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Within the next two weeks AAZ completes a bottom and then rallies during October and for part of November. Long term holders should have nothing to worry about on the interim move. Those waiting to get in should get their chance.

On a day we have over 9 million barrels of oil State side drawn down and seeing the sector trashed it has left me dishearten as I thought the share had bottomed. A comment made by toothache earlier is one that I actually followed. I pulled 52% out of BP on a divi dodge in early August. The move was a trading profit. I put 1/6 of that sell into Tullow at 24p as a 1/10 average down for 2.4p lower. It was the only move I made on the stock since June. Overall I reduced my sector exposure by 10%. After lock down relaxations I thought this sector that has missed the recovery of so many would not find itself back in March and April lows. The whole point of buying into a beaten up sector was that it might be near a bottom. I just find the positions of Shell, BP and Tullow stock prices as quite staggering.

Off for a quiet beer.

Tony

Double the API draw figures.

Fact checking;

1. The USA through the world bank forced the Ghana government to renege on the arrangements to Tullow in taking off agreed gas volumes for use in Accra and linked areas in favour of Eni. This limited production down to 85,000 to 86,000 and had nothing to do with Tullow Board.
2. There was incompetence in the company as to where Enyenra-14 was drilled in the wrong place and that got Paul McDade's number two fired as they then tried drilling away from the vertical to remedy it and made a complete hash of it. Between them it cost the company $50M and its believed they ignored a lot of advice.
3. It was Dorothy who commissioned the reserves and resources report that identified more problems with TEN and that report arrived after 13 November. Its believed the bumbling duo had a good idea that some of the TEN wells were not functionally as elsewhere and they got found out by the independent report. The pair were then fired.

Quite a few people on the Board have actually done a god job on what they are responsible for. Rahul knows that governance has teeth at the company and if there is a problem short cuts that make things vastly worse are not to be taken. If in doubt issues get discussed properly.

Malbrad

The Tullow share price has nothing to do with PMO. The strategy difference between the companies is stark. Tullow is mitigating debts due with assets sales. Thee is no intention to seek funds like PMO have done. The PMO strategy works well if the oil price goes over $65 a barrel early in 2021. Its a disaster if it stays at $50-$55.

Davstock

Tullow is forming a bottom and I for one would not be surprised with an afternoon uptick and we close near where we open around 21.7p or so. The forward curve on oil price is higher than Tullow projected as the breakeven point in July. The company is actually making money.

I would favour the company having a placing, with existing shareholders getting a 10% discount on taking it up. Basically the company creates 20% extra shares and you get a chance to buy the 20% against your current holding and those not taken up get mopped up by the market. The company has another policy 3 years later to do share buy backs or a dividend once the assets are delivering to the plan. The benefit of this approach is no hedging of gold sales, no debt raise with banks at 9-10% interest rates and the cash is in the bank against on-going income receipts to fund the Capex. It also avoids income sources that go short on the stock when gold price retreat occurs. I just put this approach out as airing of thoughts.

Megla I believe we are on the same page. A case of wanting best in class to survive after Covid-19/Sars2.

Megla, The USA shale company sector has gone through two rounds of bankruptcies. They have not made investors money as the accounting practices and extraction techniques are not at true market price and the supply is wholly in many fields is inefficient. Additionally it has ignored environmental impact such as local water supply and decommissioning in some areas. It has been an innovation that has damaged the rest of the industry and slows their progression to perhaps a less carbon extraction in future years. The USA banks are unlikely to lend monies to fracking companies with only the minority supported that operate to proper standards, with sound accounting practices and those who carefully manage their assets using best technology practice. That minority of probably just a third of the industry and it has been deeply damaged by the unregulated do not care two thirds.

Slift is right that the longer oil is in the 40's and the quicker the drawdown in supplies than a more sustained recovery happens in the sector. As survivor companies emerge there will be many acquisition, mergers and restructuring. The whole sector will be on a different path. The criteria for economic exploitation of future oil will be set at a much higher economic level. It is therefore likely that future supply will be more constrained and hence growth in the renewable sector to manage energy supply gaps. The change may then be evolution rather than revolutionary or through massive disruptive change that can de difficult to implement and do. All in my opinion Tony

https://allafrica.com/stories/202009010773.html

Be ready for FID.

Destroying future oil supply, destroys a massive range of products. If you walk into a hospital engineering is all around you. It exists as you go in lifts, the technology in the bed someone may lay on, the systems that surround them with all the insulated wiring which incidentally all encompass a lot of oil based products. The medical implants that have been tested of course that contain organic oil based materials may now have to be replaced, a lot of surgical kit and the diagnostic imaging systems and all the lab toys cased in plastic using containers that are also plastic for sera or blood and the blood bags of course for any operatic transfusions and the plastic PPE and even in the garments covering patients and the curtain material giving them privacy along with all that drip line material and whatever is packaged inside that bag is all sourced from oil. The eco warriors might say just let several hundred thousand people a year go into wheelchairs instead as it cuts down the oil used in the original healthcare pathway for new hips, knees or whatever. Then suddenly everyone realises that's full of oil based product as well but then they come up with completely impractical alternatives like shaking bones on a tray or some hypnosis. Suddenly folks none of what is currently taken for granted is going to be available because it does not satisfy climate change or political correctness and the alternatives will by-pass all patient safety and hospital environmental safety and certainly won't be fit for any purpose.

Eventually somebody with a brain will emerge and point out the complete utter stupidity of what we are now witnessing because the damaging risk of all the mistakes that will be made, because certain people will make a mint out of it who are elite connected for ordinary people to pay for it with no transparency or anything like peer review. They will point out that carbon capture in particular has to be improved, that alternatives to oil that work will take time to discover, to understand the entire consequences of making the change and then persuading people with evidence to change in the decisions they make. In essence change and evolution takes time to occur , where as forcing change overnight is unlikely to end well.

Only fractionally better than Shell.

I believe 1034 is the actual weekly double bottom. I wonder what happens next as they have effective crushed the company value. The share could try and do a double bottom on a daily chart but are thing really as bad as in major western market full lockdowns.

Can easily average off if today is a one off. A new position.

Yuri
Its not an elephant in the room. It is a practice that is followed when companies like Shell, BP and Tullow are in the process of selling assets. Host governments for those assets will argue higher longer term prices to extract more capital gains tax on what they see as future payments on sales on the asset being sold. Furthermore the long term price curb may change upwards and then appreciation occurs the other way. Hence all the deliberations surrounding disposal of Tullow assets by Uganda and now Kenya government who are doing their own forensic audit. All of this process sets out the parameters that have to be met in later years by the buyer of oil assets who run the risk of acquiring higher CGT bills if the oil price moved up sharply. On the one hand the asset buyer does not mind if they are making lots more profit on higher prices, but they know some of it will have to go to that host government as the long term average cost per barrel may have improved and hence why earnings per share may not always be as high as expected when the underlying commodity price has risen.

Hi ColonelDrake

The hedge is at 60% production per day at $57 until 31 December. So averaging it in and taking account hedge costs production average is around $52 a barrel. The company hedged 40% a day at $51-52 mark in 2021. The company is trading less than half to book value. Its also trading less than the value of all its assets after capital gains tax if they were all sold and all debt was paid off providing any leasing contracts costs were also transferred to the buyer of those assets in the oil producing fields. So Tullow is at high risk of being subject to a takeover at the last closed price and being asset stripped.

The current stored oil glut ends in 14 weeks or so as many millions of barrels are being used in an undersupplied market. Every week oil fields are depleting or cease to pump through bankruptcy (8%-10% per annum). Only 29% of all produced oil is used for vehicle transport (which is increasing heavily to avoid public transport) and 8-9% or so is Aviation that has of course dropped sharply. Renewables can not replace oil based products unless we cut down all the trees. Renewables like wind and solar power can not always be used at the same time. Most of the world can not afford electric vehicles and most countries do not have infrastructures in place to support them. The critical technology on materials for EVs and their processing is entirely dependent on China as well which is currently a big issue.

It also goes back to the argument does society give up on disposable baby diapers and go back to towel diapers that go into the washing machine and use energy there. Will society change and create alternative environmental issues as they usually do. The biggest driver of oil price growth is the increased global population and renewables have minimised the rate of increase in annual oil demand. Hence the disposable diaper example. If oil use is to seriously drop the global population has to decrease.

Finally, if emergency use of therapeutic medicines that have been developed in phase two trials and shown to effective (eg Synairgen) get taken up then full blown lockdowns may not be necessary in 2021.

I am becoming concerned how the whole pandemic is being manipulated by an elite agenda into other issues for change and that somehow the negative impacts are expected to be accepted by society and individuals as a kind of new social order. Overnight its acceptable not to have any contact with general practitioners, that a large majority of the workers can remain invisible to their line management in not really working from home, that a customer has a 40 plus minute wait if they want to speak to someone over the telephone to resolve an urgent problem, that any kind of response time from public servants, council employees is non existent and replaced by non-relevant automatic email responses, that healthcare outside of covid-19 cases is completely neglected and goes on a forever waiting list, that those who had some enjoyment through sports, arts or whatever are expected it to be substituted by an on -line experience as a wonderful permanent equivalence for the eternal future. I just feel there is an agenda by the political and elite funding class to engineer less freedom and choice and say to everyone that is your life from now on and its run on methods that profits us at your expense and future enjoyment.

The relevance of all the above is that forces may engineer to delay Synairgen product development because they do not want us to get back to our previous existence. They may want a horrible second wave and third or a fourth wave high casualty rate outcome to get the kind of society that bests suits their purpose. So the danger is not the Motley Fool message, but the dark hand that wants to stop productive scientific outcomes with endless delay and procrastination because they like a new change agenda that materially satisfies and is beneficial to them.

Forgive the above venture in paranoia which of course is what the Motley Fool inadvertently or intentionally sometimes likes to do which gives the attention they thrive on. My discourse is describing how fears are generated and partly how easy it is with imagination to do so if you want to get in the world that all others have bad intentions.

This can be found on marketscreener Tullow. It was known that the CALM buoy had arrived late January 2020 for installation. It was reported in March that it was to be done. It looks as if its a few months behind and explains where some expect savings had not materialised and some extra costs might have occurred in Q1. Something else to find out if it has been resolved in Q3. My thanks to the person putting it out and I noted Kosmos comments made on 3 August that were supportive of what Tullow had done in H1.

I received the following very recent communication from Tullow Investor Relations after I contacted them late on Friday.

"There is no negative fundamental news on Tullow that I am aware of."

I have to say I am grateful to have that out of hours comment. Tony

Adam in case you did not see this article. https://citinewsroom.com/2020/03/anadarko-total-s-a-deal-mother-of-all-takeovers/

Tim
One company outperforming most of the sector is Apache and we know why that is. If the Suriname well hits a strike, then Tullow will have a huge 2C asset and the company value practically doubles overnight. The chances of that wildcat strike are about 33%. I have not raised the acquisitions issue with the company to date and I am not sure how the RBL committee doing the six monthly review would receive it.

As for the disconnect with oil price it is a waiting game. The glut has 15 weeks to go and the northern hemisphere has to decide how they live and work with Sars2 virus. I have seen commodity shares hammered in many sectors before and the market often underestimates cost cutting, new ways of doing things, use of new technologies and how adaptable commodity companies can be. Sadly the top down approach of forcing change on a population than allowing natural market changes usually goes seriously wrong. In the UK its rare to have solar and wind working together at the same time and expecting the end of oil is not that practical unless we accept energy blackouts like they now have in California. As for magnets processing with rare elements, the process technology is entirely Chinese and we see the problems in other sectors with Chinese dominance and relying on their supply chains.
I do feel that an elite are exploiting the pandemic and may influence sentiment to energy companies. It reminds of the UK throwing tons of money to International Development projects and although some may have done good, a lot was spending money because it felt good despite having no impact and we might a lot of green projects go the same way. When politicians can print lots of money it often means thinking and planning of what and how to do it is an after thought and a failure often arises through a lack of integration into a working productive system. Its like walking into a house where a man who does not cook has designed a new kitchen for his wife and is then surprised when his wife points out how the whole room does not work as nobody asked her opinion. All the best Tony