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No wonder the price is going up . Barclays (financial advisor and corporate broker to Tullow ) published a 15 page overweight note reducing their EPS guidance for 2026 by only one cent to 21c and upgrading their 2027 guidance from 20c to 23c (17.8p). Obviously the impact of this gas injection project will have a material effect boosting net reserves by 5m barrels . They also mention the opportunity to add significant reserves and highlight “progress towards a debt refinancing” given by the Company in the conference call. Lastly, they reflect on the medium term where management are commenting that “return to shareholders would come ahead of acquisitions “. They maintain a price target of 50p but given a fair wind of likely outcomes and a sprinkle of fairy dust (Kenya gives the go ahead on a trucking operation in Kenya and the Govt of Ghana cooperate with Ten FID and court case ) these shares , in my opinion could be north of £1 within 12-18 months. Once investors believe there is a credible plan for refinancing the 2026 bonds with more conventional reserve based lending that allows both a growth agenda and shareholder distributions, i see the shares rebounding strongly. In my experience shares on a forward price earnings of circa one times , are as rare as unicorns !

J.Bond

To understand the vagaries of petroleum companies and how reserves are booked is a science in itself. Case in point was the previous write down of assets in Ten . Far from needing to provision for early release of the leased Ten FPSO the Company is now embarking on a 4D seismic programme there. There has been a wholesale liquidation of large chunks of the portfolio to pay down debt and disappointing production numbers , so I can sympathise with your viewpoint. However, if the bonds are to be refinanced over the next few months the book value of proven reserves is substantially higher than the market cap.

The CFO says the deal is valued at accretive so let’s see tomorrow how he arrives at that conclusion. Gabon would have been responsible for $65m ? out of the $75m earmarked for non op capex for 2025 ..the transaction date is effective from 1st January 2025.. so any capex would be reimbursed if sanctioned by the acquirer . So if there is interest to be paid on a 1st Jan closing date ..the company does not spend capex/receives close to $370m after tax ?by June 2025 closing ? That’s $370m could be used to repay a facility charging out at 15% plus fees or be invested in 2C Jubilee reserves with a 30% IRR ..which means that by year end the amount saved could be close to $386m ? or higher next year if it fast tracks putting further production on stream. Good deal.

`Careful JMAX you might be starting to show your true colours. Tullow have a carrot to give to interested parties …why give it to an impoverished Government who just wants a free carry. Much better to someone willing to sink in serious capital ?

@ J.Bond good post . Thank you.

Antonvb You have no idea what the real short position is.. let me assure you that when you include the sub 0.5% disclosures the short is very meaningful in this stock…as i think people are about to find out.

The key to this decision, in my opinion, is not the reaction of the equity market…it is the response of the debt markets, who do not participate in the incremental value upside per share …the latter is understandably obsessed with counterparty risk. Post this decision, the refinancing of the 26 bonds , in my opinion , is a done deal subject to a haggle over coupon rates. Tullow would be wise to pa y a generous rate but keep flexibility on repayment terms and excess capital distribution. After all they can always refinance when all the other debt instruments have been dealt with. Post an imminent ? debt restructure, the shares should pass the 40p threshold…how they perform tomorrow is a side show.

DYOR Not financial advice

JMAX

I am surprised that you do not understand how flawed your logic is…to suggest a share price has to go down to 22p before it goes up to 60p ..is saying that the market is just being manipulated ….because any mature investor would understand that with so much upside potential the shares should never have gone down in the first place. To me it is a sign that the downrampers or some very vain posters are realising that post a resolution of the ICC tribunal case and a debt restructuring they will be exposed. They would rather control the narrative ..this share will be going north of 80p in the next 12 months or 160p-200p if Kenya FDP is approved. I would expect a new Government in Ghana to shortly approve our FDP for Ten and repay the $60-80m plus outstanding. The old government of Ghana had stymied numerous commercialisation opportunities …all is about to change…in my opinion of course !

JMAX you need to remember you are dealing with an equity stub valuation for Tullow and the enterprise value only changes a small amount if the share price doubles because of the size of the debt. Kosmos knows the new President of Ghana will almost certainly look favourably on incentives for the oil industry…approval of the FDP for the Ten field would allow a substantial write back of reserves and reversal of provisions for FPSO surrender. It would appears that there are some naughty shorters trying to rewrite history..but they might be taught some manners shortly …especially if the ICC ruling on branch profits tax goes our way.

Krackers

The free cash flow is enormous …what interest cover or RBL covenants are you concerned about ? This prospective cash flow yield is phenomenal …why do you think Kosmos which has a similar debt profile is interested ? The shorters are about to get their comeuppance…i am going to enjoy this one !

Https://www.tullowoil.com/application/files/9117/0970/8906/Independent_audit_of_Tullow_Petroleum_Assets_YE2023.pdf

Look at the gas reserves of the Ten field…none recognised because of the previous antics of the old Ghana administration. The oil reserves have been booked in at a negative value because of an assumption on terminating the FPSO lease on its first break ….wheras the FPSO lease costs fall around $50m the following year and if the FDP for Ten is approved there could be write backs of several hundred million dollars. How the price dropped so low is because the CEO failed to have a Capital Markets Day and explain the real value within this Company. Kenya has sunk costs of $2bn awaiting an FDP from the Kenyan government . I think this is the cheapest oil stock in the market ! Well played to Kosmos. The new Government , which has promised to support the oil industry, does not get control for another month allowing Kosmos to take the initiative whilst not all of this is obvious to the clowns , aka the teenage scribblers, who have focussed just on production shortfalls …If Rahul Dhir had drilled more wells on Jubillee we would never be in this mess. The decline in short term production is temporary because the reserves are there to take production back up to the 90-100k gross level…but you need to drill the wells . Even at these oil prices the payback is less than a year. I suspect Kosmos will fail because there is intrinsic value which justifies a price well north of 100p even assuming really negative assumptions . All my opinion . Please do your own research .

Great news for Tullow…John Mahama is clear winner even through many votes yet to be counted.

This is the man that has called for “tax amnesty” and wants the Government to attract outside investors like Tullow to develop the oil industry. May have to wait until he is officially sworn in on the 7th January …but IMO extremely good news. Finally !

https://www.bbc.co.uk/news/articles/cdx9nlyjke4o

I suspect some people involved in the debt refinance must have had some knowledge of these issues…why on earth would the price have been so low ? Lets get some perspective..if the Government of the host nation pay its energy bill and i am not aware they have ever defaulted on us…and one lifting occurred a few weeks earlier we would be reporting cash flow within guidance….and that is after spending $300m this year largely on growth capex for Jubilee South East and decommissioning . The key point is the cash flow recovers the following year although there will be some new wells needed. .

The decommissioning costs are one off in nature, although you might say Jubilee accruals for decommissioning mean a positive variance of circa $50m ? on 2024/5. So Happy and Jmax would like to you to panic out of your shares at 1.5 times prospective net cash flow to market cap ? No wonder they’re so happy ! That’s not to say I’m happy…kick Rahul out . Shareholders require communication…there is a mature asset base here well in excess of the market cap and if we are not careful we will be handing it to a private equity buyer on a plate. You have been warned .

Everyone needs to calm down. The Government of Ghana has from time to time delayed payments . Our gas is the cheapest source available to it as the price is one third of alternatives . The Government has just received almost $5bn of funds to put its finances back in order and there is a pro business administration forecast to win the general election in a few weeks . The reserves are in the ground and are going to be produced. Even with the disappointment over power outages on the FPSO we sit on two times cash flow to market cap.

The difference in the timing of a lifting of two weeks makes this a bad update ? Well it doesn’t make for the right headline. They seem extremely confident on the debt restructuring which is the main point . Looks as though short term power constraints from top side gensets is responsible , so not something that will damage production.

Also , why has the tax result been postponed until potentially after the general election in Ghana on the 7th December ? Smells like an attempt to avoid embarrassing the Government .

There are some huge catalysts approaching …the international tribunal ruling on branch profits tax which should be due any week now and looks to me like an attempted spurious shake down doomed to fail …as Tullow is the only Company being targeted to the best of my knowledge.

Secondly the elections in Ghana on the 7th December likely to won by John Mahama who, unlike the incumbents , is setting a reconciliatory tone, in wanting to abandon such legal manoeuvres against external investors and encourage development of resources. Mahama has previous experience and a track record in government , so I can only see this as an improvement on the status quo.

The failure of the J69 well left Tullow in the uncomfortable position of having plenty of reserves but lacking a rig to plug the production gap in the short term. Despite being the only real disappointing well out of almost 30? drilled in Jubilee , the inevitable lost of 12 months production from the FPSO has resulted in a totally disproportionate reaction to the share price. Rahul needs to go . His failure to build appropriate redundancy into the well programme so that any shortfall could have been replaced by another well is unforgivable. Where is our performance dividend for all the investment in plantations in Ghana and all the virtual signalling. We are still treated as a pariah sector despite bending over backwards with all the woke initiatives .

For those selling out at close to the bottom i can only apologise on behalf of Tullow for the woeful lack of communication. They must be up to their eyeballs right now in the bond refinancing. Far be it from us mere mortals to be told what’s going on . We should all read Instagram or Twitter if we want to see what announcements the company is making at trade conferences etc.,

Not everything is the fault of the management. We have had an oil price in decline and Ghana has had to survive on sovereign debt write offs . In these circumstances , deferring investment before ensuring payment for gas offtake projects is sensible but a failure to command a second rig or hold on to the one we had…was an amateur mistake. Kosmos has already admitted that at least two wells can be drilled without the new seismic in the next campaign. Being to clever with “every penny counts” comes at a very large cost sometimes Rahul. The market is valuing Tullow as if its production profile is in permenant decline whereas Kosmos have conformed Jubilee can achieved stabilised production wells over 90bpd gross into the next decade if the well inventory is added to !

If Tullow can achieve in targeted stabilised production at Jubilee at around 90k gross per day, for almost the next decade it will be a great achievement . The shorters peddled a story that production would collapse . They are wrong but J69, which came online in February 2024 (initially quite successfully ) was a downer…it happens in this industry. The key to your observation is that Rahul up until now has had to pay down debt as a priority…as we now have a much lower capex and decommissioning spend so we can finally do production deals and grow the production base.

Jubilee is a mature field. It has just had a negative revision of 7m barrels net to Tullow in the latest reserve report owing to the J69 field (on the margin of the main reservoir but not pressure connected ) . Jubilee has been a great success with many upgrading of recovery ratios since it was put online. You complain about declining production but that the decline ratio has been clearly stated by management …as you can see from the June reserve reports it still contains billions of dollars of recoverable reserves. In my view Rahul is running this business to generate the greatest amount of short term cash flow. The current drilling programme finished six months early…and on budget …shame we did not drill a couple more. The PSC allows for extremely generous cost recovery so the impact of drilling further wells is mitigated . The oil price and woke pronouncements have lowered all shares in the sector . C’est la vie

@JMAX try not to blink, you might get the smug smile wiped off …Still waiting your answer on a legal precedent. Supercooper…J69 well was disappointing, but the reserves are there . Ensuring well productivity requires a delay whilst updated seismic confirms drilling locations. Long term production does not decline …we have a production shortfall for one year because we need to drill more wells. The real value of future cash flow is still there and the cash flow yield is insane. Once debt is restructured , expect buybacks from free cashflow to energise shares .

@JMAX how about you quote me one ruling under the jurisdiction of the ICC where branch profits tax has been awarded in favour of the host nation where the PSC has included competently drafted stabilisation clauses ? If Ghana was so confident why did they drop all the other spurious claims against other international companies , including Kosmos? Why did they not enforce these claims at an earlier opportunity considering how long this field has been on commercial development…oh yes, i forgot, I believe they tried previously but gave up because they didn’t have a case. Let’s see when the decision arrives if i am right or wrong. I have maintained my opinion since the beginning of the case. The Government will probably change on 7th January 25 after elections, the best the Government of Ghana can do now, is to try to save face until this time . Remember this case is a disaster for the country. No outside companies want to invest if they are not protected under international law. Tullow is providing the country with its cheapest hydrocarbons..it makes no sense not to settle their dues or have to pay substantially more replacing production on international markets. Perhaps you would like to elucidate your views…or are you just going to ask questions rather than give logical explanations for you “tea leaf” prophecies.

In relation to receiving part of the insurance proceeds on the turret mooring , did the Government of Ghana compensate the holding company when they paid premiums previously…or did they just want to share in the proceeds because they lost revenue ? The words cake and it , come to mind . Courts expect consistency on interpretation of lawful agreements..you can’t have it both ways once the tax authority has previously ruled the other way. Tullow has called the bluff of the Government because it had no option. The government has lost substantial long term revenues as investment is curtailed.

As for Kenya , the Government can stall by insisting that they want full development of license blocks, but if all sensible avenues to financing the Lapsett pipeline development are exhausted , they will either need to reimburse Tullow for past costs of $2bn or let Tullow move forward with a reduced FDP. You see JMAX , the host nation holds the cards, but they still have to play them eventually or it’s off to the ICC for a ruling again…what has Tullow to lose ?

DYOR the above is the opinions of a private investor . Seek professional advice before making an investment decision.