Member Info for Tornadotony

Gained on the Fresnillo move but lost on the Shanta swap but mis step is small beer. Mrs Tornadotony is now a Shanta holder.

As for the situation on oil the energy stocks are well and truly smashed up. The key is to only buy the survivors and if patient those stock could recover 20-40% in two years time like BP and Shell. ECO is reliant on Tullow oil for the Guyana well drill next year. It may or may not happen.

Staying underweight so I can average down if necessary but covering some upside if we get it.

Another good sign.

CplonelDrake

Nice thing about running an investment account for the wife and one for me is that I can buy the half I sold on Shanta for her account and buy the Fresnillo that I sold on hers today for mine. Tony

Granted in that gold and silver are having a sharp rebound. At the moment my move on Shanta is not looking good. At least I kept half. Lets see where we are next week.

USA open has disbelieved the job data and gone back into gold. I am surprised by the early move but this may about closing off gaps and doing something later this afternoon.

Modest holding stays despite gold getting canned. Worth averaging down.

Holding only 500 shares after banking the rest at 857. This looks like a cycle rotation out of precious metal stocks. Have some skin in the game if wrong but banked most of 722-857 gain.

Gold now in trouble. Taken half off. Could be a big mistake, but I have the resources to buy back heavily. Otherwise some profit from 11.8 to 13.5p banked. This could be a major down move on gold.

Gold now hitting the proverbial fan.

Gold has to break 1770 on the futures and if it does some of that money is for the energy sector.

Temporary top on Shanta might be in. Cautionary comment as the whole sector may take a hit. Gold needs to hold 1770 futures.

USA data improved for the most part yesterday. New Jersey, Ohio, both Carolina's Improved significantly. New York and North east in general was improving. Texas remains a serious problem although California, Arizona and Florida are showing signs of getting onto a plateau. Washington, Oregon and Idaho and Nevada remain problematic in the Northwest. The Midwest is generally doing quite well. Louisiana and Alabama are struggling a bit. Overall 28 USA states are on a recovery path with 6 on a plateau. A stronger focussed public health message in a few area would help. Alaska needs to get a grip as well.

My second comment on Tullow free cash flow is that a return to $60 a barrel does generate an FCF return that is not far off those delivered in 2019. A recovery of that magnitude should well yield a stable future for the company for it to pay its debt and drill a new wells once again. The comment from HSBC is quite unacceptable.

The ignorance of an analyst to suggest that a rising commodity price does not improve the sustainability of the company says it all. The RBL was satisfied with the Uganda deleverage and agreed to cover the $300M due for repayment in 2021.

Same lot who had the share target at 230p in August 2019.

To Slift and other readers,

The end of 2019 value of Tullow was 60p a share. It was forecast to gain $175M for 75,000 barrels a day and had $45,000 barrels hedged at $53.5 a barrel after hedging costs. We know that no oil was hedged in January and February and the average price was above $53.5 a barrel.
The company initial wave of cost savings also suggested shifted that $175M target to $57.5 per barrel. However this was followed by far more stringent saving activity before the RBL remuneration. The company have also stated that $15M spent in Uganda is to be credited back to the company. At this point the company gave its breakeven price as $45 a barrel.
Therefore if the hedge was used to 31 May, it is 152 days at 75,000 barrels per day at $53.5. The revenue is about 609M and the net cash flow is $92M.
The Uganda sale if taken at 560M net against $960M value on 31 December has to also consider the tax on $960M that is due. So let us assume the net loss is around $300M. This is a loss of 17p a share and takes Tullow down 17p however 5p is added back on for the $92M earned until end of May.
Half hedge at 53.5- 41 spot = $47 a barrel. $2 x 214 (days) x 75,000 = $32M However that $15M Uganda savings could fall into next year so I gave the net gain as 109M.

I should add that at 31.2p the PE rate on projected end of year profit of $109M on 50% hedge applied on 1 June gives a PE rate of 5.0. A re-rate to 6PE gives 37.4p. and at 7PE it becomes 43.6p.

I should at that at 31.2p the PE rate on projected end of year profit of $109M on 50% hedge applied on 1 June gives a PE rate of 5.0. A re-rate to 6PE gives 37.4p. and at 7PE it becomes 43.6p.

The only reason that the share price might be lower is for the company not using all of its hedge at the current time. At $53 a barrel for all the production barrels per day the share has to be in lower forties and this assumes the Uganda sale will go ahead and cost savings of not investing in Uganda are saved from annual costs. A difference to bear in mind is that annual cost saving accrued by September would be $7 a barrel. So the $60 a barrel forecast Jan 2020 for profits becomes $53 a barrel. All of the income during the year would have hit that target by mid September with only one quarter and two weeks unhedged. If the company chose to halve hedge its production from 1 June to the end of the year than the share price should not go lower than 37.5p with upside being higher than today's $41 a barrel. In other words today's price offered to you in my opinion is at a 20% discount.

The CEO will give views when other news is going to be released. The company may give a heads up on the second quarter and than we get to read what the future strategy the CEO has in mind. For example do they have any plans to move out of oil and gas and take on renewable energy. Longer term do they focus on just Namibia, Surinanme and Guyana and seek to sell off other licences and let them go. Do they keep some of the Kenya asset or does it all go. Will the CEO achieve $667M for it as valued in 2019 accounts.