Member Info for Slift

Very hard to say laidback.

But i'd say they've burned cash than made for March, April and May due to unforeseen events and costs. Going to pull a number out of thin air and say 10-15%.

All IMO.

Hi BigDavesDad,

Tullow has 3 "GREAT" assets. These are Uganda, Kenya and Ghana. Ghana is the most valuable of the lot worth over $4b+ as of 31st December.
The exploration licenses Tullow can also be seen as good, but these will need to be explored and oil discovery needs to be made to make use of these licenses.

Oil price:
Tullow will benefit from high oil prices as they are producers, but they do have hedges in place for 2020 (60% at $57/barrel) and 2021 (40% at $53/barrel). Hedges are insurance which guarantees a payout for that price for each barrel they produce.
Airlines, refineries, etc will benefit from low oil prices.

In a year.. it's a hard to say. As of end of March, Tullow had $700m headroom to weather this storm. $35/barrel is breakeven for their OPEX, CAPEX costs. As oil price has been severely depressed, I wouldn't be surprised if they have burned cash through this period. Anything above $35/barrel is beneficial, but oil price uncertainty will last through till 2021 (according to analysts). On top of this, Tullow has to service debt and pay interest. Tullow is raising $1b through asset sales, which should help with this.
Personally, i'd say even at below breakeven oil price, Tullow has the capabilities to weather this storm for another 6 months. (I have done calculations in the past, but cba to crawl through the pages sorry..)

TLDR, to weather the storm and come out on top, Tullow needs:
- Higher oil price ($45+/barrel, $60+/barrel will give confidence to the oil industry)
- Success in raising $1b in portfolio management (as they had committed to this during RBL redetermination)
- Increased production (A production guidance of 80-85k for 2021)
- Success at Goliath-Voltsberg well (to be drilled Q4 2020)
- Final Investment Decision at Kenya (2021)
- Other positive developments/results from current ongoing 3D analysis
- Positive updates/directions from CEO

And ofcourse, ALL IMO.

Bought some shares here today, and will be looking to add if price allows.

I believe the company has bought £1m of the company shares in 2019.
I don't think they have put money aside this year for repurchase of shares.

GLA.

Hi Tornadotony,

"if the whole lot goes" is the question. I think Tullow should keep some stake in this asset. If they sell 50% of what they own i'd also go with that valuation (e.g. 25% for $200m).

Tullow had planned to achieve $1b in portfolio management alone. I'd imagine they'll also look to sell parts of their non-operated portfolio.
I suppose farm-down of exploration licenses (with third party operating the drilling) will lower CAPEX spent, which would contribute to the $1b.
FCF would not be $1b through portfolio management.

Wells in Argentina and Comoros would be Tullow's drilling targets for 2021 (assuming the surveys goes as expected).

ALL IMO.

I'm not a holder of this company currently.
So take no note of this opinion if you like.

I agree with YoungEngineer that £2 is some ways away.

First of all, let's take a look at the shares in issue, at 1410m shares, Tullow isn't the company that people knew 5 or 10 years ago. For £2, Tullow requires a market cap of £2.8b. You would really only value a company based on the "growth" and the "assets" of the company. Currently, assets are being sold to service debt and CAPEX and the production has been reduced.
The less assets Tullow have --> the less valued the company is.
The less production Tullow have per year --> the less revenue the company produces (less profit) and hence, less valued the company is.

Oil price certainly has an affect on the valuation of the company. Let's take Ghana as an example, this asset is more or less valued depending on the available oil reserves and the oil production that Tullow can access. Oil price directly influences the valuation of the oil reserves and hence pricing of assets. Oil price also influences the revenue from production.

Success in operations will also affect the value of this company. Successful explorations provide Tullow the opportunity to expand it's portfolio of producing assets (or sell to service CAPEX/debt/shareholder returns).

As for assets, Tullow really only has 3 "GREAT" assets, valued in excess of $500m+. These are Kenya, Uganda and Ghana. Uganda is sold, and Tullow is looking to reduce it's stake in Kenya.
Tullow does have good exploration licenses, but would really need to make use of these by drilling for oil discovery. These licenses will only be worth so much once oil is discovered and decisions have been made to progress the discovery to development stage.

Finally, Liabilities and debt. Companies are also valued on it's ability to service debt and liabilities. A lot can service this through their normal operations with ease. Others will need to sell assets or raise money to service debt to a more managable level. When a company can't service debt and liabilities, that's when the company goes bankrupt. At that point, shareholders and the share value/market cap is closer to 0. This ties in with assets. More assets --> more value. More liabilities than assets --> less value.

Having said all that, I believe that the share price could be £1.00+ in the next 12 months based on whether Tullow can achieve certain performances and/or targets. I posted this a while back if anyone wants to go read.

ALL IMO.

Nice CV Olly.

First time i've come across P.Eng though, or PEO.. Is that Canadian?

Been following this stock since the pandemic started.

I do not have an investment, but seems undervalued.
Will wait to see how and when borders and travel restrictions are lifted.

Essentially, would need the tourist industry to "boom" again for this share to be lifted.
At the same time, great opportunity for John Menzies to take the opportunity to build new contracts during this easing period to give airports and airlines a very good "rebound".

Will keep an eye on this.

GLA!

Just as an added bonus for you all:

Production Estimates for 2020
79,200 average at Jubilee, although Tullow stated that “recent rates above 90,000 bopd”. Tullow owns 35.48% of this.
Assuming that production rates of an average 85,000 bopd kept due to reliable gas offtake for Q2. Production for Q2 for from Jubilee COULD be around 30,200 bopd (Tullow’s stake).

51,700 bopd average at TEN. Tullow owns 47.18% of this. Ntomme-9 well should be completed this month. Wells can produce in excess for 10,000 bopd. To be conservative, let’s say Ntomme-9 only produced at a rate of 5,000 bopd. Assuming this, Production from TEN COULD be around 27,000 bopd (Tullow’s stake) for Q3.

Q2 production
Assuming current production at TEN of 24,400 is kept constant (conservative estimate as not including Ntomme-9 for June) and production at Jubilee increased due to reliable gas offtake to 30,200. Also assuming non-operated portfolio is kept constant at 23,300.
Q2 estimate production at 77,900 bopd.

Q3 production
Assuming Q3 takes full advantage of Ntomme-9 aswell as the above for Q2:
Q3 estimate production at 80,500 bopd

Q4 production
Assuming above for Q3.
Q4 estimate production at 80,500 bopd.

Production estimate (conservative) for the year on average: 78,700 bopd.
Production is more likely to be within the upper range of the guidance provided by Tullow (all assuming nothing negative hits the production sites to stop production). My estimate would be between 77-82k with no production loss. Ofcourse disaster could befall us and we could be at the lower end of the guidance or even below 70k.

But theoretically, Tullow is aiming to kickstart 2021 with a guidance much higher than current guidance.
Common sense, but hey, just thought I’d number crunch the scenarios.

GLA!

Thanks ROCKZ!

Good luck to you too!

For me, profit is still profit. I guess I know the full risks of investing, which includes losing money and also missing out! :P
Chances are, I will probably be back in this stock sometime again.

A lot for me to learn yet, and sometimes you should just go with your gut!

Kinda kicking myself for selling majority of my holding last week (:
Win some, lose some, miss on some!

Good luck everyone!

Brent top of gap is $45.5.

Likely to hit sometime this week.

No input to this.

But if share price goes up, 2 people are gonna look like fools.
Likewise, if share price goes down, 30 are gonna look like fools.

Hi Bully,

I'd imagine it's the nature of the industry. It's very expensive to stop and start production, unlike say the mining industry.

Technical explanation.
The pressure is higher the deeper you go than atmospheric. And with everything, oil "flow" from high pressure to low pressure. So in essence, oil is pushed up to above ground due to this pressure difference.

Now shutting that high pressure of flow isn't an easy task. It requires a very high level safety valves and some cannot be reopened (depending on the pressure of the well).

Once these wells are shut, you're looking to have to re-drill that well to produce again.

Feel free to correct me here.

Hi HeresHopin,

Yup, I have reduced my holding. I still hold around 30% of my initial investment as I don't doubt Tullow will rise to £1+ in the next 12 months or so.

I always do "try" to buy on dips and sell on highs on a weekly basis.

On a daily basis, the share is currently more overbought than it was after RBL redetermination.

Just a technical analysis indicator.

Great title!

Pros for Monday:
- Continued optimism of quick recovery of economy and markets
- OPEC extended cuts of 9.6m for July
- General market data (Economy figures, etc.)
- General updates from Tullow (RNS etc.)

Cons for Monday:
- OPEC deal already priced in or worse (9.6m vs 9.7m cuts first thought)
- Markets overbought
- Tullow overbought
- Fear of COVID19 secondary wave from recent protests etc.
- China/US tensions may resurface (problem hasn't been solved)
- Huge resistance for oil at 43-45$

ALL IMO. Post other pros/cons!

Good luck with that!

I'm 25 and have been trading for a couple years. The problem with being young is that you don't have capital for investing without a career.

Hoping for retirement at 35-40, but unlikely. Can dose myself with some hopium right? :')

"Happy Saturday all. Daughters 5th birthday so I won’t be on much."

Hope you bought her a cake, a card and a present! :)

So in June, OPEC cuts stood at 9.7m. Saudi Arabia, UAE, Kuwait and Oman all additionally are planning to cut 1.2m.
Total production cut in June: 10.9m

From July, the cuts in total were PROPOSED to ease to 7.7m.
If OPEC extends the cuts to July, --> Production cut for July stays at 9.7m.
Saudi Arabia, UAE, Kuwait and Oman will not cut for July.
Total Production for July if cuts extended: 9.7m.
Total Production for July if cuts not extended: 7.7m.

Either way, worse than it currently is. Will require more than just one month or other "good" news regarding the compliance, or everything is priced in.

ALL IMO.

My thoughts?

Use the extra money for a good cause:
- Donate for COVID19
- Donate to charity
- Donate for my retirement.