Member Info for Nobull

Acrossthesea, my letter to KS was to sent in August 2023 when KS was refusing to give permission to Zelensky to use Stormshadow inside Russia. It would have cost nothing to the UK taxpayer to authorise stormshadow for use inside Russia. What I did not know then was that it was dithering Biden that was stopping Starmer from giving permission (the Anglo-French weapons relied on American navigation systems?). I don't need lectures from you about the virtues of pacifism. I was an aural witness to the killing of at least 200 (presumably unarmed) demonstrators in 1978 in Teheran (the Jaleh Square massacre). It is a perverse irony that had the Shah's regime killed more, a lot more people in Iran would have been saved since. I am, aged nearly 70, and do indeed think of going to Ukraine. Putin is utterly despicable. I worked throughout the Revolution and all the shooting in Iran, only leaving when expelled a few months before the seizure the American embassy. I think I can cope with bomb alerts in Kiev and I could probably help Ukraine in some small capacity (I do not need a salary), change my domicile (for IHT), become ordinarily non-resident for UK income and CGT and save on my income tax and take all my unrealised gains (very bad to pay CGT in the last years of your life before death if your estate is then going to suffer IHT) and put two fingers up to RR's confiscatory budget (transfer of unproductive capital from rich people to less productive use (government spending/waste). Ukraine needs it borders returning to the 1989 ones and they need justice for those war crimes. I trust that does not offend you.

ZF, thanks for that info. It is very interesting to hear your experience with your MP. Thanks.

At this rate, I am going to get my money back on this. Utterly gobsmacked to be getting a dividend. Gave up following this ages ago.

I just love that paragraph where AB gets stuck into the fiscal regime in the North Sea (it is as good as what David Latin writes) (we are the only country with a windfall tax on oil and gas). I wrote to RR to highlight how damaging the EPL is (it removes more wealth from our company than the actual tax itself), a sure fire way when you remove such wealth from people who know how put it to work more productively than the government can, that is sure to depress per capita GDP growth (or even turn it negative). And you guessed it, she never replied, which is more than can be said for KS, for when I wrote to him to complain about not giving Zelensky the weapons he was asking for, he at least had the FCDO reply with two pages of well crafted spin about how Britain was doing a great job helping the Ukrainians. Rachel Reeves is either too busy or knows the EPL is utterly indefensible in the light of her requirement for GDP growth. I cannot see how working in Customer Care at the Halifax makes her an economist.

Yes, one can only hope for some read-across to us: MPE's results were mostly driven by a decent rise in ex-mill gate CPO price (and also for palm kernels) with some help from lower fertiliser prices, an improved mix of ffb (more group ffb at the expense of bought-in ffb from ) and an extra mill coming on stream. It all sent their eps up nearly 66% on largely flat production.

With our maybe older oil palm age profile (their average age is 10.5 years, a particularly favourable age apparently), and more oil palms being cut down for replanting (2% every year?), I am not sure we will be able to maintain production at the previous year's level given the weather related issues in 2024 but the higher prices for cpo and pko should give us higher eps than 2023's $1.40. I hope for a dividend of about 27p to 30p.

The main problem with our rating is the extraordinary risk averseness to putting our obscene cash mountain to more productive use in growth opportunities: there are growth opportunities even if our BoD claims there aren't: MP Evans has no trouble finding them. Until they change their attitude to risk-taking, the diabolically low PE multiple is fully justified in my view. The failure to cancel the bought back shares is astonishing; MP Evans cancels theirs. I am sure our BoD will not behave like this for ever, so I am happy to hold (this sort of conduct is not in the BoD's interest, so they will change - the worst case is it might take them 8 years). (My family is invested in all 3 London listed oil palm cultivators).

"Not at all surprised the buyback has been dropped in light of "the strength of the Company’s share price."

And yet, Putup, you persist with your nonsense that all buybacks are always value-neutral, are not a capital allocation decision, and yet today you think it does matter what price buybacks are done at.

On the topic of buybacks, you really are a total moron and are in need of (psychiatric?) help.

Wonderful opinion piece by Allister Heath in today's Telegraph. I cannot commend it highly enough. While I was put off Trump's lack of strategic thinking in dealing with Ukraine, I must say after reading AH's piece I am converted to believing everything Trump is doing in America is needed to be done here (except for the land grabs of Greenland/Panama etc. and the tariffs on imported goods from friendly countries. The article really rubbishes government policy here (both Conservative in the past, and now Labour, including confiscatory taxation (a comment by a poster called IranMad mentions the leveraged destruction of Enquest shareholder wealth, i.e. many times more than the value of the extra tax extracted) , anti growth policies, and says if Rachel Reeves does not copy Trump, we are heading for fiscal Armageddon.

He is right of course. I was always put off by Trump's ignorance of science (the bleach injection comments to stop covid), geography and history, but after reading the piece, I would hope Rachel Reeves will adopt most of Trump's policies. I cannot imagine she will - the main thing is to get out of the UK before fiscal Amageddon. I still hold all my Enquest shares.

https://www.telegraph.co.uk/news/2025/01/22/britain-one-last-hope-we-must-go-unashamedly-full-trumpian/

"Nobull remember that Tullow only report the bit they own (38.98%) and not the entire field. I think that is where your confusion is coming from." Yes.

Well I am greatly relieved that the situation is not as bad as I thought. Thank you SC and Antonvb. 6.5 years is a lot better than 4 years. If the new debt is secured, I do not see why we would have to pay such an extortionate interest rate as the 15% to Glencore: we might get away with 13% at worst, certainly a lot better than that grotesque 23% gross redemption yield last week on our bonds (before the arbitral judgement).

SC, I thought it was 90k per day (when operating properly). If I have misunderstood that, then I am very bullish. Thanks. Yes, 8 years would make the refinancing at a reasonable price a lot easier. A 13% refinancing interest rate I could live with.

I thought our current extraction rate was about 3 million barrels per month. The November reserves report (as at 30 06 24) showed oil P2 reserves of 164 million barrels: gas is of no interest to me so I do not count that - we do not get a proper price comparable to oil for that.

https://www.tullowoil.com/application/files/7917/2742/0753/2024_1H_Reserves_Report.pdf

36million barrels extracted per year does not last long, say 4.5 years from 30 06 24.

SC

I am long, but I can see why some people are shorting it and it remains a mystery why RG is so bullish. In an efficient market you would expect the stock to be priced midway between two very different 2026 outcomes of roughly equal probability, wouldn't you?

The optimum debt level is a tricky one. On the one hand debt is supposed to be cheaper than equity, but it is less flexible: you cannot pass interest payments, but you can, dividends. I do not want to be holding this stock with $700m of debt at end of 2026 with only two years of P2 reserves left, and I do not want the number of shares doubled for a capital raise to deal with the debt problem, but I think one has to be realistic that it might happen, after all it is not normal to be on a forward PE of less than 2, is it? I am a believer in broadly efficient markets, so I will not be surprised if there is a capital raise. Fingers crossed for a good outcome, however that may arise: takeover, exploration success, sustained oil price rise.

SC, hi

"The scenario you paint is the one that we would be facing if RD had continued. "

According the MarketScreener, our net debt will be $1.1bn by end of 2025 (and that probably assumes a decent oil price and no production problems). Our cash flows seem weighted towards H2 IIRC, so redeeming a good chunk of the May 2026 bond will not be possible without replacement finance, and the finance costs are predicted to be $237m and $221m for 2025 and 2026 respectively, not much different from what they will be for 2024 even though 2024's average net debt is quite a bit higher.

Our P2 reserves, at current rate of extraction run out year-end 2028, so there would not be any cash flow to service debt after that (Uganda contingency payments are quite far off - EACOP will take several years to build, and Kenyan project is a

cash guzzler unless we can sell it to recover some of the past expenditure on it - I do not understand whether the Kenyan government has the right to strip us of all economic benefits from it: Genel recently lost its development/exploration rights for Bina Bawi and Miran in the Kurdish region of Iraq.

Yes, it shows confidence to be able to procure replacement finance at a reasonable price to start a heavy capex program covering 2 years of drilling but I do not know if this confidence is misplaced. I got the impression from RD that we were at an inflection point where we would start some serious equity value accretion, but a look at a slide in the November Reserves report shows our P2 reserves valued, using a 10% discount rate, at $3bn, enough to pay supposedly our debt principal and to leave $1bn for our market cap, except that is not right because part of that $3bn is needed to pay the annual financing costs of $240m (4 years of production would be say $800m of financing costs) and also a 10% discount rate seems totally unrealistic if we are borrowing from Glencore at 15%, and a 15% discount rate would make our P2 reserves worth a lot less than $3bn, to say nothing of needing decent oil prices until the end of 2028.

The main reason for holding this stock seems to me to be hope that

a) we find masses more of P2 reserves

b) the oil price goes over $90 for a decent period

c) some cash rich oil company takes us over, cutting the debt service interest rate massively

d) we are able to raise money from selling the Kenyan project

Have I understood "net present value of our P2 reserves" correctly? I assume it means the return in today's money to the providers of capital, both debt and equity suppliers, the present value of the free cash flow to firm. The thing I do not get is, is this free cash flow to firm after debt servicing costs or before?

"one thing is for sure and that's the fact they want shareholder value"

Yes, but that only comes from making economic profit (in the jargon of Stern Stewart) and while the accounts are forecast to show a statutory (or perhaps even business performance) profit, if we have to borrow at 15% to refinance our 2026 bonds and only make a lower ROCE, then we will be making an economic loss (whilst reporting profits). The problem with accounts is they do not subtract the cost of equity, so not all reported 'profits' are adding shareholder value, perhaps a somewhat counterintuitive idea for some who are not into this nerdy stuff. As our P2 reserves drop without replacement, the debt servicing costs of our replacement 2026 bond finance should rise in line with increases in debt principal default risk (decent interest cover may lull some investors into disbelief that we are heading for a liquidity crisis: our low forecast PE ratio could be normalised by doubling the number of shares in issue, e.g. if we had a capital raise to lower our replacement debt servicing costs). I am new to this stock so I do not have the extensive knowledge of some here.

Supercooper,

"Tlw is the only oiler with debt and the only oiler that faces bankruptcy because of their inability to refinance in the space of 18months."

I just pointed out the refinancing of the 2026 notes will come at a cost. 100% dilution (bankruptcy) seems a tad steep. We do not want a material uncertainty as to going concern in the accounts so it is better to do the refinancing well before the 12 month window brings into view the 2026 bond redemption date, and, as now is as good a time as any, why would not the market be trying to price in the cost of such a refinancing whether through a takeover or otherwise?

"Can anyone explain a few reasons why the share price dropped on the news of a possible takeover. Surely this should have had some positive impact especially with the sp being in a pretty low position??"

A potential takeover by KOS can be seen as a sort of 'brought forward' refinancing of our 15th May 2026 Senior Secured Loan Notes, where, if we were not taken over, more dilution risk would, all other things remaining the same such as oil prices and production volumes, need to be priced into our shares as we approach May 2026 (because we might have to issue a free equity sweetener to persuade the note holders to extend the redemption date a few years - KOS for doing this 'service' (of getting our 2026 Notes repayment obligation down to safer levels) using its surplus liquidity (liquidity which comes at a price for KOS) will want recoup this cost from us, and a bit more (nobody does anything for free), and any takeover terms will need to reflect that (if our BoD thinks KOS are charging too much, they will reject the KOS's proposals). The movements in our share price maybe reflect the market's best guess of what those terms might be, I wonder? JMV.

We should get confirmation of £27m revenue and £9m net income in the early Feb pre-close trading update. With this company net income is > PTP because of our unused tax losses (we get tax credits, not tax bills!).

The big unknown here surely is what is going to be our BoD's capital allocation policy? We should have £14m of cash in two weeks' time. Are they going to do buybacks, declare a maiden dividend or splurge on an acquisition? If they bought a profitable business, surely they could use up their unrecognised tax losses of £28.4m (y/e 2023) quicker, adding more shareholder value than by doing share buybacks? I cannot imagine our BoD want to give us any money: they give themselves plenty, so they probably do not want to give themselves any more by way of dividends, I wonder? Besides they can give themselves a bigger pay rise if they make acquisitions (more sales = bigger salary?). At the moment all the eps growth seems to be being expended reducing the PE, rather than pushing up the share price. Surely, as we monetise those currently unrecognised tax losses, the process itself will accelerate, as will the growth in our cash mountain. It may take a few years to get to 60p, but the movement up may be quite sudden. JMV.

The eps forecasts seem to have factored in a recovery in OM to 10% and ROCE to 15%, so then the problem is: what forward multiple do you then get? 14.2 for 2025 and 10.4 for 2026. Net debt reduction seems to be on hold for 2025 and 2026 at around £120m. Share price recovery looks, at best, flat for a good while. Defence (submarine rescue) is presumably a niche business. Transport of oil to smaller ports? No idea about the competition on that. Energy sector - fingers crossed on that one (growth in offshore wind farms may throw up some opportunities?). I would like to see debt fall from £120m to be confident of a share price recovery from approx. £3. Anyway, 3 analysts have it as a strong buy. Not sure why.

Could he be leaving by mutual consent? "To be leaving to pursue... " sounds like a face-saving form of words. It would not be unheard of surely to receive a draft of the arbitral ruling a week before the final version (to check for any errors of fact, giving each party a day or two to suggest any tweaks that probably do not change anything materially), only for the RNS to be released on receipt of the final version, I wonder? I am not a lawyer so I do not know of course, and each arbitration scheme may have different procedures.

Further, the only thing different about a director buying back shares for cancellation compared with buying shares in a different company is whether he is doing it to favour himself (pushing up the share price to deliver shed loads of free shares from a share price performance target being hit or to favour an activist shareholder who wants out at an inflated price and getting such a shareholder off his back). The listing rules limiting volumes and prices surrounding buyback transactions are designed to prevent a false market in the shares to stop directors behaving unethically, so the listing rules have an input into the parameters, I wonder?

“Every time Two Planks asks the same question and doesn't get a reply he likes, he repeats the question. Stupid is as stupid does. ”

To be clear, Putup, you seem unable to understand that a share has an intrinsic value and that purchasing above that price is similar to offering £1.20 for £1 coins from a bank, a way that even you can see slowly destroys your wealth. Why should the decision calculus a risk-averse director goes through buying shares in his own company for cancellation be different from buying shares in other companies? You cannot answer that.

In the case of shares bought in an associate company, the shares are shown at cost plus their share of profits (to create a “carrying value” on the asset side of the balance sheet, the so-called equity method of accounting). If the same method of accounting were used for buybacks (retaining the bought back shares on the sources of finance side of the balance sheet, even you would be able to get an indication of whether shareholder value was being created, destroyed or was just value-neutral.

Your claim that all buybacks are always value-neutral Is false.

Jon Harris understands that buybacks have to be done below GKP intrinsic value so as not to destroy shareholder value – he said buybacks will be done “opportunistically”, i.e. not at any price.

Straycat, the buybacks are most likely not being executed because the brokers cannot do them within the parameters specified by the irrevocable agreement. For the agreement to be properly irrevocable, I think $10m should be deposited with the brokers to carry out such a buyback program. The parameters specified in the irrevocable agreement could conceivably come from a number of different sources: the listing rules, the bye-laws, Bermudian company law, the City Code on Take-overs and Mergers and of course Jon Harris, himself, the latter to ensure shareholder wealth is spent creating optimal shareholder value (the money has potentially other ways of being spent to create shareholder value e.g. drilling new wells to increase production). Putup, with his nonsense about buybacks always being value-neutral distributions, cannot accept that buybacks are a type of capital allocation decision where the Board consider how best to enhance shareholder value.

The buyback price limit, one of the parameters, may have been set by reference to other alternative shareholder value-enhancing strategies. I do not think Broadford Bay's suggested possible reasons for the non-execution of the buyback program are very likely (e.g. change in liquidity requirements for a ramped-up capex program) because then the buyback agreement would not be irrevocable – the outcomes that the parameters are tested against to see if the buyback should be done or not probably need to be outside the control of the directors, otherwise I do not see how the buyback agreement is irrevocable. JMV.