The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Looks like some bozo messed things up. Total buys on 09/27 came to 7.13m shares but the 1.27% down for Pictet SA on the FCA site would have come to 17.78m shares. It looks like the correct figure is simply a reduction to 4.25% i.e. Pictet bought back 1.54m shares to reduce their short. May well have bought more today, with the total buys of 10.23m. Lets see what the FCA decides to show us as the closing short position tomorrow!
It could be that Goldman Sachs, who had 51m Tullow shares loaned to shorters as of 10 May, and had increased their lending from 2.52% of the issued shares to 3.59% at that date, have come to an arrangement with one or more shorters. We'll have to wait until about 17:00 on Monday to find out. Other possibilities are Samuel Dessou-Aworet has sold some shares (he holds c11%, from memory) or Azvalor, the Spanish hedgie, could have disposed of a stake. I'm sure there are other possibilities that contributors could add.
Yesterday, Cap Fund Mgmt SA shorted a further 0.09% or 1.26m shares while Odey reduced their short by 0.14% or 1.96m shares. Cap Fund Mgmt will be less happy today and Odey will be happier to have reduced exposure.
There seems to have been a few good messages:
1. Good interest from potential strategic partners re Kenya - avoiding the need for Tullow to invest capital in a significant development project
2. Re Guyana, Tullow will either drill the committed well in 2022 or farm down, allowing someone else to drill, while maintaining a reduced stake in the block. Interestingly, this shows how risk-averse Rahul is. Sounds like he wants Tullow to be just a Producer with minimal Exploration. Lower highs but higher lows.
3. TEN is providing some headaches (through the E part of the fields) but he is very happy with Jubilee and can work around TEN challenges.
4. Overall, he seems to be saying that he is happy with progress and that things are on track.
If I were Capital Fund Mgmt SA and I was short 7m shares, what could I do to help me buy them as cheaply as possible before Tullow issues a positive RSN on 15 September? I could sell short a further 1.5m shares. That would expose me to c£0.6m of further price risk but would make the tracked short position appear to go from 3.76% to 4.37% or an apparent increase of 8.5m shares shorted. That would enable me to keep the price down while I back at least a few million of the shorted shares. So, is the buying today coming from Capital or one of the other shorters, in advance of Wednesday. We should know by end of play on Tuesday (but that's after the market has closed!). And when the market reopens on Wednesday the Tullow RNS will have been released. We'll have to wait and see!
Indeed, the intention may have been to make it appear that shorts are increasing significantly but, as stated, this was a tiny increase. All that is reported are positions that are 0.5% or more. So, if someone on 0.5% drops by a tiny amount, the overall short position will appear to have fallen by 0.5% (c7m shares). There will be a number of other shorters that currently have positions at just below 0.5% and these may cause the price to move on particular days, without triggering a change in the disclosed short position.
I was just looking at the SP compared to the oil price. 18 June OP was c$73. SP was 60.48p. 25 May OP was c$68. SP was 50p. Today the OP is $71.6 and the SP is 44.6p. And the volume being traded is negligible. Any thoughts?
Likely, with 4.4m shares already bought today, that there are shorters closing. It would be nice to see confirmation tomorrow but it may be shorters holding less than the 0.5% disclosure requirement threshold. Anyway, that's good news in the medium term, with shorters closing their positions. The confirmation that the "going concern" concern is disappearing in the half year results (out in less than a month) will be further good news.
Kosmos RNS posted this morning confirming production level at Jubliee is currently c80,000 bopd. Good to see confirmation of data as Tullow has 35% of that field. The extra barrels are worth c$44m to Tullow over the second half of 2021. i.e. 10k x $70 x 35% * 183 days. Looks like the Ghana developments are going to plan. Good news.
Hard to believe Odey got to buy 5.74m shares in this falling market at sub 50p prices over the last couple of days. The may have even bought more today. They must feel happy that there are sellers willing to let them "get out of jail" so cheaply! The upside is that the short position is disappearing rapidly.
So, we've had 4.4m shares bought and 2.4m shares sold this morning and the price has gone . . . down to 57.2p. That sounds illogical. I wonder if, with the volume of shares bought this morning, this is on behalf of a shorter. We may know tomorrow evening, unless it is on behalf of individual shorters with less than 0.5% exposure i.e. less than 7m shares short. Does anybody know how the price can be going down when demand seems to be exceeding supply in this way?
I believe TEN/Jubilee prod's for Tullow for the first six months is c7.73m barrels. Same period in 2020 was 9.84m barrels. I used the Ghana Gov numbers to May and the Kosmos numbers for June. Thus we are down c21% by volume to these two fields. We knew there would be a continuing decrease. The big question is what will the new wells contribute in Q3/Q4.