Member Info for Scrodingerscat

The 14% spread is killing any real volume.

That doesn't actually mean anything, it either is or it isn't, priced in suggests the outcome is a given and is reflected in the current SP, partly priced in??? to what %? Look sorry for being facetious, my point being the only price currently reflected is that of a company heading out of business. I already agreed with you that it won't change the sentiment.

JMAX You are probably right about 40p but it definitely is not priced in, the sad state of affairs is that you have chapter 11 bankruptcy oil company basket cases with higher debts, weaker assets, higher costs of production and lower bopd productions with higher market caps than TLW. Let's not kid the current price reflects complete failure of the company in the short term.

My first purchase was at £1.80 and since then the balance sheet has taken a massive hit. Impairment mainly but also the disposal of Uganda.

From a fundamentalist point of view its obviously not going to hit £2 even at 100K bopd on it's own. You can only do limited balance sheet strengthening with reduced reserves. But they can get there at $65 oil by commercialising gas in Ghana and finding additional oil reserves in South America, say if they find 250 - 300 million barrels of light oil in Suriname the fundamentals change. A reduction of net debt and a currently justified reversal of the oil price write down would also help.

Rahul though will focus entirely on Ghana for now but with oil where it is I wouldn't discount entirely another drill in Guyana in 2022 or with a farmdown an escalated time line push for first oil in Kenya.

*$1.4billion not million (write down)... duh!

SiPi, it's been telling that TLW has pretty much mirrored Premier Oil the UK's most shorted share since their takeover announcement last year. The board has taken the polar opposite approach to PMO by disposing of assets and still has been punished the same for it. There has been little or no positive momentum generated by CMD or the proposed asset sale, the only positive momentum has been generated by the rising price of oil. Even mickey mouse oilers have seen similar rises. Something has to give and if they keep releasing positive news its just a matter of time. TLW refinanced, production addressed and even a £1 share price looks silly. The $1.4 million writedown from $65 to $60 oil now even looks like it could have been premature.

I'm not making ridiculous suggestions of $100 oil but it's clear that every Tom, Dick and Harry are currently busy recuperating losses from 2020 and the lack of investment last year has continued this year. Major's divesting assets, only investing in core low cost assets and alternative energy. Shell the largest FTSE company by market capitalization disposed Canadian assets today. Minors and mid tiers do not have the financial clout to do as much exploration as the major or supermajors. If the supermajors continue to exit at the current rate OPEC+ become even more powerful because electric and Hydrogen are still some way off being ready to supplant oil.

How is break even $35? The trading update shows all in last year the realised oil price was $50.8 and still lost $70million due to redundancy payouts. Even with reduced overheads, TLW still has 4 drills and an exploration drill to pay for, at least 16,000 bopd less of production (if EG sale is approved by shareholders), $100 million in decommissioning costs and a $300 million debt payment. Not deramping here but you have made a figure out of thin air.

Back in the FTSE 250 would be a positive mainly because tracker funds have to buy in. Still some II's will not buy into stocks less than £1 and the market in the main remains transfixed on TLW's debt and not much beyond that. Which despite the worst oil slump in my life time has still come down from a peak last year of $3B to $2.4B.

Still lots of hurdles plenty of ups and downs from here, but a re jigged lending facility, a plan to get production to a sustained 100K bopd, net debt reduced by $1B, dividends reinstated, gas sales in Ghana and cash to pursue some of the companies exploration acreage then there's no reason why this couldn't be a $2B and beyond market cap again. When RBL and refinancing is done and dusted this is just a sit back and hold for a few years. You never know by 2024 they could even start a share buy back programme. I do think this will be the last major cycle for oil so TLW will need to start to think about diversifying in the next 5 years but gas is a good start, the trust built over the years with Ghana will hopefully pay off with exposure to energy contracts that fall outside of oil.

Sageman, scot is way off the mark not sure why he thinks a collapse is about to happen, there was attention focused on an inverted yield curve on US bonds in 2019 and the US major indices are grossly overvalued and due a correction. But it is in theory entirely possible for the federal reserve to go bust, too much quantitative easing in times of high interest could result in hyperinflation which could cause a crash in confidence. Though this is so unlikely because there would have to be so many errors made along with bad timing, as all central banks have checks and balances to any QE actions. What makes USD a global benchmark currency and the Russian Ruble a mickey mouse currency... Confidence, legitimacy, trust and stability that's all, only a fool can say it will ever be so. Trump being case and point. The Euro now appears the safe haven globally and has been far more stable than GBP and USD in recent times.

BumBum, it's in the RNS but since it's a blue day:

Contingent annual payments to be paid on upstream revenues from the Uganda Interests (reduced to 28.3334% following exercise by Uganda National Oil Company (UNOC) of its back-in rights - see below) calculated as follows: (i) no payment if the average annual Brent price is less than or equal to US$62 per barrel, (ii) 1.25% (net of tax) if the average annual Brent price is greater than US$62 per barrel or (iii) 2.5% (net of tax) if the average annual Brent price is greater than US$70 per barrel.

So there's a royalty due when total start producing and oil is above $62.

Roxbury, some well thought out reasoning though I would add that it is basically a throw away comment, TLW "could" be able to pay the debt by the maturity dates but is presently not able to demonstrate that it currently can and also if all cash is earmarked for debt then we can effectively kiss goodye to 9 drills by 2022. The RBL looks forward and is based on TLW's overall and current liquidity position, not a mostly hypothetical position in 18 months time.

I would say that in respect of gearing, current prices and the recent disposal announcement I would expect the 2021 $300M convertible bond will be paid.

Yes I'm aware of that but in 99% of cases you are betting against the platform. It's only when you have a large position that anything filters through to the open market to hedge your bet. For example a spread bet of £1000 per point requires leverage or margin availability of approx. £7500 on TLW, your platform will only take a counter position if the bet is going in your favour when you reach a threshold on that share each platform is different but I wouldn't imagine they wouldn't even sweat if they were down £25K on a stock with so many shares in issue.

PI's don't borrow shares generally, mainly because you need to have a lot of capital and nobody is going to loan out tiddly amounts. Placing a short bet on a trading platform has no impact on share price generally because even if you take a large position that exceeds the platform thresholds they will take a position to counter or hedge your position. Also PI's don't have Algorithms in place to maximise sell or buy in particular direction.

I doubt it. Odey Asset Management target companies that are struggling rather than true hedging, the fund was criticised last year for being excessively short compared to it's overall long position, they do it because basically borrowing shares is cheaper than buying them. They never owned any Metro Bank bonds and piled in as biggest short on there. I have no proof but I wouldn't be surprised about that Telegraph article that came out of nowhere the other week claiming the writing was on the wall for a rights issue was a favour to a fellow Tory donor.

We all understand his point it's just not based in reality. At the time we were having a liquidity crisis, oil was on the floor and Uganda is not a business friendly jurisdiction with suitors queuing up. Remember the $900M deal collapsed originally because Uganda wanted chunky Capital gains, notice how these were paltry this time round, from the country where the government turns the internet off during an election and they have had the same president for 35 years. Still no FID either.

Wothy? Are you actually happy for once? Are you still going to burn Les at the stake for selling the silverware?

The only issue is the reduction in reserves, the RNS is very thorough though explaining the breakdown. I suppose the question is how long would it take exactly from the non-operated proposed disposals @ 6000 bopd and $60 oil take to generate that level of cash minus costs, if the answer is longer than 18 months (which I believe it is) then this is a good deal IMO. I will listen to the conference call tomorrow and re-read the RNS, looks like we will have another vote to consider so please people research the transaction and come to your own conclusion DYOR.

steward1 for TLW to generate $700 million in FCF oil would need to be $70+. Fair play for optimism but I can't see it.

Steward1, I do like the optimism but oil would have to be 40% for that to be true above the $50 forecast and considering 1/12 of 2021 has already gone would need to average around $71.50 for the rest of the year. That's also ignoring any cost of refinancing.

Bullmarket, well put. I don't think any investor is expecting anything other than addressing debt first and after the dust settles from lenders hopefully have the freedom to increase CAPEX focused on production. Oil is currently 20% above that forecast and if it sticks @ $60 ( big if) assuming RBL is sorted without debilitating covenants that potentially gives an additional $30 - $40M headroom by end of H1. We will likely be eating into cash first half as CAPEX appears to be H1 heavy but if oil stays here I would hope for a further well being drilled in Q4. Over simplified but clearly to reverse the decline in production TLW needs to de drilling at least 4 new wells by the end of 2022.