Member Info for Tornadotony

Sageman

We are looking at different time intervals. My comments were for this week as some of our readers were interested in opinions of others on the next 48 hours to Friday. Of course things will change as you say come late December or during quarter 1 next year. The share has risen 35% and we should not be surprised if the stock is now seriously overbought. Anyway we shall soon see if what I looked at is wrong tomorrow morning or the indicators I looked at were of any use.

I had to wait until USA New York close.

As we all know during the summer when Brent was $45 the oil company shares moved down despite flat Brent price. Usually oil companies follow the commodity and the market waited for proof that majors could avoid losses at low oil prices. Despite Tullow demonstrating this it still got reduced until Shell delivered their data and increased its divi that goes through tomorrow.

Watching Exxon was useful as it followed Tullow going up and tonight it failed to do so after Tullow closed. The Brent price closed at the same USA close price yesterday. So no follow through from Asian markets that happened pre-London open this morning.

The oil supply side is getting problematic as Libya is up to 1.1M barrels a day. Azerbaijan will now want to pump more to cover the cost of a conflict with Armenia and although USA was turning down its production, issues in Nigeria and Iraq suggest they may be over producing to manage internal pressures. Overall supply quotas may be exceeded and perceived drops in storage may not be as high as hoped for.

As for Tullow its seriously overbought and stochastics are 100%. Its setting the scene for a quiet day and the Exxon close hints of a drop to around 24.05p for Tullow and that's a test if that marker is of any good or not. I still feel anyone who sold at 23.x today is likely to have a chance of deciding to rebuy if they want to.

As for my own position of coming out 40% at 15p, that move has broken even with the Tullow close tonight. I achieved it with 19 closed trade wins and 1 loss. I was way ahead when Tullow was on 18p. The tables turn of course everyday as someone else wrote here today if your position is a mis- step you can wait for a retreat, buy double back and sell half higher or jump into another opportunity. Whatever decision you make be comfortable with it and being the manager of your own destiny.

Best of luck with your investments.

Now we get to see where the Brent price direction will now go.

The graph to look at is start of this year. Exxon Mobil is retreating tonight. If it closes more negative than Tullow if it does what it has done since 1 January this year, it will retreat tomorrow.

Left a small gap in the Tullow chart this morning but the gap in Brent chart USA is huge. I expect back filling in the afternoon. Whether it rallies higher after back filling on Brent is a maybe. Next higher low for Tullow from 17.9p, should imop be 20.2p if it stays on the recovery path. Increase of 2.2p is less interest being paid.

Slift

The original Uganda deal giving 10% ownership required Tullow to meet its costs in building the pipeline and various other infrastructure. Tullow estimated that the amount of additional debt it would require was approximately $500M. The 10% was not a free carry. The breakeven per barrel a few years back was around $38 a barrel and my guess is that it may now be higher. So on the one hand Tullow may have off loaded $700M debt, but then they would needed to take out $500M debt for pipeline construction and were locked into supporting a significant staff base at low oil prices. On top of that how much profit would they have mad on 20,000 more barrels a year coming out at $50 a barrel might make $90M a year. It could well take 4 years to be in a better position of not being involved in a heated pipe production and everything else associated with the earlier deal. All it takes in some error in the construction and all kinds of delays could happen. I sense the company has de-risked on a huge scale.

Synairgen has moved from 4% to 5% in my own portfolio and added between 110.7-112p.

The literature shows the latest most potent influenza vaccine has 50% efficacy and hospitals although not under the same extensive strain as years ago, still have a higher and older demographic population in the UK and on a mild infection rate year will still receive over 600,000 older than 65 years for actual hospital admission stay or around 2000 patients per hospital or around 250 patients in stay on wards at any one particular moment on time in the peak two month phase in the NHS. A very heavy epidemic would be 3 fold those figures as seen in late 2017 early 2018. Of course the entire population is not immunised for influenza, but it has a huge degree of herd immunity from previous years of influenza outbreaks. It is maintained by young people getting influenza and recovering normally.
So if a Covid-19 vaccine arises the key efficacy data to look for is the over 65 year old patients. If we gave the influenza vaccine to everyone in the population the efficacy rate would be 90%. As 19% of the UK population is over 65 years and if all positive cases were in the over 65 years group that 90% efficacy actually becomes 50% as 9.5% + 81% = 90.5%. So age ranges in the Pfizer study means everything. It is still handy to protect half the elderly population that could die of Covid-19. It would also convert the mortality rate from Covid-19 as being equivalent to a middle range influenza pandemic. The vaccine does allow the economies to open up. However, the Synairgen product was for the other half likely to take up hospital beds. If it has an efficacy that recovers many of those severely affected it saves 1000 patients being in any one hospital ill or at least that is what we hope is being proved in the stage 3 clinical trial.
The upshot is that Synairgen had a therapeutic market for the UK alone of around £200M plus a year and quite possibly £1B in overseas market. If profitability was just £50M after all cost at a PE rate of 8 for a small company on its current share base is £4 share price. Synairgen was never really a population treatment application, it was specifically those arriving in hospital in time to have value from being prescribed the product. It has potential of possibly limiting long Covid and it may be safer for older patients to have. The cost of treatment and being able to return home on discharge quickly makes it cost effective for healthcare providers. This scenario exists with or without a vaccine being available as Covid-19 attacks more specific vulnerable groups in the populace.

The data I mentioned in previous was UK NHS source 2018 stats.

CD

I bought Shanta as every November and December we get the seasonal bottom. We also get a seasonal high somewhere between January and March. I still feel a stimulus is going to be needed. I would want to know what the shelf life of any vaccine was and how it is to be kept prior to administration. Despite influenza vaccine availability each year, around 1.8M hospital admissions in over 65's arise with influenza or pneumonia. Vaccine efficacy is far lower in the over 65 age group and hence the need for a good therapeutic.

TT

This was a divi hold share for me. Starting to look like Easter again. May the force be with us.

CPMOD

I adjusted Synairgen to 4% of my portfolio last month and keep as long term hold. My broker platform was unreliable today, but could not add anything until late next week as I have loaded up elsewhere. I believe that I explained fully why a therapeutic and vaccine was needed to manage Covid-19 outbreaks. Events today do not change my outlook.

The patent attached gives an idea where the Uganda and Kenya oil may have an important use and why Total and the Chinese market have such a big interest and why the Kenya asset may rather important..

https://patents.google.com/patent/EP3315590A1/en

The Kosmos RNS expects Tullow to hit its annual targets for production. In fact they may well be exceeded. An additional 1000 barrels a day is likely to generate $1.8M FCF and deliver savings of plus 5 cents off production per barrel or $1.35M per annum and adds a further 0.16p to the share price.

The cost to pump oil is $11 a barrel in previous.

Dark Knight

The $500M is to pay off debt from $2.9B down to $2.4B. Once this occurs, the company earns $1.50 more from every barrel of oil it pumps as the interest debt which was around $10 a barrel is reduced to $8.50 a barrel. The cost to pump oil is $11B. Add on payments to governments, administration costs and debt interest that lifting cost plus those elements is around $32 a barrel. On top of that add $350M Capex being spent gives a breakeven price of $45 a barrel.

So what is the net benefit from when $500M gets paid is $112,500 cash saving each day compared to what its not getting prior to receiving the $500 which some posters on here continue to ignore. The $41M a year towards FCF has a value to be added to the share price. That value alone in my opinion is worth 2.2p share.

On top of that issue the door is open to earn an additional $75M from the Uganda FID. A more important factor is that more attention may focus on the Kenya asset. Someone may ask why does China want the Uganda oil, what do they use it for. The only other source for the Uganda waxy oil is Kenya. I would not be surprised for a bid to be made for the Kenya asset when the relief on future investment and final production is known and agreed with Kenyan Government. Kenyans may soon see the urgency as Uganda races ahead to gain global market share.

The final factor is the Biden stimulus in 2021.

A breach of 132 forms a cup bottom in the chart. With gold on 1962 earlier a completed bottom could be in play.

Up 10% so at least 66p on the open bid.

Jubilee 87,700 a day, TEN 49,600 a day, 98% up time equates to Tullow around 54,100 Ghana. Non-Ghana to add on.

D220

Not as cut and dry as we might think. Republican party is starting to split. Some will be desperate to have EV car manufacturing in their state or stimulus in their state. If Republicans turn on the midwest voter like in Michigan and Ohio were most cars get made they will be out from power for decades later on. I bet Republican senators may want to cut a deal (Bear in mind if just one dies in office the senate majority may be lost). The issue of HZM is are they getting taken over or are they going ahead with construction. The future looks potentially greener.