Member Info for seakingalpha

Total are interested in operating fields ..not being a junior partner . I do not believe their relationship with the Kenyans was helped by favouring the Ugandan pipeline proposal either . Originally they had high hopes of exploration in the Lamu basin which was not exactly a great success. Big is not a guarantee of commercial execution …BP currently has its own headache with the Tortue field development . In my experience , large companies are often a nightmare in terms of cost recovery and laborious and inflexible authorised financial expenditure budgets although I wouldn’t mind employing some of Exxons tech being used in Guyana :)

I might also point out

@Tambo. You appear a little confused , that might have been your argument before they awarded the licenses ..not afterwards. Meanwhile it has been the likes of Total who have disappointed the Government by not maintaining an equity participation not Tullow . Normally , it is the multinational who appoint Country Managers from the expat community and shun local content in favour of their suppliers. Tullow try to view all “stakeholders” as worthy of participation and benefit from the value creation . Strange concepts for the large inflexible multinationals . Just sayin !

Completely agree…one month late with commencement of Jubilee South East accounts for the tiny shortfall …but the balance sheet debt will come down fast from now on. Very well orchestrated bear raid. They have picked the wrong company IMO. The valuation is not a “bear trap” . Excess cash flow after capex has been used to pay down debt..after the next debt renegotiation we should allocate some to growth project with high IRR. Then watch the share price.

Hi Tambo, Doc you see the Chinese tourists visiting Turkana in the last week…or the tweets from the Chairman of the NOC of Kenya . Strange times . The reserves have been increased and the pipeline size upgraded …apart from the requirement of waxy crude to be heated which might add $4-6 per barrel to transit economics I am struggling to see why this is not an attractive project at current prices. Why explore when you have onshore assets close to FID ?

2026 maturity bond price is marginally up but share price is down …what a load of contrived BS from the bears ! They need to held accountable in coming months …many innocent investors will have been forced out on this raid. Company IMO is in great shape …free cash flow multiple is one of lowest on market

People are seriously daft.;..oil futures allow you to sell forward and lock in profits if you want to …I am sure the company will lock in the appropriate caps and collars in due course to justify a significant rerating . As capex is much lower going forward the Company will lower its forward gross debt facility saving material amounts . The harvesting is just starting . $75m of cash generated in the latest 2 months and the last well only came on stream in the last week. Current production is at 107k …this is heading north in my opinion after the usual IR results fiasco. Rahul is doing at great job but his presentations sucked. It all comes out in the Q&A. There should be substantial saving on the FPSO as the market is severely depressed compared to the shortage of available FPSO’s when the original lease was negotiated. Also, subtle reference to other operators potentially using the infrastructure …might be the Pecan development? Or Ivory Coast on a longer term basis ? Outstandingly cheap share . Added to my holding today as I note one prominent CFD provided doubled their margin requirement and combined with stop losses exacerbated the situation . Post any positive agreement in relation to an extension of debt maturities , the sales shiould be north of 80p in my opinion.

Sorry, see slide 5 of the link for forecast Jubilee production .

Not sure if we are looking at the same Company. Thanks to “Bootycall” on another site for the link

Production is obviously moving materially ahead. The link up for Jubilee South East was delayed by just over a month and the building up in production necessitated lower the main field output for a few months . This has been explained in the Kosmos investor call. As usual people need time to disgust . This is a Company about to generate virtually its whole market cap in free cash flow in the next year…and some posters are trying to describe progress as a “problem that needs to be resolved”. The last well came on stream at 17k bopd !

hTTps://investors.kosmosenergy.com/static-files/7b9c3940-a273-4ed6-90b8-601feaf5f583

Look at the forecasted $200m of free cash flow in the second half. This is not a seasonal business and average production will be higher next year. The business is on 1-2 times free cash flow for goodness sake ! The Company can sell forward its production and lock in massive cash resources now prices have improved. One of the cheapest value stocks in the market in my opinion . Only annoying thing is the Kenyan Government faffing around …but I suspect that may be a bit of a negotiating stance ?

Anton, I decided to buy back my shares after watching the reaction on TV of the Gabon population to the coup… and the statements from the interim military government who appear to be supportive of new fair elections. I am still a little wary of the Organisation of African States intervening but if the status quo was to return that would not be an issue. Tullow still has to navigate a somewhat spurious tax demand for branch profits tax in Ghana ,which noticeably has been dropped against several multinationals in the same position ….and refinance the outstanding bonds maturing in 2026 …but current oil prices will allow very favourable hedging and with the Kenya project approaching potential approval and the new gas opportunity in Ghana …..the cash flows are too compelling for me to not get involved.

Https://www.upstreamonline.com/production/boost-for-tullow-oil-in-chase-for-high-return-production-assets-in-africa/2-1-1498198

Sensible points Anton..but the reality is that Tullow does not appear to have closed yet its asset swap with Perenco…which could leave everything in Limbo from a legal perspective . Furthermore, if all government ministries are “dissolved” for the time being , getting the relevant operating permits for the satellite fields to be tied back offshore may be disrupted. Life will go on …but field operators need sign offs on many aspects of operations from Government . It is in everyone’s interest for oil production to continue unabated….but Western operators have a duty of care to their personnel ..they normal evacuate first and ask questions later.

Hi Anton, I would not get worked up about an MOU in Kenya…just sayin. There are many reasons to be excited by Tullow…just not that one :)

Anton, it sort of suggests to me (rightly or wrongly) that using the new pricing that shareholders will be better off by close to $40m before tax now and potentially a lot more than that when the second train becomes operational . I would expect higher pricing for non associated gas in Ten …let’s wait and see,but this sounds as though it is the precursor to material value deal being negotiated. Certainly worth a bigger share price reaction in my view !

They will probably extend the existing debt maturity by a couple of years.

@Supercooper. If it helps , remember that Maersk was acquired by Total in 2017. They inherited the assets in Kenya which have been non core to them from the outset . Africa Oil decided to prioritise spending on Namibia post the enormous Venus discovery. The Kenyans hardly helped matters by being very slow with the Enviromental Impact Reports, land compulsory purchases for the pipeline, not to mention objections from the local Turkana government hustling for a bigger slice of the pie. It looks as though these issues are behind us now….IF the FDP is about to go to Parliament .

Antonvb.

https://www.shs-conferences.org/articles/shsconf/pdf/2023/12/shsconf_icssed2023_01001.pdf

If you look at the bottom of page 2 of the link it says that the National Oil Co of Kenya typically gets 10-20% of commercial development projects with a free carry during the drilling phase. It will be interesting to see what “R” factor (return) is provided for ..but 22.5% certainly suggests an equity sweetener might have been offered in negotiations? which would be an astute move to get this across the line and keep everyone happy. The other interesting aspect referred to in the link is the history of joint Kenyan/Chinese cooperation in bidding for projects. Looks as though things must be quite advanced .

@Supercooper We already saw what would happen to Tullow’s share price when Africa Oil and Total pulled out of Kenya and investors presumed our holding would end up worthless. Jubilee South East on the other hand, is coming in way above prognosis . The implications from having such high well productivity are obvious. Within the time constraints of of the Production Sharing contract they should achieve higher plateaued production out of Jubilee lasting several years. IMO this will almost certainly result in material reserve upgrades because we would not have had enough time on previous analyst assumptions to drawdown those reserves. I am making a presumption (which may be wrong ) that there is very low GOR initially on the new production as well . I think JSE upgrade would more than cover any Kenya book value write off you are hypothetically referring to. Having said that , it looks highly probable to me , that Kenya will allow Tullow at the very least to achieve cost recovery over time and maintain a reasonless equity percentage. Now Tullow has double its interest for nothing it allows them more flexibility to offer concessions to get this project over the line. Meanwhile the gas sales contract negotiations in Ghana look very promising now that the local gas processing plant is about to invest in a second gas train to treble its processing capacity. Exciting times .

@doctordong The fundamentals of this company have changed dramatically for the better. Have you considered the likely reserve and cash flow implications from an extended production plateau at Jubilee South East ? Do you think the US$700m Gas train 2 at Atuabo is going to go ahead without a revised gas sales contract from Tullow or that reports of an Indonesian Company wanting to tender for a major oil refinery in Kenya are just figments of our imagination ? Shorters looking in the rear view mirror often crash their cars ! If you want to make negative comments …no problem …but you are coming across as a playground bully who has nothing but insults to add.

Hi Anton, seriously appreciate your contributions. It’s like being in the twilight zone as a small cap investor right now. Kenya’s progress is admittedly confusing to the average investor, as Total and Africa Oil exited , but these decisions are often agreed a long time before they become official. What we now know to be current is that EPRA has finished its deliberations and Parliament “appears” to have less than a month to ratify and pass to the President for his decree. The irony is that for large capital projects everyone wants to commit right at the end of the process because otherwise “special interest groups” have a habit of getting their hands in the trough . It certainly looks like a serious two horse race to partner Tullow .The stars are coming into alignment ? In a binary situation with possibly up to $500m-$1bn ? of incremental value to Tullow . I would be extremely surprised if Tullow had used up its cash to buy back bonds recently if it did not have visibility of how it would finance its Kenyan project. The plot thickens but i suspect the next few months could be very rewarding.

Just wondered amongst all this hysteria , on a day when the TLW bonds went up , whether anyone can find a company on such a high cash flow yield for 2024?. What a farcical share price performance. Time to ban shorting activity which is turning the LSE into a Wild West sh$t show ! Kosmos was just extolling the performance of the Jubilee field at its last quarterly ..but the Tullow retail investors seems spooked over nothing. Kenya is very frustrating and I don't like Rahul’s supposed ignorance at whether TRACS had included the latest reserve upgrades from the Jubilee SE wells…which it clearly had not. He must have known that…if he didn’t he should be sacked. He also knows full well that Jubilee can Rako production up well above 100bpd. I don’t suppose the management are about to reset there incentive packages by any chance ?