Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Thank you Tony. I guess we shouldn't underestimate how the new management regulate news about their 'strategic' performance out to 2025.
As debt is the stalking horse, the refi underpinned by a sustainable fcf with a layered capital reinvestment cycle linked to [$55] oil price will be incremental and progressive from here on in, imo!
Also, in Q1 we have Goliathberg-Voltzberg North prospect, block 47 offshore Suriname so plenty of excitement, tipping to the upside.
GLA next week
Good spot Nickel
'Positive incremental step toward meeting liquidity milestones beyond 2021'
Busy reporting calendar now with capital markets day Nov 25, January 2021 voluntary redetermination, Goliathberg-Voltzberg North prospect in block 47 offshore Suriname in 1Q 2021, Financial Year end/ clean audit report, Kenya end of 2021 and $650m debt 2022 $650m.
Another sale from the remaining $425m portfolio management would be icing on the cake. Rahul is the man to negotiate that. All good imo.
GLA
Thanks Stephen, yes $650m (my memory!)
Page 16 of 34 sets out 'Targeting a more conservative capital structure'
https://www.tullowoil.com/application/files/5015/8807/1195/Tullow_Oil_Overview_Presentation_-_April_2020.pdf
Interesting the $650m can be pushed out to 2024 for a higher coupon and it makes sense TLW are voluntarily bringing forward RBL commitments but this also coming to a head at and post CMD.
Of course the good news on 7 October RNS was TLW 'completed the bi-annual redetermination of its RBL credit facility with $1.8 billion of debt capacity approved by the lending syndicate. As a result, the Group retains c.$500 million liquidity headroom of undrawn facilities and free cash at the start of the fourth quarter of the year'
I think TLW is a great opportunity and an easy hold from here. With the revenue hedges, we have time on our side for the oil price to strengthen. The management team are as good as we could hope for and clearly able to do big deals and execute a strategy.
Roll on CMD and $500m UG cash in the bank.
GLA
Thanks Slift,
'I believe that Tullow has met the requirements for an upgrade ' Yes agreed.
I guess Moody's will have an eye for the $700m secured debt in 2022, further investment in Kenya 2021/2022 and how both feature in CMD and accelerated/ voluntary RBL activity in January.
I suppose the prospect of an audit qualification for this FY cant be put to bed until the CMD and subsequent phase of the strategy has some 'legal form or material substance'?
I dont see a major issue with $300m convertible debt in 2021 or cashflows this year and next. But it is tight looking further out (current oil price etc). While there is prospect of a better deal with Kenya, the requirement for incremental funds I guess must compete with paying down the $700m secured debt in 2022. Also I dont know if an asset sale from elsewhere in the '$1Bn portfolio' (not Kenya) may be acting as security for the $700m! That would leave the RBL facility, organic growth and as you say, an unknown debt/ebitda ratio.
So I suppose a rerate could even stretch beyond this financial year end and maybe follow a signed set of statutory accounts for the FY ending 2021?
In the meantime, it probably means we will have a short interest continuing to control volume/SP and regulate volatility with each major RNS.
To help the shorts out, I added a few today @17.7
'I would be interested in anyone who can justify this low valuation, I'm truly lost for words to explain it.'
Think it is being valued as a utility versus a growth stock. With the div cut, the value element has been removed. When the div is restored and cv demand ticks up, BT SP will too imo
Toff
Water follows lines of least resistance but doesn't flow uphill :-)
Added a few today. I remember similar 2000/01 and SP recovering with the div reinstituted.
No idea where the bottom is but we must be nearer the bottom than the next top.
GLA
Maybe because the quarterly 'witching day' ie expiration of all the options, index futures etc.
No idea why TLW beating the trend except the short interest controls the float so can do whatever they want
'Once you lose the conviction, then hard to justify holding it'
imo, if you are day trading, this stock is like marked cards in a game of poker. If you are lth, nothing to worry about as sovereign interests in oil will monetise at $60+.
Aimo
We recover all the JV costs from the effective date of the sale to the UG completion date..so c7 or 8 months costs? Dont know if that is a material number over and above $575m but maybe useful upside this year.