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A driller thriller for Tullow Oil
The oil explorer surged as the price of black gold soared, but it has hit rocky ground
Default hint sparks stock dive
Tullow Oil chief executive Rahil Dhitr spooked the markets earlier this month when he raised the possibility of a future default on a $650m (€550m) debt facility due in April 2022. It sent the stock falling by up to 20% in early trading on September 9. Tullow must guide future cash flow from its oil and gas fields 18 months ahead under the terms of its reserve-based lending facilities. The period from January 2021 includes the $650m bond maturity, and the company warned that if it could not demonstrate it had sufficient funds, it could trigger a default.
The company is exploring refinancing options including seeking new funds from banks or capital markets investors. The market value of Tullow, that once soared above £15bn, propelling the explorer up the FTSE 100, has slumped to below £250m.
Heavey‘s African acquisitions offered rich seams
Former Aer Lingus financial controller Aiden Heavey founded Tullow Oil in 1985, remortgaging his home and selling his vintage car collection to help raise IR£1m (€1.27m). A contact at the World Bank flagged up an old gas field in Senegal, which had been abandoned by the big oil and gas companies.
It listed on the London Stock Exchange in 1989, acquiring interests in the UK, Pakistan, Egypt and Romania.
“We used to be very bad explorers,” Heavey said in an interview. “In the Eighties and Nineties we were rubbish — great at doing deals to buy old assets, but not very good at finding oil.”
Two key acquisitions, Energy Africa and Hardman Resources, with acreage in Ghana and Uganda, transformed the group’s fortunes.
Jubilee no field of dreams
At its peak, when oil prices topped $100 in 2011, Tullow Oil was valued at more than Rolls-Royce, and worth twice as much as retailer Marks & Spencer. Its Jubilee oil field off the Ghana coast began to hit production problems in 2012, the first signs that Tullow might be a better explorer than producer.
The collapse in oil prices in 2014 coincided with the group racking up debt to bring its TEN field, also off Ghana, to production and fund exploration. Yet when Heavey stood down as chief executive in 2017, becoming chairman, and handed the reins to chief operating officer, Paul McDade, the ship had steadied. Two years later, McDade was gone, again after production targets were missed at the Jubilee field. The dividend was scrapped, and a cost-cutting programme included the closure of its office at Central Park in Stillorgan and 55 job losses.
Part 2
Tullow has created two spin-offs to date: T5 and Boru.
Former chairman Pat Plunkett and four other former Tullow executives set up T5 Oil and Gas in 2014, to explore in Africa. It acquired interests in Senegal and Gabon. It also gathered a shareholder list of the great and good of Irish private wealth, including entrepreneurs Cyril McGuire, Maurice Healy and Patrick Joy of Suretank.
Plans for an IPO in 2018, which would raise $45m (€38m) to advance the Gabon project were shelved. T5 was last said to be seeking a strategic shareholder to act as a cornerstone investor in reviving a stock market flotation.
Heavey has private equity giant Carlyle on board as a large investor at Boru Energy, his exploration vehicle named after the former high king of Ireland Brian Boru. This spin-off is yet to make a dent in the $1bn funding commitment from Carlyle, though it is still less than a year old.
Boru is also targeting sub-Saharan Africa, offshore and oil. It is looking to do big deals of up to $1bn.
Investors hope for Dhir turnaround
Tullow’s investors will gather at a capital markets day before the end of the year to hear what chief executive Rahul Dhir plans for the company. The event “needs to provide a credible path to growing high-margin reserves in Ghana (and elsewhere in west Africa) and outline a more attractive development proposition for potential industry buyers in Kenya”, says Barclays analyst James Hosie. Dhir led Cairn India to its stock market listing, so he has credibility. He must complete the sale of Tullow’s Uganda interests. Amid the gloom, Dhir did have some good news at the recent market update. Production numbers out of Jubilee have been good. A tide turned?
Tullow Oil: Canaccord reiterates hold with a target price of 20.0p.
Well that's a really hard worked out prediction ....my dog could do better
NAIROBI (Reuters) - Tanzania and Uganda signed an agreement on Sunday paving the way for the construction of a crude oil pipeline running from Ugandan oilfields to the Tanzanian port of Tanga, a Tanzanian government spokesman said.
Uganda discovered oil reserves in 2006 and needs the planned 1,445-km (900-mile) East African Crude Oil Pipeline to be in place to start commercial production. The pipeline is estimated to cost $3.5 billion, according to the two governments.
Hassan Abassi, Tanzania government spokesman, said on Twitter that 80% of the pipeline will run through Tanzania.
Tanzania will earn 7.5 trillion shillings ($3.24 billion) and create more than 18,000 jobs over the next 25 years, or more, that the project is in place, Abassi said after the signing ceremony attended by Tanzania's President John Magufuli and Ugandan President Yoweri Museveni in Chato, northwestern Tanzania.
Uganda has not given a date for when construction of the pipeline will begin but said last year that once construction begins, it would take 2-1/2 to three years to complete.
The agreement on the pipeline construction comes days after French oil company Total said it had reached an agreement with Uganda protecting its rights and obligations in the pipeline's construction and operation - known as the host government agreement.
Total is the major shareholder in Uganda's oilfields after agreeing in April to buy Tullow Oil's entire stake in the jointly held onshore fields in Uganda for $575 million.
Tullow said last week it was confident of finalising the sale in the fourth quarter of this year.
The other partner in the 230,000 barrel-per-day project is China's CNOOC.
# Trades 4,110
Vol. Sold 16,575,722
Sold Value £3m
Vol. Bought 22,515,860
Thought the same.
When you do, it will then shoot up !
Is this dead now ?
£87 UT price drops .25p Disgraceful !
BP down 3%
Shell down 2%
PMO down 3%
so its a trend we follow ....
http://www.iweb-sharedealing.co.uk/share-dealing-home.asp
£5 per trade. That's it !
Sold their lot 17% on 15th July
Have you ever noticed on AIM, it take a few sells to drop 1p and hundreds of buys to go up 1p
Just looked at https://www.flightradar24.com/ covering Europe.
I was really surprised how many planes are actually flying NOW !!!
A lot of oil is being used....
Ordinary shares of 5p each in the capital of Non-Standard Finance plc
I thought the SP could not go below 5p
Obviously i have been misinformed !!
JEFFERIES RAISES TULLOW OIL PRICE TARGET TO 13 (12) PENCE - 'UNDERPERFORM'
Do these people live in the real world
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Covid-19 may throw up opportunities, as Mr Bogart thinks. But it has also delayed cases. Litigation funding aficionados argue a year is too short a timeframe to take a view. Returns are lumpy, says Burford, which was once the darling of disgraced investment ace Neil Woodford. Too true. Investing in porridge might be more sustaining.
Terrible Article .......
Burford Capital’s US listing will test its fair value
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Kate Burgess YESTERDAY
8
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Burford Capital, Aim-quoted litigation funder, is to float shares in the US.
Chief executive Christopher Bogart, a lawyer and no relation of Humphrey, has got over his initial uncertainties. In August last year he said: “We’re not entirely clear of the benefits other than possibly, at a moment like this, it might make people feel any better.” That was after short-seller Muddy Waters’ attack which poleaxed the shares.
Now Mr Bogart reckons a US quote will boost the shareholder register and the value of the group, which is trading on about 5 times forecast earnings before adjustments and uglies. You’d think that he might be wary of floating shares anywhere near Muddy Waters, which was rude about Burford’s accounting methods. But there may be something in being seen to comply with a more rigorous listing regime than lightly regulated Aim.
That said, Lombard struggles to see a place for any litigation funder on any public market, whether in the UK, US or elsewhere.
The group has improved its governance and begun to disclose more in preparation for a US listing. But its numbers — based on what bean counter standard setters describe as fair value accounting — are still anything but straightforward. It bankrolls complex and often long-running court cases. The prizes can run to oodles in settlements or awarded damages. But the costs can run to many millions, too, and cases last on average two-plus years. In 2019, half of Burford’s £356m in revenues were unrealised gains.
Now and then, Burford may sell a share of a case to outsiders and bank the cash. Since 2017, it has sold almost 40 per cent for $236m in the high-profile claim being pursued against the Argentine government for seizing energy assets from investors in 2012. That lawsuit now represents half of the value that Burford puts on its total portfolio and 95 per cent of unrealised gains. Other cases, where third parties have not paid hard cash for stakes, are more difficult to quantify. And Burford discloses little about ongoing cases, impairments or the cost of losing suits.
Bulls look misty-eyed at the group’s record in backing winners. Past returns on invested capital have topped 93 per cent, says the company. But the past is no guide to the future. Many analysts reckon returns will halve next year.
AND Oil price been steady all day above $43
That is news to me !!!
Must be good !!
Jan 2, 2020 - Tullow Oil plc reported Thursday that the Repsol-operated Carapa-1 exploration well offshore Guyana will be plugged and abandoned .