TEN. That gives a daily average of 45,000 (at 31 days production). Am I missing something in the calculations?

You are patient!

It’s been a good 6 months for Tullow. On 23/5/23 the values of the bonds and equity were: 10.25% - $1,297m, 7% - $271m, equity - $437m (25p at $1.24).

On 16/11/23 the values are: 10.25% - $1,604m, 7% - $329m, equity - $612m. On top of that, the 7% bondholders got $100m in June 2023 through the bond buyback.

That’s a total increase of $639m, with $307m going to the 10% bonds, $157m going to the 7% bonds and $174m going to equity.

So the combined increase going to the debt and equity holders was 32% i.e. from $2,005m to $2,664m. Of that, 15.3% went to the 10.25% holders, 8% went to the 7% holders and 9% went to the shareholders.

With the current structure, there is not much upside left for the bondholders (as they are almost back to par), which means that most of any further upside should go to equityholders.

If, for example, we had another increase of $600m attributable to Tullow over the next six months, the bondholders would max out at 100% of their nominal value. That means that the 10.25% holders would gain $197m, the 7% holders would gain $32m and the balance would be attributable to the equityholders i.e. $372m over 1,410m shares. That would increase the share price to $0.698 per share for over a 60% increase.

Of course, if we manage to buy back $400m of bonds for less than par in the latest bond-buyback announced, the results for the equityholders would be even better.

Just my thoughts. DYOR.

It seems strange that this share is languishing at 13p at the moment. The 31 December numbers showed cash/cash equivalents of $14.5m. The sale of 6.25% of 3B/4B for $10.5m would bring that to $25m. This low-end valuation for the 3B/4B stake still values the remaining interest in the block at $33.6m. This, added to the $25m, gives $58.6m or $0.16 per share. That’s without looking at the upside/exploration interest in Guyana and the likely farm-out of 3B/4B. 13p? DYOR

The company may have narrowed it down to one party and then, rather than simply roll over at a low price, they have said that they are prepared to "go it alone" if a fair deal is not struck. That is not an unreasonable approach to take.

I have had correspondence with IR, seeking clarification on the legal disputes. Firstly, the claim by GRA on the Business Interruption insurance sounds groundless. The policy was put in place at Group level, the premium was paid in the UK and the claim was also paid in the UK, with no related claim or cross-charge to the Ghana interests.
Secondly, under Ghanaian law, the GRA cannot apply a penalty.
Thirdly, re the GRA overall claims, IR says "Management then apply judgement in assessing the likely outcome of the claims and estimates the financial impact based on external tax and legal advice and prior experience of such claims. The amount is disclosed in our HY and FY Results".
So, the Ghana government is currently negotiating a loan from the IMF. They are also renegotiating their domestic debt and have got agreement from 80% of creditors to renegotiated terms. My view is that they may be imposing additional taxes at this point, even if those taxes are unlikely to be paid (because the will be successfully rebutted in the future), resulting in the financial picture presented to the IMF and Ghana creditors being improved and consequently resulting in them managing to successfully negotiate for the funds they need. In the short term, companies like Tullow have to deal with these claims as they deem fit. Thus, Tullow feel duty bound to disclose the claims, even though they feel they will never have to pay them. At the same time, they are separately negotiating terms for the commercial exploitation of their gas reserves. AIMO. DYOR.

Odey has closed short positions to below 0.5%. He bought 0.11% on 13 Dec and 0.3% on 16 Dec. That's 5.74m shares that he's bought in the past few days. Yes, there was a much larger volume traded towards the end of last week, but this was part of the picture. Good to see shorts closing. DYOR

Rahul’s 250m free cash flow forecast is not at much risk. If we had 20k bops unhedged, getting $80 pb (v $95), we would be $300k short per day or $9m short in a month (assuming no taxes), so $250m becomes $241m. That, to me, is not materially different. The bottom line is that Tullow will have generated a reasonable amount of fcf in 2022. Now what we would like is to get a deal sorted in Kenya, reducing our dependence on just one country (Ghana), thereby reducing our link to the Ghana sovereign debt risk, and a deal to develop the gas potential in Ghana. Hopefully one, or both, of these scenarios will be realised soon. DYOR

Try a different browser and then copy the link to your regular browser.

Another 1.3m shares bought on 21 October per latest RNS. They keep buying but the price seems to be pegged down. Difficult to understand.

No doubt about it! In the last month they have bought 17.7m shares and have accounted for c16% of shares traded over that period (using Advfn data) for the days they traded, which was most days. They are slowly increasing their position but it is surprising that the share price has continued to weaken throughout that period. Of course they have good information on the company. This is not simply a blind bet. They are aiming for a certain stake, perhaps 15%, and will continue to build at these low prices. Let's hope we get some reassuring news soon. DYOR

This morning we had:
1m shares bought at 9:25 for 44.5p each;
0.5m shares bought at 12:17 for 44.1p each;
0.5m shares bought at 12:52 for 44.3p each;
C 100 sales of exactly 1,000 shares at c13:31 at 44.8 or 45p each
And yet the share price has not moved since the opening. Any idea how these big buys can go through without any move in the share price and why there would be 0ver 100 sells of exactly 1,000 shares each at around the same time?

Not sure I would go so far as to call this "porkies", Supercooper. If prod'n was 25,000 boepd and the field was shut for two weeks (with the planned works around April), that could take c2k from prod'n. Add natural depletion to that and the number could have been closer to 20,000 boepd. Adding on c5k from pre-emption exercise would only get you to c25k, so 31k is probably not a bad number.

Re Beebei-Potaro, if it is estimated at 200mboe and Tullow has 37.5% interest, then, at even $20 pb recoverable, that would be worth $1.5bn, which is over $1 per share based on the current shares in issue. If the well has, say, a 40% chance of success, and that success was to help confirm the size of the field, the EV would then be $0.4 per share. Is that really reflected in the current share price?

Does anyone know when there will be news on this? This drill must be of interest to all on this BB.

Possibly good news on this front. I looked at the transcript of the meeting that accompanied their annual results (March 2022) and that said they were unhedged. So, they should be benefitting from the full impact of the current high prices. That will reduce our average combined hedged position (if allowed to remain unhedged) and increase positive exposure to high oil prices. Their 2021 "highlights" said they had 36,500 boepd for 2021.

Thanks for posting Anton. It seems very positive!

Hard to make sense of this. The volume they sold short on 29 March was c5m shares and the volume they bought back on 30 March was similar. However, the overall sales on 29 was 7.9m shares and the overall purchases on 30 March was 6m shares. Hard to see how this makes sense. It was Pictet that previously posted incorrect data (with an error for over 1% of the total shares, if I recall correctly). I pointed this out to the FCA at the time and they took a week to correct it. Could this be another error? IMO/DYOR

No worries, J Bond. Where significant debt is involved, the bondholders will typically insert protections for themselves. For example, they are the party that resulted in Tullow having to hedge so much of the future sales i.e. 75% of the near term production is hedged. Similarly, they (the senior bond holders) would almost certainly have inserted a clause that prohibited the junior debt being bought out before they had their capital secured. That's what I'd do anyway. Yes, companies can buy their own shares back but there is quite a process involved before they can do that. Typically, the interests of creditors are considered before embarking on such a move. Anyway, you can ask the question of Matthew at IR but I suspect he will say it is not currently on the agenda.

Firstly, Tullow's CFO is moving on! We're not aware of who his replacement will be. Secondly, the 2025 Bonds are subordinated debt. I cannot imagine that the 700+ pages of the prospectus that was issued with them (and with the main facility) would not have a section precluding the purchase of these bonds with Company funds. After all, how would I feel as a senior debt holder if the company went under, having used some of its cash to repurchase subordinate debt? What would have happened to my security? That having been said, a yield of 16%+ is very attractive so it depends on your risk appetite. You could buy the bond and hold to redemption in 2025. Minimum investment amount is $200,000 and, assuming that is nominal, the actual investment would be c$160k or GBP120k. Your choice. AIMO/DYOR

I asked Matt at IR: Does that mean that the average of $86 is for all barrels sold in January, after paying away the amounts due where the realised price exceeds the hedge caps? He replied: Yes, that is correct and inclusive of quality differentials.