Member Info for Tonyb33

Hi @TDDW

We are now on war day 58 ie week 9

Hi @xxnjr

Many thanks for your input. I have now altered the models in line with your input. On the basis of

Barrels/day Floor Cap Call

Floor 9,500.00 57.00

Floor/Cap 3,000.00 57.17 75.67

3 Way 174.00 57.85 76.30 86.30

12,674.00

I am getting a zero hedge costs for Jan and Feb 2026 (ignoring hedge premiums) and a total cost for March 2026 of $2,608,143. However these were the H1 2025 positions and I agree the 3 way collar numbers are way too low. I will update the model when I get the actual data on Tuesday.

However I believe the real loss is in the two way collars now in 2024 these were kept low in the near months (2,000 barrels) and so I think the 3,000 barrel estimate will hold up.

You have a very good point on Iran but we are now in week 9 of the dispute. To date I see very little that will end this war within the next 3-4 weeks. So I think Iran shut in is on the cards and the nature of their wells is that they will lose a lot of well production if they do.

Re GPPII another fair point. But I think the high costs Ghana is currently paying for gas alternatives (ie they are currently having to buy oil instead) will make this project an absolute priority. My key point on this issue is that for the 2026 oil field valuations the higher oil prices plus 4 years longer leases will increase oil field valuation and by comparison with the 2025 valuation decrease the annual oil field depreciation charge massively. When it comes to the 2027 oilfield valuation we should have a gas agreement with Ghana. This in turn will boost the 2027 oilfield valuation against 2026 and again depress the 2027 oil field depreciation charge.

The original 2025 Projection was $180m pre financing costs at $65 a barrel. That $180 included $40 of deferred disposal proceeds plus $40 from Ghana (being $40m as part of the over $200m they owe Tullow). That would indicate $100m trading income before Financing Costs. Financing costs are running in excess of $200m for 2025. The business plan is based on using cashflow to drill more wells. However this war has given Tullow the opportunity to rapidly reduce its debt levels.

Https://mofep.gov.gh/index.php/news-and-events/2025-05-12/new-gas-processing-plant-will-be-a-game-changer-for-ghana#:~:text=The%20Second%20Gas%20Processing%20Plant%20(GPP%20II),Create%20over%201,000%20direct%20and%20indirect%20jobs

Looks like we will shortly be getting a gas supply agreement for the TEN oil field

Many of the disposals Tullow have performed over the last few years have legacy revenue deals. For example the Ugandan disposal provides for 2.5% post tax commission when oil is above $75 a barrel with this kicking in late 2026 which could provide a potential extra $5m a month post tax income.

The non tax deductible depreciation charges, accelerated IFRS16 interest and London booked hedging costs have meant in certain cases Ghanian taxes have exceeded 100% of income. As these charges reverse due to higher oil prices the opposite effect will come into effect and taxes will be a lot lower as a proportion of income.

Tullow is currently priced as a debt recovery company. As debt is quickly reduced with the current high oil prices the company will quickly reprice. The company’s senior debt has risen in value by over $330m in the last 60 days.

I personally think we are all good and as this news gets out into the market Tullow will reprice

I see a lot of commentary on the cost of hedges. I personally think that the costs will be limited. I believe Tullow have learnt from experience and limited their two way collars and would have put the vast majority of their hedging in three way collars which will limit hedging costs to a maximum of $10 a barrel.

In addition the hedges are calculated on a daily basis. Trump by constantly telling the world that the war will end immanently has depressed prices on the hedge whilst Tullow has hit very high prices on the narrow window when their oil cargo was shipped. Eg In March in the early weeks oil was still around $70 a barrel but due to the quarter month Ghanaian load the March load actually sold on 2nd April hitting $139 a barrel

We are now in to week 9 with Iran showing no signs of giving up the fight I think this war will be on going for months and maybe even years. The USA have just stated that its going to take 6 months just to clear the mines laid.

We now have 13 MBPD shut in. Iran will shortly hit shut in with another 4 MBPD, Russia is also facing shut in due to its export terminals and refineries being systematically being attacked by Ukraine. After the war is over Russia will need western help to reopen their wells, Iraq will need financial aid to reopen and Iran’s well are such that the last time they shut in when they reopened they lost 30% of production.

This year Tullow will be generating 14 days more production as its biannual maintenance was performed last year.

Its oil fields were valued last year on the basis of oil prices 2026 $61.29 2027 $61.68 2028 $63.21 2029 $64.94 and 2030 $66.24 and future years to 2036 on the basis of 2% inflation. The fields were valued on the basis that the lease ended in 2036 and no TEN gas deal in effect. On this basis the TEN oilfield lease actually had a negative value for the Year end 2025 valuation.

Ghana is now actively working on building a new gas processing plant (GPP II) to process the TEN gas which is expected to come on stream in 2027. The leases are now 4 years longer to 2040 and the oil prices a lot higher. This will mean the 2026 and 2027 depreciation charges are going to be a lot lower.

Tullow has also been hit by accelerated lease interest under IFRS16. These leases are now hitting the later periods which means the lease interest expense will be lower than lease payments. In addition the early termination of the FPSO lease will actually mean the accelerated interest from earlier years will be credited as negative interest.

Tullow books hedging up to 12 months in advance. The higher oil prices are now allowing Tullow to lock in hedging at very high oil prices. When the oil prices finally reverts to lower prices these hedges will lock in profits that will be booked tax free in London due to unutilised tax losses.

As of today, April 24, 2026, the physical oil markets are seeing significant volatility. Platts Dated Brent—the real-world benchmark for two-thirds of the world's physical oil—is currently reflecting a massive premium over futures due to ongoing supply disruptions.

Today's Price Snapshot

Dated Brent (Spot/Physical): Trading at a significant premium, with reports indicating levels near $144.42 per barrel.

Looks like my $150 estimate is looking on the money

Since 9th March Tullow has been ranging in a Bull Flag. The top of this flag is now the 200 day Moving average which is 12.44. If Tullow closes above that (which with the results on Tuesday is highly likely) then we will be seeing substantial gains. In line with the two previous bull flags that gave 25% gains on 18 Feb and 27th Feb .

If you look at the TLW Fundamentals Shares Bought 2m sold 6m. Yet the price is up 7% and rising into selling. Do you think the market makers are picking up stock to sell next week when the 1st quarter trading numbers are released??

One other thing

This price disparity of Tullow's hedging (which is based on a fixed number of barrels V the Platts dated Brent) and the Tullow Cargos which is based on Platts Dated Brent for only the 5 days over the cargo load period is showing Trump is actually helping Tullow out. His constant lies about immediate settlement have not only depressed oil prices but also the premium of Platts Dated Brent over June Brent Future.

So last week when he declared the Strait open the premium collapsed and the underlying dropped below $100 a barrel and our hedge liability was calculated on that lower price.

An good example of this was March 2026 when our hedging costs were mitigated because Dated Brent opened at $72 did not get over $100 until 12/03/26 and peaked at $126.69 on 31/03/26. But because Ghana takes a cargo on the quarter months the Tullow cargo did not ship until 02/04/26 at a value of $139 a barrel

@fewdollarsmore

Hang in there if you look at the trade volumes and timings the value of Tullow has been resting on a very small trading value most people are simply throwing money at it and getting board and taking their money back at a loss. We will have a better idea when we get the 2025 accounts and 2026 update next week. I think its all going to be good news.

The US Navy recently admitted its going to take 6 months to clear mines from the Strait (and that's only if the Iranians do not decide to add a few more from converted fishing boats whilst the mines are being cleared) Iran has 900 miles of coastline. This is also on the basis that the USA does not go kinetic which I am sure the Secretary of War and Donald Trump being such patient and peaceful statesmen are sure not to do (For all non UK residents that's sarcasm) If US goes kinetic a lot more oil infrastructure will go up in flames and the first thing to be hit will be the East West pipeline.

This war if it goes on another month will elevate oil prices for at least 2 years. This will give Tullow breathing space to repair its balance sheet, reduce its debt obligations, collect the $200m owed by Ghana, actually book some hedges at elevated prices so its hedge book will actually generate some tax free profits and rerate in line with its peers.

Its all coming good.

We are now getting close to the next Tullow load window. The last gap between loads was 14 days with the KOS load dispatched around 16/04/26.

The Tullow load will be value over the average of the 5 day load window on PCAAS00 Platts dated Brent

The last time Tullow sent out a cargo on 2/4/26 the Premium of PCAAS00 Platts dated Brent over June Futures Brent was $40 a barrel.

When we had that Kumbiyaa moment with the Iranians declaring that the Strait was open a few days ago this premium collapsed to a few dollars. Since Iran changed its mind and started shooting at the ships it said could pass (A single day later) the risk on premium has started rising. Most commentators are talking $10-$15 a barrel. I do not have access to this number but apparently @xxnjr does.

So we have two price drivers the rising price of Brent June Futures and the premium over Brent June futures in the Platts Dated Brent. I estimate this number should be around $118 a barrel and rising (Almost on a par with the Platts dated Brent future (ABUJ6) which has risen by about $6 a barrel in the last 5 days.

So estimates for this load so far are $103, $108 and my optimistic $150. I think with a few more attacks on ships we may get the price up to my range before loading time.

@xxnjr would you be so kind to tell us the PCAAS00 price this morning??

Hi @Flavius

I have looked at the 2024 Hedging Accounting note

The Group uses a number of derivatives to mitigate the commodity price risk associated with its underlying oil revenue.

Such commodity derivatives tend to be priced using benchmarks, such as Dated Brent, which correlate as far as possible

to the underlying oil revenue. There is an economic relationship between the hedged items and the hedging instruments

due to a common underlying, i.e. Dated Brent, between them. Forecast oil sales, which are based on Dated Brent, are

hedged with options which have Dated Brent as reference price. An increase in Dated Brent will cause the value of the

hedged item and hedging instrument to move in opposite directions. The Group has established a hedge ratio of 1:1 for

the hedging relationships as the underlying risk of the commodity derivatives is identical to the hedged risk components.

To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes in the fair

value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.

The Group hedges its estimated oil revenues on a portfolio basis, aggregating its oil revenues from substantially all of its

African oil interests.

As at 31 December 2024 and 31 December 2023, all of the Group’s oil derivatives have been designated as cash flow

hedges. The Group’s oil hedges have been assessed to be highly effective.

Financial risk management is adopted centrally for the Group. The Group adopts a risk component hedging strategy.

This results from designating the variability in all the cash flows attributable to the change in the benchmark price per

the oil sales contracts where the critical terms of the hedged item and hedging instrument match

1. I agree that the note refers to Dated Brent on a barrel per day basis

2. It does not refer to the specific date of the sale of the cargo

3. My read is this is a daily calculation based on the Daily Dated Brent Price V the Hedging Trigger Price

4. As I said before although H1 2026 is 60% hedged what will really lose you money is the collars

5. In the 2024 2025 and projected 2026 pure collars were only in place for less than 5% of projected production the balance were 3 way collars that only cost you a maximum of $10 a barrel/day

Hi @Flavius

One other item although Tullow policy is to hedge 60% of its production that is the overall barrel count but it applies to different hedges a mixture of floors, collars and three way collars.

Due to the fact that no floor would be triggered in this market they are irrelevant

If you look at the 2025 hedging the absolute collars were only 5% of the book that's where serious money could be lost for the H1 2025 there were only 2,000 BPD

The H1 2025 guidance showed only 3,000 BPD for H1 2026 at $57.17 floor $75.67 Cap

The balance will be in three way collars whose maximum loss at $100+ oil would be a maximum of $10 a barrel

Hi @Flavius

So you are saying that the derivatives trigger prices are based not on the daily Platts Dated Spot but only on the 5 day average Platts daily Spot price if and when a Tullow cargo is in effect sold?

Can you please tell me where you got this information?

Can you please tell me how the barrel per day pricing would work?

I had assumed that as the hedging was based on a barrel per day basis that the hedge price would be recalculated on a daily basis also.

So If for example as is the case Tullow sold nothing in March and two cargos in April how would the day rate of the hedging cost work?

The key issue with the North Sea is the shared infrastructure. The tax increases and ban on drilling dropped the average well life from 14 to 7 years and that was about 18-24 months ago. If this is not reversed a lot of the less productive production platforms will be prematurely scrapped. The problem is that the sea to shore pipeline network (shared infrastructure) will be shared by fewer and fewer platforms pushing the marginal platforms into being scrapped.

This is what happened with coal mining and resulted in all pits being closed

This is a national scandal Labour says these rigs are no longer productive, yes no longer productive if you take 78% of revenue off the top in taxes. If the platform is scrapped no taxes will be earned if the tax burden was reduced the platform life would be extended. Those type of maths never find favour with Labour.

Hi xxnjr

I have reread your message

I know I am using the Platt Spot Financial Futures quote and as you explained that the Platt Spot Quote quote used for Tullow is different

I understand you have access to that number

My issue is that the Platt Spot Futures quote has been rising steadily over the last three days, as this is a moving average it is indicative that the number that only you can see is probably rising pushing the moving average up. Is that the case??

Hi xxnjr

Well as you put it spot Brent was around $95 on Monday so its moving in the correct direction :-)

We have $103 $108 and my $150 on the board at the moment with about a week or so to go.

All we need is either Iran or Trump to escalate the situation which is not unlikely and I will be there

In 2025, the Ghanaian government executed a massive $1.47 billion settlement to clear legacy energy debts. While Tullow Oil is still working through a "roadmap" for its arrears, other major partners like Eni, Vitol, and Karpowership received substantial immediate payouts to stabilize the power sector.

Comparison of 2025 Debt Payments

Entity Amount Paid (USD) Category Description

World Bank (PRG) $597.2 Million Guarantee Reinstated the Partial Risk Guarantee for gas supply.

Eni & Vitol $480.0 Million Gas Supply Fully cleared outstanding invoices for Sankofa gas.

Karpowership $120.0 Million Power Gen Largest single payment to an IPP; covers powership fuel/fees.

Cenpower $59.4 Million Power Gen Settlement for thermal power generation arrears.

Sunon Asogli $54.0 Million Power Gen Legacy debt payment for the Tema-based plant.

Others (Aksa, Cenit, etc.) $159.4 Million Power Gen Combined payments to six other IPPs.

Tullow Oil $0 (Direct Arrears) Gas/Ops $225M still owed; current focus is on a "payment roadmap."

The reality is where losses will be made it will be in the collars. The three way collars have a maximum loss of $10 a barrel.

If you look at the 2024 accounts where Tullow's projection for 2025 (where there was more oil) it varied its collar protection less in the early 6 months more in the later 6 months. So the H1 collar for 2025 where more oil was produced was 2,000 barrels.

I think the H1 2026 collar projection of 3,000 barrels will hold up

I totally agree more 2026 3 way collars will be booked but losses here will be confined to $10 a barrel and at $100+ oil that is acceptable