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It's all about demand now. Supply cannot be restricted any further, with OPEC increasing production each month and the rise of oil rigs in the US looking to increase production of shale.
We need a significant but stable shoot up and growth in demand that will outstrip the supply for long periods. If there's a time for the world to have growth in demand, it's now.
EIA STEO Forecasts:
2022: $75/barrel average
2023: $68/barrel average
I think final approval of sale of stake from the GoK and other relevant bodies will be by June/July.
With FID taking place soon after.
Announcement of sale of stake and strategic partner will require shareholder approvals and other conditions being met. Expecting the intial announcement to take place in Q1.
Ofcourse, this would be the most optimistic and realistic scenario. But never know what hurdles there are.
HNY L3Trader,
Yes, I see Kraken performing under that threshold too, but all depends on if there are any work programmes to mitigate the decline this year.
I think the GE asset should be value accretive at $55-60/barrel average. As it stands, at $82/barrel Brent price, this asset should be more than paying itself.
As for the balance sheet.. Unless ENQ pull off another extremely value accretive acquisition, I expect the balance sheet to deteriorate further due to bad performance from assets.
It will be interesting to see the balance sheet at YE21 at results.
Everyone seems to be focused on Magnus.
For me, the flagship; Kraken is the bigger picture.
I anticipate Magnus to recover slightly by YE22, especially with the work programmes planned around Magnus, including the drilling of 2 wells.
However, Kraken is more likely to underperform. With lack of significant CAPEX attributed to this field past couple years, the natural decline will be impactful this year. Combined with a shutdown planned for this year, the production figures will suffer from Kraken.
Whilst work is ongoing to identify potential infill drilling, i'm doubtful that these will materialise this year, or even next.
Hope i'm wrong, but there is a lack of direction presented by the BOD. At least the GE asset seems dependable, for the time being.
Average Floor at $51
Average Ceiling at $77
One thing to note is that these are AVERAGE and may fluctuate between quarters or even months based on the hedge period and when Tullow hedged placed the hedges.
Since majority of the hedges were placed early in 2021, it's likely that majority of the hedges in the first half of the year is:
Average Floor: $45-50
Average Ceiling: $70-75
But at the same time, majority of the hedges in the second half of the year is likely to be:
Average Floor: $50-55
Average Ceiling: $75-80
Overall, decent hedges as the oil market is very unpredictable with demand and supply.
https://corporate.exxonmobil.com/News/Newsroom/News-releases/2022/0105_ExxonMobil-makes-two-discoveries-offshore-Guyana
Fangtooth-1 discovery is extremely important for the Orinduik block.
The Hitec dispute is very opportunistic.
Even if Tullow are liable for the contingent payments, it certainly will not be $95m.
The Ghana dispute Tullow is confident that it is not liable, or at least for $300-400m. That's just silly.
Not worried about these disputes at all. Any damages Tullow should be able to absorb currently.
oiluser,
Maybe, but it's not that bad for Tullow.
Not accounting for Goldman Sachs (who have a holding between 2-4% to lend for shorting purposes), the following are large individual or institutional investors:
Petrolin Group: 13.07%
Azvalor Asset Management: 9.041%
RWC Asset Management LLP: 5.09%
Summerhill Trust Company: 4.19%
and M&G: "Below" 5%
Total: Up to 36.4% on major shareholders alone.
There are several IIs with less than 3% shareholding here too, though not reported and not considered major shareholders.
Sure it could be higher, but for an O&G company where IIs are restricted by green initiatives, the shareholding is pretty decent for Tullow.
So still makes no sense why it's incomparable to peers.
I do wonder what's holding Tullow back. Tullow is currently incomparable to peers and significantly undervalued.
Fundamentals are sound, business plan is in motion, opportunities to growth available and debt is now manageable.
Could it be that further confirmation is required on business performance?
Could it be lingering investor confidence and trust in the company following 2019 fiasco?
Could it be that the market doesn't value TLW's assets as much as it is really worth?
Could it be that the market just doesn't see a future value in O&G in Africa and/or green initiatives?
Whatever it is, once that is overcome, a new enterprise value will be determined and a move upwards WILL happen.
Still some very butthurt people about their investment in this company.
I'm sure you'll all get through it after multiple legal attempts to get your money back when this company folds.
See ya in 6 months.
You're the littlest man here Dickbatty.
Still trying to make returns on your investment I see. Keep wishing, keep hoping. It'll all be over soon.
With the BHP at bubble point, the production will fall at a much higher rate.
It's over. In fact, you were given a gift to sell at anything above 1p. A miracle to be able to have sold at 5p after the restructure fiasco.
But you certainly won't be the last one laughing.
Hahahaha.
Hahahaha.
Lol, there wouldn't even be a company by Jun 2022 to even worry about the Lincoln commitment well.
L3Trader,
Also, there were 3 issues raised with Enyenra.
1. Oil in Enyenra is not continuous across the field. But how far it extends and which wells have access to the main pool has not been released.
2. The mechanical issue that occured in 2019 was that the drill had to be at an angle to find the reservoir, due to the complexity of the geology. The well in 2019 failed to do so and it was too late to even attempt to modify the drill, hence was suspended. Similar story to the water injector (or point 3 for water injector).
3. The geological rock formations around the east side of the Enyenra field isn't the typical sandstone and so it isn't very porous. It's a bit more complicated and requires work overs to extract oil efficiently if the drill isn't successful.
So as it stands, there is very high risk due to the above 3 issues still affecting Enyenra and will require significant work and solutions to have successful drills in that field.
L3Trader,
Yes, it is alarming from a TEN or Enyenra point of view. However, there's not much that can be done currently around there. The decline in production will lead to a reserve downgrade.. but the increase in production from Jubilee will lead to a reserve upgrade. So overall the Ghana reserves will increase (not accounting for depreciation due to production).
I.e. production increase from Jubilee is more than production decrease from TEN.
I don't think Tullow has any intention to develop Enyenra currently. There is significant amount of oil in Enyenra, but due to the complexity of the geology, very risky to access. Be interesting to see what the intentions are, but the rates of production are currently so low from Enyenra, it wouldn't even be worth risking to maintain production from that field. c. 8k gross production from Enyenra currently... of which @ 47.15%, it's contributing to less than 4k of Tullows' working interest production.
Although.. that's not to say Ntomme won't decline either, but Tullow have been doing strategic drills to keep Ntomme production optimised.
Going forwards, Ntomme and Ntomme Far West is what Tullow will develop.
Although, I wouldn't be surprised if they do attempt restoration to Enyenra as the infrastructure is already there.
L3Trader,
May 22 is when the first payment needs to be made.
OrinduikUK,
Can't tell if you're mad because the company was saved with Uganda sale.. or if you're mad because you won't see your average price for another 5+ years..?
Who knows.
Have a good Christmas.