Member Info for Slift

Hi Laidback,

I'm quite skeptical about production for Q2. Whilst I have no doubt about Tullow's operated production from Ghana... Production from their non-operated portfolio is what I'd be concerned about.

Gabon and Equatorial Guinea are both part of OPEC and are taking part in production cuts.
Estimated non-operated portfolio production is 23-24k bopd, but wouldn't be surprised if this comes down during this quarter.

All IMO.

For those that want to compare,

Q1 Results:
Q1 Production Average: 75.6k
Realised Oil Price (Incl. Hedge): $56/barrel
Total Revenue for the period: $386m
Free Cash Flow: +$75.6m

GLA.

The following should be taken with caution as all ESTIMATES based on a few calculations and conservative assumptions. Also note: I'm not a shareholder.

Q2 Production Average: 78k
Realised Oil Price (excl. hedge): $31.5-$33.5/barrel
Hedge Receipts: Approx. 96m - 104m
Total Revenue for the period: Approx. $325 to $335m
Free Cashflow for Q2: Approx + $76m - $85m

Q2 results at end of July.

GLA.

All will be met with the confirmation of the Uganda sale going through.

Still require:
- Uganda Gov/URA to agree on tax agreements
- Approval from Minister of Energy of Uganda
- Shareholder approval

Moodys rating is likely to be end of July or start of August.

All IMO.

Any takeover at the current share price will be at most a 50% premium to the current share price, and that's pushing it too.
12-13p would be the maximum initial takeover offer.

Whether shareholders accept that is a different story.

ALL IMO.

Nothing to do with Tullow, other than maybe market influences.

Today, the Federal Reserve Chairman; Jerome Powell, said that the "Fed is probably 'some years away' from halting asset purchases."

Fitch have previously predicted that the GLOBAL quantitive easing (QE) asset purchases will reach $6 trill in 2020.
($6 trillion is more than half of the total Global QE from 2009 --> 2018.)

Since March --> The Fed Reserve has bought approx. $3 trillion in assets (and thus helping to keep the stock market afloat).
As of June 8th --> The Fed Reserve balance sheet stands at $7.2 trillion in asset purchases altogether since 2007.

Referring back to Fitch's prediction, the Federal Reserve ALONE (in the last 3 months) have bought half of the predicted QE Asset Purchases, and we can all expect the Global QE Asset Purchase to be well above the predicted $6 trillion.

Is Jerome Powell bluffing that the Fed is "some years" away from halting purchases? Or will the money printing machine never stop BRRRRRRRRRing?

Post your thoughts!
Slift.

This stock is looking increasingly more valuable each day in comparison to other similar stocks.

Can only expect good news from this company from now on. Should prop up a little in like with market conditions once the company provides an update on the forward activity programme.

I do not have an investment, but will keep an eye on this.

GLA.

*Greedy when others are Fearful

"Be Greedy When Others Are Greedy and Fearful When Others Are Greedy" - Warren Buffett.

I also don't think another lockdown is an option anymore for the government. Another lockdown will send this country into a depression.

What the government will probably do is keep restrictions on particular industries and activities that involve close human contact.
Restrictions on anything will lead to a slower economic recovery, I think people can forget a "V" shaped quick recovery in the economy. This crisis is going to have an effect on the economy and peoples' lives for the next 2+ years. Not to be pessimistic, but it's stupid and selfish to expect a full recovery short term when millions are going to be out of work and companies are going to earn less as a result.

Let's take the UK for example:
- 8.9 million people furloughed
- 2.1 million people claiming unemployment benefits
--> 11 million people essentially temporarily or currently out of work.

THAT'S A 1/3 of UK's workforce. This is clearly reflected in the recent economic figures with the GDP for April contracting more than 20%.

Now of the 8.9 million people how many are going to retain their jobs?
All of them until August... when companies have to start funding to keep employees furloughed.
Let's be realistic and optimistic and say only 15% of the furloughed jobs are lost.
--> That's another 1.3m unemployed.

In total from the said figures, unemployment rate will be 10-11%.
Taking the financial crisis as a reference point, the unemployment rate from then was 7.6% in 2009. That took several years for "full recovery".
THAT'S JUST THE UK.

Oil is more likely to perform better than most industries during these periods to come with the implemented cuts for the next 2 years.
However, oil will also be only so valuable relative to the general market.

FEAR or FOMO, just don't be surprised with the huge dips and rises to come until people face reality and facts.

ALL IMO.

Dotty went Potty, haha ????

Hi Longish,

I had picked up on the 2021 hedging percentage in that presentation before.
There's some misleading numbers going around.

Tullow had said 2021 hedging was 40% in Final results.
See Final results: https://otp.tools.investis.com/clients/uk/tullow/rns/regulatory-story.aspx?cid=495&newsid=1378292

This is confirmed again during the last trading update.
See AGM Trading Update: https://otp.tools.investis.com/clients/uk/tullow_oil/rns/regulatory-story.aspx?cid=495&newsid=1387272

As at 31st December 2019, 22,000 bopd hedged for 2021 (This works out to be 30% of current production guidance).

That presentation (although provided in April) is outdated or they have made a typo.

ALL IMO.

I'm not qualified to teach anyone accounts!

I think I calculated FCF for Q1 to be around $75m.
But remember Breakeven is based on calculated/estimated known costs, and hence so is the above FCF.

GLA.

"There's no guidance been given by the company for net debt at 31st March. You are just guessing it really."

But you're probably right in assuming net debt to be $2.7b or less.

2860m is total debt, not net debt.

Calculated via:
3071m total debt year end 2019. In March, Tullow voluntarily paid $210m amortisation due in October.

Total debt at end of March 2020: $3071 - $210 = $2860m.

I never said anything about net debt as like you say we don't have guidance or information on free cash at end of March.

Laidback,

I'll let you figure that out :')

(PS, net debt is total borrowings - cash at bank).

*2860m

Laidback,

FCF is more likely to be $300-400m for 2020 (if Tullow can really keep B/E at $35/barrel).
Debt is likely to be reduced to $2-2.3b by July 2021 if Uganda is approved to be sold and that Tullow uses this cash other proceeds to service debt.

Debt at end of March 2020: 2680m (+/- 20m)

DYOR.

BigDavesDad,

Pretty much. It's more the case of supply vs demand.
As you say, noone wants to see war, but here's a scenario to explain it:
America attacks Iran's oil fields --> Less supply --> same demand for oil from oil consuming countries--> people pay more for oil --> oil price increases --> every oil producer benefits (Iran less so as they would have lost a lot of production).

Hi BigDavesDad,

Like you say, oil price directly influences the assets in that the assets are valued based on their production and also the potential oil reserves held.

One of the major industries in Iran is the oil industry, they produce around 4-5% of the total oil production in the world. Any tensions between Iran and America threatens this industry in the middle east, and hence increases the price of oil.