Member Info for Tornadotony

There is not much temptation to sell it on the rise. Having skin in the game makes me work harder learning about a particular company.

came through, this would be revalued. Suddenly you have a route to 450M 2P resources. This equates to $3B extra value to the company with 230 2P cost paid by farm down. The remainder 2p needs 600M extra cash but the value of the developing assets are way higher. Eventually you have a 550M 2p asset company and yes it has a lot of debt to be paid off over time but is take over value become over $5.5B dollars. Way higher than the present day enterprise value.

Ex Governor of OPEC when he was just 32 years old and held that position until he was 36. This guy believes in Tullow and he believes in Africa development on many fronts. I believe East Africa politicians will have confidence in Tullow with Samuel owning 12% of the company. I am not leaving with somebody like Samuel getting involved. Incidentally he would not buy a company that was telling lies.

I have added more cash into the trading account. The SP was 48-49p at the current oil price. What has changed in 19 days. An anatomy of an influenza like illness which is likely to be old news 5 weeks from now.

I would consider the ability to gas flare when necessary as a positive.

At 171.40 just 2000 shares. Bigger 161 and 163p orders failed this morning. Will stake build on any share retreat. Company has assets for sale that equate to debt.

The share has risks but then all the gold miners have different risks. If silver goes very high the company can buy new licence areas and truck ore to the mine plant. I like the idea of rare earths needing hardly any water to extract. I like that idea a lot.

Tony

A lot of things go without saying but I hope the new CEO as sell a lot of assets, they engage involvement or have a team working on hydrogen energy. See attached. This would attract different funding sources and diversify from a carbon only company to deliver energy. Oil companies fifteen years from now won't be the same as they are today.
https://phys.org/news/2019-09-catalyst-outshines-platinum-hydrogen.html

A few individuals have asked is Tullow similar to the Afren situation.

Afren scandal started with a discovery of a Nigerian shell company that receive £232M in which the CEO and COO acquired $35M of it to by themselves Caribbean properties. They were fired for corruption and the bond values to the pound halved. This resulted in a unwillingness to loan the company money.

Afren was then hit with a $115 to $45 price drop in crude oil. It was discovered that 1B of 2C resources did not exist and that 190M 2P barrels did not exist and that alone was responsible for a 2B write down in the company and the company was not hedged well. I should stress this is not the same as a write down on future oil prices that Tullow has done. Does anyone believe the price is going below $40 a barrel again for any prolonged period of time?

So Afren with equity value of £1.86B and lost £0.76B on the original corruption charge and was carrying $1.4B of debt has suddenly half the 2P value is gone and quite a bit of 2C and it had no oil hedge in place during a collapsing market as it sold that hedge to cover up losses elsewhere. At this junction I should stress Tullow has audited independently its reserves and resources and has a 12 month hedge covering 60% production.

Finally Tullow has assets that saleable and the only issue is fair value sale versus fire sale. The Kenya assets if completely sold would cover all debt in 2021 and 50% plus debt in 2022. FCF forecasts complete the 2022 profile. A lot can happen between now in 2023 with new discoveries and rescheduling debt through remunerations.

Overall Tullow is not at Afren and it would be unfair to draw the comparison based on debt profiles and equity values. The resources and reserves are real, the hedging is transparent, oil is nearish to a bottom price and Tullow has lots of assets it can sell.

Noggers,

The biggest argument is about the long term value of oil. A tax inspector anywhere will have their reference points to extract the best deal for their people. The company has its reference points which may be EIA or whoever with respect to oil value. The company might offer payment on criteria favoured from their sources. The third party decides who is nearer to future reality on best evidence they can avail. The media may also sometimes present opinions to appease its readers.
As of late we can hardly accuse Dorothy Thompson of Tullow of appeasing anybody.

Thanks noggers in bringing the article to our attention.

The Kenya blocks are not P grade reserves and Tullow have correctly classified as 1,2,3 C. The company has not mislead the market on Kenya prospects regarding oil to be exploited. The Kenya tax authorities are in dispute over previous partial block sales held by Tullow with Devonex and any accounts are transparent to third parties who are appointed to decide on the matter. Tullow have made it clear what their tax liability was and it appears like the typical effort to grab what funds they can and dispute allowable costs. The article is having a go at the company as they retreat from Kenya and make local people redundant when in fact it has become necessary to pay for debts accrued on making oil discoveries and building Ghana oil fields. There is no criticism of the host government and the endless discussion on the project their end.

https://nationalpost.com/health/new-coronavirus-may-be-no-more-dangerous-than-the-flu-despite-worldwide-alarm-experts

I personally agree with this article as more scientific data emerges to support it.

https://www.reuters.com/article/us-nigeria-oil-eni/blast-shuts-oil-pipeline-feeding-nigerias-brass-oil-exports-officials-idUSKBN20718F?rpc=401&

Nigeria government is to reform regulation on all new oil exploitation later this year. The impact has now stopped all new investment into the Nigerian oil industry. Nigeran oil production is now likely to decrease in future years. (Also the reason for some divestment at fire sale prices).

https://www.watoday.com.au/world/africa/we-have-ways-to-escalate-rival-factions-threaten-long-war-over-oil-20200218-p541u5.html

Conflict is currently escalating. Libya oil likely to be off market all this month imop.

https://www.alaraby.co.uk/english/news/2020/2/18/un-impact-of-libya-war-on-civilians-is-%60incalculable

Today was the day when some kind of agreement was hoped for and hence why oil had retreated. The latest news is that Libya oil currently remains off line.

jaffjoon the baffoon.

If your in prayer mode sit on your cash. See what 12 March brings.
I am sticking with my Tullow and 120% cash mode.

I am working on more aggressive valuation models and have given up on 100p share prices here. Already down to 69-70p mark. Just wish I thought that way a month ago when this share was 56-61p.

https://www.total.com/en/media/news/press-releases/total-acquires-maersk-oil-for-7-45-billion-dollars-in-share-and-debt-transaction

Would Tullow be worth 55% of the above as its in Africa and only 75,000 barrels a day? Price= 70p.

3.195M barrels a day mainly from OPEC.

https://www.erce.energy/graph/oil-production-outages

Uganda $560 M after all taxes paid.
Kenya $385M after all taxes paid.
Non Ghana producing assets at 50M barrels at $400M
Ghana oil fields and all materials with it $2350M
All other licences = to decommissioning activities.
Value net of all debts = $895M
48.6p as share price which on a FCF of $150M per year is below 74% of any book value determination.
Anyone suggesting 12p or absurd prices is just ridiculous.

I agree with the view that hardly anything at all was priced in for a Marina wildcat success. The share was capped at 45.5p and only went up 2.5p on a $3.5 rise in oil. It is a buying opportunity.

A chart gap high 43p to 45.24 to get filled. Flaring good news and oil price holding allowing hedge to be saved another day are the plus marks against Marina well news let down.