Member Info for Tornadotony

Eventually this may help the stock price.

Important news was actually Kenya dropping the 15% VAT on its project. The entire asset is now attractive for a would be buyer or farm down. Total are also supportive of building a pipeline.

Quick reminder Sars 2 hits the older population. Vaccines in young people do not give efficacy data in older people.

https://www.nhc.noaa.gov/graphics_at4.shtml?start#contents

Sally still a tropical storm but likely to become a hurricane.
Paulette became a hurricane and hit Bermuda.

The mid- Atlantic and Caribbean sea has become a lot more active of late.

There is only one principle concern to focus on and that is the oil price. If oil next year gets back to $55 a barrel or higher its happy days. Below $45 is trouble. $50 is hard work scrapping along through selling assets and cutting costs. $52-53 gives a little wiggle room. Oil needs to get in the 50's by March/April 2021.

This was absolutely vital. It allows the project to be viable in a $50-$55 barrel market with costs say of $35-$40. The reworked Kenya proposal being worked on is now interesting again. It allows any farm down interest to be a lot more serious on any offers or bids. On any oil project companies must have $5 buffer for extra debt interest, $5 Capex and $5 profit net per barrel otherwise its not worth lifting or getting into a deal to lift the oil.

https://www.gov.uk/tax-on-dividends

In the Uganda sales document it says the following in the event of $500M being paid say in September or October.

In the event of the average oil price being $35 for all of 2020 and forward curve is $45 for 2021. The company would need to find an additional $100M to meet its gearing covenant of being less than 3.5 or less for its annual accounts for 2020.

If Brent price was $25 average for all of 2020 than $280M has to be found from sales assets or a rights issue.

The documentation also reports that $25M in additional savings would be found to support passing the end of year gearing test if necessary. In the event of the FID of Uganda providing another $75M by 31 March 2021, than the gearing tests would have been met by publication of audited accounts for 2020. Page 31 of that document.
On Page 32 at an average on-going oil price of $45 in 2021 a shortfall of $130M is required on passing liquidity tests in April 2021. The most likely source to cover this test was a farm down outcome of the Kenya asset. If that was not possible other assets might be sold and that further cost cutting activities may also help the liquidity target. It is failure at this point that triggers an RBL default regarding liquidity test in June 2021. The Gearing test if not passed in the annual accounts published in April also fails the company into default in June 2021.

Mick-b ad other AAZ holders

The complete history of hitting production targets.
2010-2011 met.
2011-2012 missed by 1,000 ounces 57kinstead of 58k.
2012-2013 missed by 4,000 ounces bad winter Q1.
2013-2014 missed by 8,000 major leaching plant problem.
2014-2015 missed gold target on gold by 1,800 ounces but mined lots of silver so really hit target.
2015-2016 hit targets.
2016-2017 finally reports equivalent targets so hits target
2017-2018 hits target well despite poor H1.
2018-2019 hits target near top end.
2019-2020 hits target bottom end.

Overall a six year run of hitting targets. Implies Q4 outperformance on production of 30%. To be confirmed on interim guidance report.

Slift, Cluelesstim

CNOOC posted $1.5B profit in August. They have made it known they want more stakes in Guyana blocks. A 20% stake is probably what they have in mind. If its not CNOOC it could be another company wanting some of the action. This may well give that extra liquidity in January.

held not d in previous

We did not get the 142p close on Thursday and it was pushed lower on quite low volume of sales. I do not know the exact bottom and why its getting pulled back further. 129p is a double bottom on the sell side. The company stock charts have given a series of higher lows and today we got 133.xp. I have d back for my last buy when the share delivers a bottom a it goes back up.

Why will the share go higher? It has a resource and reserves report at the end of the month (likely positive), it has an H1 report end of next week or early following week, the next divi qualifies first week of October. I will do further analysis over the weekend and post it.

The March redetermination has been brought forward to January. Its September 2021 that has the critical test.

More discount this morning.

Slift

Glad your back. I noted that the non- Ghana assets need $100M, but offer a lot of continued opportunities for a longer run of years. This allows 30% low cost production with profits generated above $35. I noted that at least 75M was at least needed by Jubilee to get the Southeast development going. This again delivers 40% at sub $35 breakeven prices. TEN is seeing being worked on but has resources to reserves to re-direct things back on 2P. None of this happens if the company has to cut an additional $150M to pay off debts at their due time. The banks therefore have an opportunity of deciding if the proposed new developments generate enough future profit to pay off interest and future debts. In essence the company is delivering a viable value solution and do the banks want to take the risk.

The CEO believes that coupled with efficiencies of just 2.5% is like 45M barrels of oil in production which is 1.5 years additional supply from producing fields. I certainly believe the banks would swap the June $300M payment in 2021 for an RBL extension assuming Uganda $500M is paid over. The company still has $75M from a later FID in 2021.

So the remaining problem is the 650M in 2022 bonds and the later bonds in 2025. Lets assume the company is allowed to spend the FID and other 200M from the Uganda sale on all their developments and they get to 75,000 barrels a day that clears $10 barrel in real profit to pay down debt. This gives a repayment of $270M a year at $45 forward prices. At $55 this is $540M a year. The company is paying interest. I believe they may well sell Kenya blocks eventually giving more time to do it. The life of production fields is up to 14 years. Assume half those years pay out $400M in repayment $50 forward curve, 1/4 pay out supporting Capex and decommission set aside, the business in 14 years delivers $1.2B net profit. Its an $85M a year generating company excluding any discoveries. This is a 4.6p a share earning company and at 8PE which gives a base line value of 36p. At 10PE which is the sector average it would be 46p but we may get say a little bit of dilution over time.

Overall I believe there is a model and there are choices of what to do. The January meeting is either cut like crazy, fire sale assets and cover the 2022 bond and zombie what is left of the company. The second option is RBL says they want their money out as well and it all ends, but why would they do it if someone offers 14 years of interest and debt payments like a mortgage and they ae looking after the asset. The third action is to support the CEO give him the resources from Uganda and fix things up. The fourth is unknown but raising more from shareholders with the price of equity on the floor does not make sense. All of this is opinion like everything else I ever right on a board like this. Tony

We desperately need a 100,000 doses to protect and recover NHS patients. I wish to God somebody hurries up. We could be in a crisis by end of October.

The first response to any virus is to produce IgM antibodies. These typically fade away after a month or so. However, the immune system generates IgG antibodies in the third and fourth week as a bacteria or virus load declines. Eventually we are left with a reservoir of low concentration of IgG4 antibodies. These antibodies only reappear in large volumes in a second infection they are referred to as the memory antibodies and very little if any will be in blood circulation. If the immune system did not work this way our blood stream would be saturated with antibodies of all the exposures we may encounter in our life time. We could end up with autoimmune diseases and many other problems. I am not sure how far that study was done and whether they took samples from the spleen or lymphatic system or wherever to hunt for memory antibodies or did they give people second exposure to the virus and then had no further antibody response.

https://www.offshore-technology.com/features/will-covid-19-lead-to-a-wave-of-upstream-oil-and-gas-mergers-and-acquisitions/

Basically Alaska pipeline delivers 600,000 extra crude, imports 500,000 and refineries decide not to process 1M barrels leads to 2M in storage. A set back and fingers crossed for some kind of economic pick up.

Real scars in the economy are now happening. Its quite concerning how its starting to all unravel. God knows what is going to happen. Everywhere I look, I see idiots in charge. I do not want to appear arrogant by that comment, but the mis-communication and the garbage we hear does not inspire confidence in me at any rate.