Member Info for Slift

Out of curiousity, could everyone here post under this thread whether they will be voting yes or no to this deal and their reason?

Please do not spam this thread with anything else.

Use the following format.

Vote: YES/NO
Reason: Explain your reasons.

I suppose the shares have really changed hands to new investors.. and the older rosey glassed ones are mostly gone.

I mean.. how else does ngms27 get 7 likes on their post? Afterall, pretty sure everyone on hopium had ngms27 on their filter list not long ago lmao.

I'm also keeping an eye out here.

GLA.

I agree scaredycat.

This sale is very very important. I can see some shorts closing on the sale as it derisks January 2021 RBL.
I don't see Tullow passing the January 2021 RBL without the proceeds from this (unless a miracle happens at CMD?). But I have full confidence in Rahul and the board to get the deal completed.

HappyInvestor100,

It is analysis based on information known. The debt capacity prior to September RBL re-determination was $1914m.
Regarding liquidity and projected cashflow, it's easy to work out by using available liquidity at end of Q3 (provided in RNS).

"As for no change to risks from last RBL, is this your assumption or do you have actual information from RBL? "
This is for the next RBL in January 2021, not the last.

"All in all the update was as expected but they are running behind on asset sales if they are going to hit $1bn. I think they will raise equity very soon."
Equity raise as a last resort.
$1b in portfolio management is just a business strategy to managing liquidity going forwards. There is no need to raise this in a fire sale as Les Wood pointed out in the Interim Results.

GLA.
Slift

Today's RNS:
- Debt capacity reduced by 65m-163m (best and worse cases) to c. $1.8b
- Liquidity headroom at c. $500m

Analysis:
- Likely cashflow positive for Q3. Estimated cashflow for Q3 at c. -$30m --> +$166m (Worst and best cases in line with above RBL reduction and assuming debt has not increased)
- No change to risks regarding January RBL redetermination
- Possible that Tullow voluntarily reduced RBL debt capacity now that they can maintain $500m liquidity? - Reduced capacity is reduced finance costs.

GLA.
Slift

HappyInvestor100,
"So this RBL credit facility is down by $100m and liquidity headroom is down by $200m. That's a $300m adverse movement on a plan that itself is predicated on $1bn of asset sales this year."

You are simply wrong.

$1.8b debt capacity confirmed.

Richard Duffy's statement in latest RNS is particularly interesting:
“We thank our partners in the NUM for their positive and constructive engagement that has resulted in this agreement. This now allows us to renew our focus on continuing to deliver operationally as we reposition the business in emerging from what has been a particularly challenging period”

- "as we reposition the business in emerging from what has been a particularly challenging period"??

Captainscarlet67,
$65+/barrel by May 2021 is a little optimistic lol. I think we'll be lucky to see $51-55/barrel in 2021. I'm all for this as this would really bring in cashflows for Tullow.
But it's more likely going to be $48-51/barrel as it stands... with increasing covid rates and decreasing demand.

@MrMasonknows,
"I would certainly vote in favour."
So you're voting in favour of Tullow defaulting? - See previous post on liquidity shortfalls.

bransonbull,

PMO's situation is different. They had net debt of $1.97b, with their $2.9b gross commited debt facility maturing in May 2021.
PMO also messed up in announcing the refinancing terms (including rights issue and dilution) without a discount to share price, which sent the price down to 15p. At this point, these refinancing terms were useless as it would have meant even more dilution.
With less than 8 months left for maturity of their facility, they really need shareholder approval on a deal.

With Tullow:
Equity dilutions would be last resort, but I've always said, don't put it past Tullow. There could be some sort of dilution (D4E) if things don't go Tullow's way and if RBL is required to be restructured.
Tullow's RBL facility matures in 2024, so plenty of time. Only thing that is concerning for Tullow is the liquidity and the requirement to meet harsh covenants when Tullow is drowned in debt.

So far, the Tullow has managed risks very well under the going concern statement.
As it stands, Tullow has enough liquidity to pass the January RBL if Uganda completes. Tullow will have a liquidity shortfall of about $80-90m for the March 2021 RBL redetermination. If this happens, then Tullow will have 30 days to raise this, otherwise will default under failing of liquidity test.

Tullow's net debt at YE20 will be c. $2.3-2.4b.
Which gives Tullow room to refinance or secure new liquidity from banks or investors (in the form of senior notes or convertible bond). The CMD is like a sales pitch for this - Tullow will provide investors with plans for the future with Ghana and Kenya and their investment opportunities.
We'll have to see how the CMD goes before we look at the risks. A lot of it also depends on oil price.

ALL IMO. GLA.
Slift

Estimating Q3 Revenue at $356m, with realised oil price at $51.5/barrel.
This is on track to provide a positive cashflow if production performance from Jubilee and TEN are continued through Q4.

The commissioning of the CALM Buoy is expected to be completed this quarter. This should reduce the OPEX costs for Tullow going forwards. But likely be around $10-12/barrel unless production improves.

An oil price of maybe around $48/barrel will set Tullow nicely for the January RBL redetermination and refinancing/restructuring options.
This will give a lot of confidence in this company for 2021 onwards. Guess we'll have to wait and see on oil price for Q4.

ALL IMO. GLA.
Slift

Yup, they've already decommissioned a lot of infrastructure. They have started seabed clearance which will be completed by the end of this year.

Also, assets and infrastructure at the end of their life isn't very useful for production.
Ofcourse Tullow can buy these assets and rebuild the infrastructure for these assets, but the development costs will be very high for Tullow in comparison to other North Sea operators.

Even for PMO (who have the infrastructure), these assets were supposed to have an OPEX of $20/barrel. This is very high in the current situation with oil and oil prices.
Why do you think BP are trying to get rid of it despite the North Sea being one of their key areas for operations going forwards?

Tullow has no infrastructure in place to develop the BP assets and they are in no position for acquisitions.
PMO were an ideal candidate for those assets as they have operations in the North Sea.

I think Chrysaor, Shell, Enquest, Equinor etc. would be better options for these assets now that the acquisition will not proceed.
Maybe BP will rethink about the Shearwater and the Andrew area assets.

As a shareholder, I'll vote yes for them assets for £50m. Any higher and nope from me :')

GordonAlbert,

I think there may be an uptick for PMO from now until merger, IMO. Likely to rise a little on shareholder vote.
I'm sure there are investors out there that want a piece of Chrysaor. This merger via reverse takeover is basically an IPO for Chrysaor.
It's very hard to predict what the share price will do as it's always volatile during situations like this.

I believe that this deal is beneficial for shareholders. I mean, it's not the best deal out there, but it's not the worst either. For PMO, time is running out the longer this drags on.
The consequences of not accepting the deal isn't favourable for shareholders.

But it's up to the shareholders to decide.

GLA.

Whoops, I apologise for getting currencies wrong. Both should be in pounds.

Over £1b*
Estimate between £3-4b

Substantial news soon regarding RBL redetermination (and possibly Uganda, both at once?!)

We will see what this week holds for Tullow :)

P.S not invested here, just providing opinions.

Slift.

Market cap of new merged entity will be over $1b, making it the largest independent oil and gas company on the LSE.
I'm estimating between $3-4b, but guess we'll wait and find out!

Big risk if shareholders vote NO to this deal.