Member Info for Longish

Brent up 4%
TLW up 6%
Making money from shorts on the way up imo

US is printing money to prop up bond prices. They could tax the tearaway fangs...

Interesting. SA need to get to $80 and Bahrain $90 to balance their budget deficits. Growing market share by oversupply is on the back burner. They are all seeking marginal revenue = marginal cost. TLW will do very well in this environment compared to higher cost producers and majors still working out where to take out costs imo

You might think delaying the sale until H2 would be more beneficial but the Uganda deal shows the value of cash now versus a few dollars more in 25 years time. TLW is meeting its strategic milestones and the new CEO might want a say in how the Kenya cash is spent to continue the recovery versus his long tetm incentive plan and targets.

Still, good news is good news.
30/35 range close imo

Slift, thats a positive then. All seems to be coming together. Patience..

Moodys said...

WHAT COULD CHANGE THE RATING UP
A rating upgrade would require (i) confirmation that the production guidance reset by management in December 2019 can be sustained in the medium term; (ii) material progress on the divestment programme allowing significant deleveraging and resulting in Moody's-adjusted total debt to EBITDA falling below 4.0x and (ii) restoration of a robust liquidity profile.

WHAT COULD CHANGE THE RATING DOWN
Conversely, the ratings could be downgraded should the liquidity position of the group deteriorate post RBL redetermination and/or in the absence of any disposals. The rating would also come under pressure should the group generate sustained negative FCF resulting in Moody's-adjusted total debt to EBITDA failing to fall back below 5.0x for an extended period of time.

Anyone know if tlw is due for a rerate.?Moodys downgraded in march pending the rbl and a significant asset disposal. These are all achieved so we are due a rerate surely?

Investor1, its in our dna. I have used leveraged long and short oil etfs but the swings were huge and harder to time. The spreads got very wide and so the risks seemed better managed in tlw. But as you say something odd this week. Maybe its an increase in call options now the wealth class are investing in energy. Thats still ok for tlw as its investors covering risk..

Good luck with tlw. We all hoping recovery

I started in 160s and all the way down to 8...

Investor1 makes a good point about wisdomtree. Buy oil etf and hold till $80...hedge tlw.

26p open monday?

'The entire project is valued at between $1.25 billion to $2 billion, but it is hard to be precise because the development has yet to receive a final investment decision (FID), two of the sources said.'
https://www.reuters.com/article/us-m-a-oil-kenya/total-and-tullow-launch-joint-sale-of-stakes-in-kenyan-oil-project-sources-idUSKBN1ZM1FZ

'What will this mean to the SP'
If tlw get the full £1.6bn settlement the SP probably go to 50p+. We got 30p+ on uganda. So 30-50p+

'My gut tells me were through the worst, oil demand rising and supplies falling. '
I think you are right. SA needs $80 oil and has for some time now. Thats partly why TLW was able to buy $57 hedges and why the pressure for highr oil prices is (net) increasing ie so TLW doesnt have to use them

'What will be the impact on SP on Monday?'
Depends if day trading or investing...
It should confirm TLW is on track/ progressing the $1Bn initiatives they promised.
$575m Uganda sale already delivered already plus $XBn (out of £1.6Bn) and other initiatives.
I see it as a well managed activity on the strategic and operational glide path they have laid out.
As I said in an earlier post 'Kenya in the back pocket and can be used anytime to support any liquidity issues after hedges, sustain glide path and feather in demand supply etc.' The timeline for the legal/court determination will be the month we get an rns imo

'It's good news.'
It is. Its progress on executing the strategy.
In the 2019 accounts, TLW made provision for $537m of kenya costs leaving $667m recoverable so plenty of negotiating room with potetnial for additional upside, see note 10 intangible and exploration assets note to the accounts
https://www.tullowoil.com/application/files/6515/8636/0100/2019_Annual_Report_and_Accounts.pdf

'I hope this has already been priced'
Think so. This gets it over the line for a legal determination and negotiated settlement imo
Spent £1.6Bn in development costs which are recoverable as stated in march

Investor6, that's interesting. Think TLW are turning the negotiation screws.
In March, TLW 'submitted its compensation bill to the (Kenyan) government to a tune of Sh204 billion for its six years of oil exploration in the country'. That's £1.6Bn!
https://www.the-star.co.ke/business/kenya/2020-03-13-tullow-to-proceed-with-kenya-operations/

Shell dropped a bit more than the div and on the face of it looked a good price. Expect a few ppl rebalanced or took profit. I added here...
New CEO and some good relationahips coming in with him that are not priced in. Kenya in the back pocket and can be used anytime to support any liquidity issues after hedges, sustain glide path and feather in demand supply etc. Will spike on that rns for sure and why wont it happen if uganda is proof. cnocc is my bet to buy from tlw and total to balance out the deal in uganda.
Need to have a good % invested or you miss it.

LoL. CFO has done a cracking job bridging to the strategy. Heavy lifting in July when the new ceo starts. Kenya rns anytime.

Thanks Alexios.

'investors should be exceedingly cautious '
I will top up small amounts on weakness and not trade any.
Plenty in the pipeline to make this a (recovery) investment with some more one off wins along the way.