Member Info for seakingalpha

@RNS Translator Happy to oblige. May I offer you the cryptic words of the Total E&P team in a May 2021 presentation, see page 9 of link below.
In the link Total state their disappointment with the Lyon well drilled in 2019 which was meant as a replenishment line for the pipeline …they also acknowledge their need to develop further opportunities nearby..but you question if they would by a proven asset by a pipeline with a FDP about to be sanctioned ? Good for you maestro . We will see who is right in due course. Thank you for the constructive debate but i must get back to the day job. I have purchased many millions of shares today .

https://www.geolsoc.org.uk/~/media/shared/documents/groups/specialist/energy/2021/New%20Learning%20from%20Exploration%20and%20Development%20in%20the%20UKCS%20Atlantic%20Margin%20Abstract%20Book.pdf

@Grey Panther I agree…I think they were too aggressive with their acid job …subsequent horizontals funded by a sale of Victory should do the trick ! Management are in the dog house and they no it. Need to pull a few rabbits out to re establish a proper valuation ….IMHO…of course !

If you want more information re expected life of field calcs you can use this link :
https://mem.lyellcollection.org/content/52/1/967/tab-figures-data

Why is this the only website that doesn’t have an edit function I have no idea. Guess I will have to be very careful posting here :)

Lagan With a gg fgs

Meant to say Lagan…i provided the link but was jumping in the shower. Freudian slip..now deal with the point and thanks for the correction which i had already spotted.

No value in an FDP ? I see. Carry on then ! Personally I think FDP approved fields are bread and butter for private equity groups. When the oil and gas price was low people were only interested in production but there is definitely interest in this project. If you were a little more experienced you might conclude that Total need to defer decommissioning costs on the Clair field by a simple pipeline extension to Victory. It a high IRR project because of the availability of nearby pipeline infrastructure which has spare capacity. This is basic stuff but you go ahead and frighten all the novices !

https://www.reuters.com/world/uk/uk-north-sea-oil-gas-fields-bought-by-private-groups-2021-05-25/

https://www.offshore-mag.com/field-development/article/14187706/corallian-energy-assessing-victory-tieback-west-of-shetland

Interesting call. I take it you have not put a value on Victory FDP due at the end of 2021 ? Potentially worth 2 times current market cap on its own ?

MIND THE GAP……(and it’s a pretty huge one )

You are talking nonsense. Yes, the coupon on the bond was maybe 100-125 basis points too high , but Ghana has a higher sovereign risk then say Gulf of Mexico production . The real scandal was the debt syndication fees which were far too high in my opinion. If Tullow pulls off a sensible recovery of past costs from Kenya it will be able to accelerate the well programme and refinance its bonds to more favourable terms . Look at the 100% IRR’s on projects at $55 per barrel. At these oil prices you could pay a 15% coupon for debt (which I am not suggesting) and still make a fortune.

Totally agree…but you have to see the cryptic message. Look at the IRRS given at the capital markets delay presentation and then look at the capex budgets. The production profile is going to rise close to nameplate capacity over the next two years . Why dont they just say it ! Meanwhile Kenya looks a much more interesting project..reserves are brought more quickly onto production with a much lower cash operations cost. Looks like a farm out is on the cards !

For goodness sake…the FTSE250 quarterly changes which have already been announced, often results in some funds selling short in advance of the rebalance which formally occurs at close of business on the 3rd Friday of this month. The shorters know the passive funds will sell as Tullow ‘s lower market capitalisation makes its drop out of the index. Some of that supply will be hoovered up by the small cap passive funds but sometimes there is a timing mismatch and a surplus of stock. The problem for the shorters this time, is the next trading update from Tullow is expected next week before the rebalance date…and should show the Company making great progress (judging by updates on jubilee production from Kosmos) .
We could see an almighty battle next week when the bulls turn up to the party…at the moment the bears are relying on the weight of passive selling into a thin market .

Most people do not understand how hedging work…..still plenty of upside on the base case …we are talking about caps and collars..which allow some upside participation to rising prices . Also production which is above forecast levels is not necessarily going to be hedged …until new budgets are agreed.

@Rock8. The greatest risk was that the first two new wells did not perform... Kosmos gave production guidance which showed Tullow was basing its contributions on the low end of each new wells productivity. IMO, If these wells can be brought on stream in the next few months as implied in the press conference we will be ahead of more conservative guidance which was not assuming much of a contribution . Also, the Company has guided to only 4 wells this year....possibility of a fifth now ? If the oil price holds up and they are discussing a third FPSO in theory it suggests an additional rig might also be being looked at. With the cost recovery terms so attractive you would have to be stupid not to consider it. I am sure the company will want to put appropriate hedging in for existing production to provide them with the cash headroom for additional investments over that agreed as part of the bond refinancing ..but we will have to see what they decide. In the meantime the main logjam to increased production was managing the waterflood and gas off take from the rig (GOR) . Judging by the latest published monthly field production numbers (production up 4K ?), it looks as though facilities have been uprated and these bottlenecks are being addressed. Very encouraging .

@Rock AGMs are not generally the time to update on trading , so I am not expecting any fireworks...after all Dorothy is still occupying the Chair ...for the last time ....so I expect nothing .

@kilman. Talk of evaluating a second FPSO on Jubilee at the Ghana presentation , is a pretty big hint that Dorothy’s production guidance to analysts (for a producing field with only 500m out of 2.9bn in place of reserves) may be a tad over prudent to say the least. Over the next six months prepare to understand what Tullow is really worth . IMO, It’s going to be an eye opener . By the way I guess you can lease second hand FPSOs ...on interesting terms these days....just sayin !

@JJ many of these deals take several months to complete. As evidenced by Tullow's sale of EG assets , the price was agreed many months previously with the cash flow received on the assets in the intervening period, being offset against the purchase price. I have to laugh at people who forget the pricing of oil in 2020. We can all do a better job with the benefit of hindsight .

JP MORGAN have to rely on production guidance supplied by the Chairperson. If she wants to take a conservative, or some might say overprudent view on 1) FPSO percentage downtime 2) oil price hedging 3) well decline rates 4) new well productivity 5) the time taken to bring new wells on stream 6) the use of an additional rig to drill out prospects 7) timing of abandonments 8) a farm out of either Kenya or Guyana , etc etc . ...it will materially affect their conclusions./valuations. Boards of public companies worry about getting sued for non disclosure of liabilities or overestimating likely cash flows ...so many cover their backsides by throwing in the kitchen sink provisions ....Now the debt has been syndicated I would expect a short cooling off period and then some of these assumptions will be more relaxed. To be fair to the Board , the pathetic attempt to resuscitate TEN has no doubt been hampered by the imminent ? sale of the Occidental interest which must have had an affect on agreeing an ambitious work programme.
Let me be clear , if high impact wells with outstanding IRRs for Ten are delayed, it will ultimately mean that recoverable reserves will not be recovered during the licence period. Dorothy might as well pour the oil down the drain. In my opinion this constitutes incompetence and will not impress the Govt of Ghana .

Hi Joek1

I was a little lazy. Tullow outline the hedging policy designed to “protect” $2bn of revenues on page 22 of the credit presentation.

https://www.tullowoil.com/application/files/3716/1969/4591/Tullow_Oil_Credit_presentation_280421_FINAL.pdf

50% of the required floors for 2022 will be put in within 14 days (presumably of closing) with the remaining 25% for 2022 production a few months afterwards. You can read the rest for yourself. I have not perused the final documentation to see the additional safeguards required by bond holders but I think these stated commitments form part of the agreement . Incidentally, I think a similar hedging requirement formed part of the old RBL for what it is worth. Important to remember that these are floor fixes and the Company retains some upside to rising prices.

I

@JMAX you do realise that the majority of Tullow’s production will need to have floors set in the next 14 days for the next two years forward. This requirement to hedge production is laid out in the bond agreement. Tullow will be most fortunate to lock in at current levels but it makes some of the analysts commentary pretty much redundant straight away.

@Prosecco. Tullows high share price sensitivity to oil prices reflects a low market cap percentage relative to the total enterprise value which is five times odd greater. This means that the shares have a comparatively large asset base to generate returns. which accentuates the operational leverage both ways to free cash flow. Tullow is also able to hedge up to 18 months forward, so short term pullbacks in the oil price may have only have a limited impact . Tullow activities are purely upstream, whereas many integrated oil companies have downstream operations (retail , refining and distribution) which have little elasticity to the movements in the price of oil. On the other side of the equation. Tullow has a large proportion of 1P reserves producing, which means that unlike other exploration companies (which may still be burning cash as they prove up potential reserves) Tullow can benefit from the short term movements in prices. Hope this helps. none of the above should be constituted as investment advice. All exploration companies should be considered highly speculative.