Member Info for Longish

TLW is a sausage dog, especially with regards to fcf. Hopefully not Pinocchio

Toff
'The dividend is 20.85p but I’d bet my life those MM mofos will mark it down at least 50p, probably more.'

LoL you were right

CNOOC got plenty to think about, including Uganda and Kenya

CNOOC (NYSE:CEO) reports H1 net profit plunged 66% from a year ago, as low oil prices and the COVID-19 pandemic hurt its production and operations.
The listed arm of China National Offshore Oil Corp. says net profit totaled 10.38B yuan ($1.5B), missing analyst forecasts for 12.6B yuan, while revenue slumped 32% to 74.56B yuan from 109.31B yuan in the year-ago period, as H1 averaged realized oil prices fell 40% to $38.70/bbl.
H1 net production of oil and gas rose 6.1% Y/Y to 257.9M boe.
The company cut its all-in production cost by 11% Y/Y to $25.72/bbl, but capital spending climbed 5.6% to 35.6B yuan.
CNOOC says it expects H2 earnings will improve, with oil recovering to nearly $45/bbl.

https://seekingalpha.com/news/3607050-cnoocs-h1-net-profit-slashed-two-thirds-on-low-oil-prices-pandemic

Hi Scrodingerscat,
"The Group's underlying operating costs remain less than $12/bbl, with Ghana operating costs at c.$9/bbl. With the benefit of the Group's hedging policy and production remaining on track within the Group's 70-80 kbopd guidance range, this results in a free cash flow breakeven oil price of c.$35/bbl for the rest of the year."

The trading update on 29 July said:
'At 30 June 2020, net debt is expected to be c.$3.0 billion and liquidity headroom and free cash are expected to be c.$0.5 billion; full year free cash flow is forecast to break even at the current forward curve'

Reading between the lines I think both statements are true. At 29 July, incremental free cashflow is being utilisedfto underpin the plan eg the Maersk Venturer extension

'imb is subsidising income from other stocks in the funds'
Interesting. Could be down to liquidity toward 'growth' stocks.

'Not clear why the SP is so low, apart from the level of debt'
I imagine debt holders are very happy with IMB ability to service debt. With a possible bond market rout on the horizon, I imagine cash generators like IMB will be seen even more favorably.

$1.25Bn just matured/ cleared and presumably why the cigar business was sold.

I'd bet the new CFO will sort out the €1Bn due in Feb 2021 and €0.5Bn due July 2021.

Jefferies increased their buy target today to £21.66..

https://www.imperialbrandsplc.com/content/dam/imperial-brands/corporate/investors/debt-information/FY2019/200430%20Debt%20summary.pdf

Interesting Chevron expect to exit their year on the same volumes as they entered. They think shale capex cuts are short term and will easily be back in production over several weeks in the same way they take operations up and down for storms/ hurricanes.

$60 oil probability by end of year as 10 year US treasury yields/ German Bunds rising.

Is this a 2016 oil rebound followed by a 2 year bear market for bonds?

https://www.bangkokpost.com/world/1969055/s-africa-lifts-booze-and-tobacco-sales-ban-as-restrictions-ease

according to the FT Weekend. Look for inflation expectations to rise with $60 oil, bond prices lower and bond yields higher.
Because oil (energy)impacts inflation disproportionately to other cpi basket items, a 10% jump in crude prices can raise inflation indices 0.5 to 1% depending on the country.

'If bond prices crumble because the oil price is reset, it may be better to own oil related etfs and stocks than be tied to gold'.
Oil price is rising..

0.1% is 1.4m shares and daily volume 4m...
Seems like a waste of capital if this is the bottom and an rns could land. They must have made their money

small reduction in their short position.
https://shorttracker.co.uk/company/GB0001500809/

$46 oil

Thanks Slift. What is the logic of booking a cost impaiment because future oil prices are lower but not recognise the benefit of contracted future hedges. The future hedges are incremental cash and improve assets.

Hi Slift, thanks that makes sense.

Are hedged prices used in the impairment forward curve ie should the 2020 and 2021 price be higher and impairment cost lower?

Will we get another impairment charge in H2? If BP is using $55, will tlw group policy change from $60 to $55?

Div on the 20th. Q3 and Q4 divs, even if they are rebased to 20p would suggest c.£13.40 @6% yield. Current div profile, SP would be £20 @6% yield.

I guess mm's using it as a work horse for smaller caps..

Hi Slift, I agree. TLW have met Moodys criteria for a more positive rating. When might they give it?

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.

I

'Any thoughts in Sammy??
Supportive of the company or asset stripper or something else...?'

Rahul and his legal council have all the skills to carve tlw up in any way that they see creates value. 13% interest is influentual but other stakeholders have sway too if their interests align.

9 Sept may throw more light. Even better we get a strategy update, partcularly met assets at year end when uganda kenya impairment and rbl better unferstood

holding over $44, US stockpiles waning. See what Shell say tomorrow.
https://m.investing.com/commodities/brent-oil

Neversell, there are some earlier posts trying to reconcile different resources. The 18 June Uganda shareholder circular says:
Sam Dossou-Aworet 13.05%
M&G plc 5.22%
RWC Asset Management LLP 5.04%
Summerhill Trust Company (Isle of Man) Limited 4.17%
Azvalor Asset Management S.G.I.I.C., S.A 3.23%
Goldman Sachs & Co. LLC1 3.30%
Total significant shareholdings 34.01%

There is also Yahoo Finance 'Holders' that gives some overview on 'mutual fund' holders, but looks out of date
https://uk.finance.yahoo.com/quote/TLW.L/holders?p=TLW.L

There is of course the short interest too declared >0.5%
https://shorttracker.co.uk/company/GB0001500809/