Member Info for Tornadotony

A company with $4B on balance sheet earning 1.5% interest would earn around 8% if they bought Tullow for that amount. Over time they would just asset strip non-producing parts of the portfolio when oil prices are elevated. If they shut down future exploration outside TEN and Jubilee the return hits 10%. or at least factors in 5$ lower oil prices. $4B is above 66p share price.

HH

In 2017 investors paid off $775M of the debt in a rights issue to bring debt down from $4.8B to $4B billion. So three years later after $1.2B more was paid off by the company, The CEO gave $100M back to investors. Yes the debt and gearing was still high at $2.8B. However trouble in TEN caused a drop on income of $50M and no luck in Guyana and no farm down monies from Uganda took us into trouble.

It all comes down to just one thing. Do you believe in the 4 year forecast given when told reserves are the same. Your told Non Ghana oil fields have more oil but a lower annual production figure is then given to the one published in H1 2019. Do you believe that Jubilee field can deliver at 31,000 to 32,000 barrels a day for the next few years what it its doing now. It all comes down to TEN. The Ntomme field is okay and gets an extra well. So we have one difficult field left to sort out which needs a chunk of 2C becoming 2P and needs a redesign in where wells are drilled to get back to higher production. The difference from forecast in 2019 is 6,000 barrels a day. A loss of that amount crashing stock value by $2B in 10 weeks. That's 4 times the market value of TEN 2P lost that was made up elsewhere. The real correction when you think about it should have been $500M instead of $2000M.

CW
You need to factor in some down time in early February to fix the gas issues in Jubilee. What we know is that is was fixed successfully. It could be that Jubilee has its poorest performance in Q1 and improves in later quarters. The water injection well should stabilise and help areas of the field that needed it and aid production further. What may happen is that Q1 is very much in line with the projected downturn RNS, but as problems get fixed, who knows if production up grades can then be raised higher. At least the direction is towards positive surprise if that is the case.

Your message about Jubilee is incorrect. Tullow own just over 35% of Jubilee and it share of production is just above 31,500 after completion of gas handling issues. It is the TEN field they own nearly half. Improvements on TEN are on-going and the Ntomme new well comes on line in April. The company is hedged oil production until August and any economic downturn would recovers in later weeks or months. Stocks in warehouses do run out and need to be refilled later on.

Confirms Jubilee back up 90,000 per day total (and 31,500 plus for tullow). Jubilee back to 2019 performance.

https://www.worldoil.com/news/2019/4/23/murphy-oil-acquires-deepwater-gom-assets-from-llog-for-1375-billion

On the basis of $11.25 for 2P bought assets and other considerations of 2C assets the fields are then worth $2700M. On a fire sale price its $2200M possibly ($9 per 2P). My spread sheet has Jubilee and TEN lower at 40p. We might be selling some of the Kenya asset +$200M as well.

Incidentally Tullow closed 3% up on USA market Friday night.

https://www.csir.co.za/energy-materials
This is the future for Tullow and they can build an African link here.

1. If the FID gets delayed again 20% of Kenya assets freed up and monies used to pay off debts. Improves FCF with lower net debt. $1 less debt per barrel = $20M extra on FCF or more buffer on oil price.
2. Deal could have a part 2 to say when FID is approved, another 20% goes and some pays back on Tullow route to market and some extra cash as Farm down like in Uganda. They end up with 6000-10000 barrels per day production long term and walk away 2/3 of their original investment being paid back and those funds pay down debt. The other 1/3 is earned long term probably $20M FCF per year.
3. FID is approved and they sell all the remainder in the deal. Tullow is debt free in 2021 and what little is left in 2022 is paid off on earned income. Company recovers Kenya investment and walks away. They have to refocus on next steps.

The plan in the article belongs to previous CEO. A new CEO will want 2 or preferably option 3.

I believe the new CEO will need to create a new Africa energy division independent of oil and the company eventually becomes Tullow Energy. This is the future direction hence why I prefer they follow the leaders like Total and Shell. It may need to start off small but Tullow will be responding to what financial investment sources want them to do.

Romeike
You can find assets just last month at 18,000 barrels a day with infrastructure sales of $650M being paid in which a lot of work has to be done to expand access to 2C assets in off shore oil fields. It is possible to find cheaper assets, but regular disruption to supplies occur either through war events, local espionage and blackmail or in jurisdictions where assets might get seized and the country does not care about international law with widespread corruption. Some countries have enormous tax take or high labour costs. When everything is taken into account the share is trading at asset stripping rates for a would be takeover. They will soon be able to do with profit after paying out tax bills. This is how low the valuation is at the present time. All my personal discipline not to buy add more stock before 12 March was applied today.

To avoid temptation I am taking a break from scribing here and looking at the share price. I have the resources to aggressively average down sometime in the future.

one last point, I am not so sure that many redundancies may actually happen in Ghana. Instead we might see a lot more cooperation in areas like gas off take and getting pipework finished asap. I think there is a big recovery play to take place here on Tullow.

I was referring to oil fields actually bought where production, costs of doing so are known along with reserves and resources. If yo do the research you can see that Jubillee and Ten and the other wells they have a share of does have a value. Additionally I would not take Uganda off the spreadsheet and say its worth nothing. A decision has to be made soon as they are building refinery capacity and why on earth do that and not proceed ahead.

I have been looking at recent comparable production of oil from fields that are actually smaller than Jubilee and TEN and other wells Tullow has a share of. I have the current share price eroding $500M off all those assets. The only others on my spreadsheet is Uganda and the Kenya blocks. Another way to look at is the Kenya blocks being valued at absolutely nothing. Sums up how stupid this current share price is.

The average death rate for typical influenza illness is 130,000 people per year in China. So alongside those diagnosed with coronavirus we have 7-8 times as many as normal flu. The presentation rate in the population as a percentage of infected of influenza and coronavirus into hospital is the same. About a month from now we will have some official come out of WHO and say oh golly this is what a normal influenza breakout looks like and we have our first epidemiology model following it and how handy it is. Emergency then declared over as it behaves very much like normal flu.

This quite possibly now goes up for those who like trading it.

This company has an enormous 3p range, and it has 3C as well and I could go on. I have told myself wait until 12 March and that is what I am doing. Otherwise I could hit a button and buy 240,000 shares and sit on an average of 48-49p and wait for the gravy train to come in.

So 230M 2p 1000M 2C barrels of oil is worth what exactly. Trying finding 1000M barrels of 2C oil under $1B on the planet. Try and find 230M 2p with all its facilities and lead ownership for less than $2.3B please anywhere on the planet with a production cost of $14 a barrel.

I suspect an over reaction in the market to coronavirus. Will be back when this eventually retreats. Good luck to holders.

Like most people, I have reviewed Tullow assets. I have been quite brutal so I thought for this to be in the upper 60's. At 40p this just gets crazy with Guyana assets at zero and the like for all their entire licence areas. My valuation of Kenya and Uganda is right at the bottom of any forecasts where the company just gets back its tax allowable losses. I have Jubilee and Ten 20% below what it would get as P reserves and other producible what they earn at under their contribution to FCF for 4 years. I am switching off after today as the company is worth a lot more than what short traders are pushing it to. Everyone has their own opinion where this is going. I have at least done my own homework as best as I can. I find the share price has arrived in idiots village.

Auson

I do not have a list of bond holders so can not answer that question and we do not know who acts for who. It could be another company shorting Tullow if it was minded to take it over for all I know. Tony

When it goes down it usually does so by now. These bonds are later and much bigger and the one's to watch. If they go up and Sam D continues to increase on the equity side I am holding on with the smart money.