Member Info for Tornadotony

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I always try to abide in the intelligence box myself. After events on EU on Friday its useful to read the relatively short Cipolla paper. It does not matter if you are a Stephen Beetham or a hobby time investor, there is value in reading the Cipolla paper just as a reminder and perspective of what is going on around us.

All out at 26.25 and all in sub 24p. Ended the day taking a third off to now act as a short against the 2/3rds running long. Sold some other stock at a big profit to cover the loss on the 1/3 as I am not near my average price. So if they want to drop Tullow price I can buy my 1/3 back on a gain, so shorters have competition. If it runs higher great, I was overloaded on the other stock in any case as it was bought as a Tullow hedge and I do not buy that one back again and enjoy the Tullow ride up. Whatever Tullow does I have a win in either direction.

25p reclaimed. Trading range 25-35p

A few weeks back had the 84-85p long term support being hit and it has happened. I said afterwards next stop is to be 142p. Pensana now bouncing off its long term support.

Landing on the beaches.

Catch the volatility right and you make enough to cover a holiday one day to Barbados.

Fingers crossed.

Hope your right Stephen Beetham

The rout in the market is continuing. Fortunately I reduced my portfolio by a third earlier in January. Some really good stocks are also getting hammered. This is not just about Tullow. Its about cash preservation.

at 26.25

puzzle got changed to possible.

https://www.chartguys.com/technical-analysis/

Many other places to learn charts but this site is quite useful. Its usually a day later looking backwards at what someone chose to do in real time and what they were seeing in the chart. I have been investing for 10 years and have only being using charts in the last 5 or 6 years. Its not a perfect science. In the end one uses fundamentals, back ground research and charting all together. Its like all the pieces of a possible but the market can make fools of anybody. Arrogance and over confidence can be your own worst enemy. Tony

The reason for not getting back is that we are seeing a general sell off all over the place. Its the kind of sell off where babies are thrown out with the bath water. The AIM 100 chart today was awful and the index got hammered.

I should mention we have two channels that were running bullish. The channel from 18 December has certainly held. It has a slower bullish gradient and may herald less volatility. To a certain degree we are waiting to see if the market gives a positive bounce tomorrow and recovers part of today's pull back which is the worse in months or that a market wide selling response continues. Logic tells me that a lot of money is sitting on the side lines and today was profit taking as being near the end of the month and also the time of year when the financial sector decides things like staff bonus payments. We shall know for sure tomorrow. What I can confirm is today's pullback has nothing to do specifically with Synairgen.

1. The company has stated that 90% of its future Capex is in Ghana and 10% is elsewhere. The first question is it a condition of the rollover so that the 90% is not diluted downwards either through ambitions elsewhere in the portfolio or that as a result of say higher oil prices they expand the 10% elsewhere to a higher figure, but not the Ghana asset.
2. If Tullow agrees with that request it begs the question what is their priority of existing assets and my guess is they are actually all up for sale bar the offshore assets in Cote De Ivories that was specifically mentioned in today’s RNS. Of course the company wants to extract best value and not be a distressed seller. As a bond holder being asked to rollover I would want an independent source to give both the current price for assets and what it might be in the next 4 years.
3. The second major issue is how confident can we be of finding 360M barrels of oil in Ghana as described in the Capital Market Day presentation. Again an independent assessment of the calculations provided by the company need to be verified, and how optimistic/realistic is that data. It may be that the reviewer agrees a particular improved life extension of the production asset and say it does work out as 85,000 barrels a day for 3 years on Tullow production. This might support a move out from 2022 to 2025 and the 2025 bonds move out to 2028. It then raises the issue can the bonds be paid off at $55 a barrel when the company is expending $300M or so a year on Capex and would the production profile increase enough as to average out at 85,000 barrels between 2022-2025 and gas off take and other issues are all resolved for that to be possible.
4. So assuming it was possible the revenue per year becomes $1.7B as before. This would yield $200M extra after Ghana Government takes it cut and then have additional profit from the current $1.4B income as costs are spread over more barrels of oil and so the $60M Slift calculated actually becomes more like $100M. So in theory selling the odd asset and delivering $300M additional FCF each year would pay off the bonds and some RBL costs. Ideally a 4 year rollover would allow more variations in oil price to deliver the $55 average per barrel and allow the time to build up to 85,000 barrels a day.
5. The next question for the bond holders would be all the other risks on oil price, production, gas off take, Ghana Government stability and a host of other things to consider. It would be understandable for bond holders to work through and want to appraise those risks.
6. Finally in a pandemic, with home schooling, shielding, people getting ill and can not be treated, should we not expect delays in government decisions, getting agreements with banks, getting reports done by a definitive time and allowing a bit of slippage or leeway from what is usually expected.

Its a bit odd to go through support lines on a few 1000 sells with ne news. I can not be certain but it looks like a bear trap.

It was inevitable that the banks would need more time to go through the new plan. I thought it was a good sign that it would conclude next month. The key was that the debts were not recalled and both parties were to arrive at a solution. The fact that Rahul and Les organised earlier discussions was positive. They also have time to resolve issues in their plans (like off-load an asset).

If the company struck oil in Suriname they would provide an analysis on the amount of 2C in millions of barrels they have found. At 2C each barrel is valued at $1. So if they discover 50 M barrels of oil and own 50% of it the increase company value is $25M to be added to enterprise value. Over time as the 2C goes into 2P production its value increases ten fold on the amount converted into 2P. If the conversion was net 50% the Enterprise value increases 125M in this example.

They could of course drill further wells and the 2C over time grows higher. Overall for every 25M barrels of 2C increase for Tullow would add 1.7p to their share price.

The name you have chosen does invite some mickey taking being flash and all. In fact you should be renamed as bipolarflashbondtrader and the reason is for taking us down a road of a really depressing analysis.

However, lets just speculate how Brent Oil could get to $30 a barrel. It probably requires China becoming paralysed with a massive new wave of Covid-19 infections. The mutagenicity of the virus also accelerates to the point of rendering the existing vaccines as having useless efficacy. It may then rely upon a range of new therapeutics acting against all mutations of the virus again not meeting any previous promising levels of efficacy in smaller completed trials. It requires stimulus packages being halted until widespread lockdowns end and requires vastly low levels of inherent infection rates to exist in communities afterwards and this takes a prolonged time to achieve. It may need India and USA to get hit by another pandemic wave as well along with Brazil. A nice bout of warm weather also rolls in over the northern hemisphere for the rest of winter despite vastly reduced carbon use. Finally Governments restrict all airline travel and limit motoring to five miles of residential addresses per day and all major events are cancelled until August. Finally President Biden also lifts Iranian sanctions and the Iranians dump oil big time with Libya into the market and the Russia and fight for market share despite agreeing not to do this. Shale frackers in USA also decide to have another go and dump into the market as banks decide to lose a ton of money again. So if all these things happen a race to the bottom on oil price does occur. However, there are countless maybe's and if's for all of it to happen and lets hope to goodness it doesn't.

It was today the presentation. Clearly a no brainer, they are likely to exceed last year's performance. This should pass the 200p level. $38M in the bank as of 31 December 2020.

I believe the presentation is on Thursday. Could be saving some juice for an uplift on the day although any firm production guidance would need its own RNS.