Member Info for Tornadotony

https://finance.yahoo.com/news/opec-calls-off-wednesday-technical-115315691.html

God knows.

The advantage of a small position on this one is to leave it in the draw. Long term prospects for Shanta are very good. When the dust settles will get a great average down.

How does suspension work? Can it stop trading completely?

Incubation time is broadly two weeks. By locking down population movements transmission of the virus collapses. Its a tough month but it gives a plateau on new cases and builds a recovery curve. Careful management of the following 3 weeks ends the worse of this virus nightmare. A case of holding on.

The protocol on who goes on a ventilator is based on best chance of survival. These could be young doctors who have taken to many risks to help older people. The biggest factor is life years saved with lowest morbidity follow on consequences. These are difficult decisions for anybody to make and so 3 doctors ruling decisions should be applied.

The politicians can not save everybody and neither can any health service model. We all have to take some degree of effort and responsibility in all of this.

If they lock down to early not enough people have become immune and we get repeated breakouts. The infection has to run to a level where enough immune people bring us back on line after implementation of lock down as the re-opening has to be phased to favour those who had all the symptoms and came through as mild outcomes and they are the foot soldiers to get us back to normal. The price of this strategy is accepting influenza like mortality rates in the population that are normally hidden and accepted annually but in this case we have the media focussed on every single case. The lock down is timed to fit best capacity levels that health services and communities can manage to handle morbidity of patients needing intensive care. This will be a difficult 3 weeks for Europe and after this week we follow them here in the UK. To note fit sub 40 years are at much lower risk. If your over 70 make sure your well supplied and have good friend contacts to help you and batten down the hatches (incidentally 4 months timing is absurd its the next 4 weeks that are really important). Do not be shy in wearing a surgical mask if you have one. Those who wear them are being safe in contact with you.

The logic of lower production up to 2023 is to recover lost reserves in TEN so that the company is sustainable longer term. It implies that production may well increase back to 85,000-90,000 for a few later years when more 2C TEN resources become 2P and it has a big reserve pool to call on. The field is then operating to a much tighter controlled plan. TEN has 216M of 2C and managing this to 2P has to be done just right as to avoid a repeat of early depletion rates. The asset sales help the company in my opinion get to that point is how I think its all working. I hope another presentation later clarifies this issue and this is where the new CEO comes in.

In the 12 March presentation it was clearly stated that the 6 technical banks can see the cash flow generated from the hedged oil until September so the $1.9B RBL does go through. The uncertainty that is material involves the September re-determination meeting. If the redetermination remains at $1.9B the company has cash to pay for its 2021 debt in June. It is the sale of assets that pay off the 2022 and readjust advance use of the RBL monies used in 2021.

The upshot for Tullow oil is that it may face Ghana disruption of oil production during its COVID-19 outbreak. However the population is very young and at lower risk. It may result that spare barrels produced above 75,000 barrels a day and result a mean reversion back to the annual target to accommodation slightly lower production performance at that time. It could mean the hedge works further to mid- September with less oil pumped at very low prices. The risk of this being a cause to miss targets on up-time levels is quite probably low.
An additional impact is that meetings with governments, the French bank managing Kenya sales and face to face business meetings with prospective buyers and show casing the assets may get delayed for very practical reasons like access to aircraft restrictions. However, this should be less so in H2. The problem at second redetermination in September is how much progress was made and how reasonably the company is treated as they tried to manage through the Covid-19 issue. Overall I think the risk of it being material on the business may prove low and perhaps a delayed re-determination in November is a fair way to handle it.

If folks want an evaluation of oil price risk I will do that next.

Covid 19 March to June Profile- A Personal Opinion

The recovery phase is fully underway in China and bar the hospitality and travel sector the economy should be running back at 90% capacity by April subject to no secondary wave breakouts. These of course become unlikely with a high proportion of the population having acquired immunity through mild infection. It is likely that true mild is far higher than official statistics as they cannot measure them all except for population wide screening. The next new test will be confirmation of immunity by having antibodies to COVID 19 but with no detectable virus. Once these tests roll out everyone tested has a means to prove clearance for travel or to do whatever they need to knowing they cannot pass on the infection. These type of tests take just a few months to put together and I would expect employees and employers getting access by around July.
South Korea is next on the recovery profile and should be working through its recovery phases in April and is 2-3 weeks or so behind China.
Italy will be the first country to enter the recovery phase in Europe and again they should see the benefits of measures now in place next month. Italy will have a higher fatality rate as a result of an older population. They are likely to approach a peak in the coming week or two. The UK is likely to go into distancing protocols in the coming week, but is behind Spain, Germany and France. The European lock down is probably three weeks to mid- April and then recovery to mid -May should follow. USA is behind Europe and other countries are likely to manage a smaller wave of infections during summer months and benefit from knowledge of deployed strategies elsewhere.
Overall it will be in the month of June when major economies will be getting back to near normal. The UK herd immunity approach has to be proven to work by selectively testing for COVID 19 and its antibodies in the reasonably well population to an extent that it proves its modelling. It also reduces risks for next winter of a repeat COVID 19 economic impact which is a durable approach.
The true mortality rate may be proven ultimately by population sample modelling to be at 0.3%. The acute severe cases are likely to be 2% which is enough to stress most healthcare delivery systems beyond full capacity and why lock down efforts and protecting vulnerable must be done. The mortality ratio for those over 80 years is showing to be near 16% of those infected. Those under 40 years it is less than 0.2%.

A response to Megla and other interested readers

A number of posters on here do not appreciate the value of getting the right people into the correct positions in a lean and mean company environment. Anybody not up to the task is being shown the door and experienced well trained people are replacing them. Its all about a building a good team. What the company can do and its fully in their control is being done. I think we all wish the CEO was in place by now and it should soon happen.

As for the market, its looking at the oil dispute, how long it will go on for and how it sees the shakeout. They probably see Tullow doing all the Darwinian adaptable measures in what is a changing environment. Their assessment is that the conflict between the oil parties is to eliminate competition outside of USA, Saudi Arabia and Russia. This grouping provides 40% of the world supply and wants a bigger share. Jubilee and TEN match their profile along with all Tullow's other fields as minor partner. The advantage of Kenya and Uganda oil is that its a quite different market and China in particular wants to have the resource. This can be proven with the Kenya sale deal that is on-going. Tullow is not a typical direct competitor and hopefully it can relinquish assets others want and reduce the debt profile to $1.9B. This situation is then like having a 60% mortgage on the house and its a bit unfair to try and reclaim the property on risk of late payment then work out a sensible deal.

I had sold them higher up in price but that rebuy did not go to plan. Will watch and wait from now on but at least have something in the portfolio earning a divi.

At 106p. Not many shares where you get 3% yield in two months time.

At 12.19p so the average down at this stage was to 56p. Decided to buy in small tranches based on news flow.

1. The RBL re-determination and agreement set out by management is decided end of March. The probability of acceptance in the light of the company actions is likely to be given. It is of course reviewed again in September which is the real crunch meeting.
2. The company needs to show where it has generated income towards $1B by 31 December. This is where some analysts question the credibility. Some of you may have picked up that the maximum share on any exploration block is being reduced to 30%. So some of the Guyana blocks are getting sold down to that level. We know Kenya blocks are on the market and a good outcome is above $600M. Anyone looking long term beyond the current oil dispute would see the asset as attractive as production is on 2023 prices and who is to say if oil is $80 that year or $60. It certainly wont be $38 a barrel. If the company fell short but delivered $750M the Debt levels drop to $2050M against. If they get a Uganda farm down through they are home and dry.
3. The COVID-19 issue would be clear cut by September. Progress to vaccine availability would be more visible. Managing infection waves, picking up second wave clusters through rapid monitoring will be in the tool box or should be at that time. I put Coronavirus on the lower band of risk and a lot of economic stimulus measures also help.
4. Putin and the Saudi are already getting a lot of what they hope they would achieve. Some sources suggest oil prices to gradually move back up to $40 a barrel after July 2020. This price is above Tullow's $38 price model. The 2021 projection is a price on $50. Although these are not brilliant positions for Tullow. The company if $1B of assets gets sold will have achieved a repayment of all 2021 debt and effectively covered the 2022 debts that are due. The company is also more attractive to a buy out if Uganda farm down has been realised. Effectively it would be a company heading back to 350 2P resource with debts below $2M and asset profile above $3.5B.

There are some challenges in the above but I will mull over a big personal decision in the coming days. Maybe its best to buy allocations against targets being achieved. Overall I think Dorothy and her team got a lot things done in the last 10 weeks. A lot of people here underestimating what they have been doing.

Tullow is down severely of late due to Putin and Saudis not finding an agreement. If this changes, those who bought Tullow at the current price make a fortune as oil and this stock shoots up as being way undervalued.

If the conflict destructively runs and we watch Russia and Saudi economies trash their wealth and nearly everyone else in the sector than a lot of good companies fail. This conflict started 6 March. We have a vision given by Goldman Sachs which changes daily. Its a case of whether you believe certain parties can reach an agreement on market supply. Breaking other economies around the world adds to a wider wealth destruction way beyond oil markets. Additioality impacts will drive wealth destruction of the oil major producers countries at a lot faster rate than they expect.

I will hold Tullow and see if any common sense discussions emerge from Putin, Trump and Saudi Prince how they manage things as the world emerges out of the worse of coronavirus in 2 months time.

Managed to get 10,000 CEY at nice price this morning. Only part of the portfolio that has held up reasonably well.

Try the BBC. Also UK Brits in China wrote on the web from lock down that the number of real cases were way over 80,000 and more like 800,000 but people got better in just a few days.

Expect a two week lock early April. They confirmed my thoughts that 10 times the number of milds are out there. The death rate is probably 0.3-0.4% which is 3 times the weight of a normal influenza epidemic and so could swamp the NHS. I noted that testing is being concentrated on those who could infect the vulnerable elderly. We shall soon see how it will work out. They are relying on enough people having acquired immunity in the population to give a strong buffer for next year in case they have no vaccine or one with limitations.