Member Info for Tornadotony

The shares have behaved the way they have.

It was a good trade you put on that could have gone wrong. I hand it to you. Its something to try if your average is not to high as materialising a loss of plus £30,000 tests the pulse. Its a lot easier to do when the share was higher price and gets increasingly difficult the lower the SP drops.

Several folks are all eggs in one basket on here. An important lesson is to have different baskets and that includes high street savings as funds not to touch. If equity pot is 25% of the total liquidity someone has they can avoid getting ill by investing when they are in a difficult position. If that 25% equity has a rule that no one stock has more than a third of the equity pie and some allocation is kept in cash that is a much better practice than being all in one equity stock. If more folks followed that kind of practice the maximum damage is minus 8% of their wealth and that is something they can come back from. I do hope a few investors here learn some rules and apply to themselves so they end up more relaxed as they invest and don't get so depressed.

Tullow has acted in advance of today's oil move. I have seen this with gold miners on many occasions. They move on equity first and the commodity afterwards. Lets all hope on a coronavirus breakthrough treatment and then we have a fair chance of seeing value when others have thrown the baby away with the bath water.

Before the 9 December, Tullow Ghana and production was valued at 50,000 per flowing barrel. The company with much lower annual production numbers and more life years is valued at 35,000 per flowing barrel which is fire sale utter rock bottom gives $2,275M (65,000 barrels per year). The Kenya blocks are worth $600M so that is all the debt squared away. Uganda alone is plus $700M plus all the other prospects and assets that they have. The closing price tonight is worth $820M. 45p is a laughable low valuation after fire sale on everything. The Guyana blocks alone would probabl get $200M in auction. Anybody taking this over for 65p would be laughing all the way to the bank.

Mr 11% shorting stock rubbish. More likely standard life selling shares at a loss for tax reasons.

The company can meet all the costs to creditors. Production cost is $11 a barrel and the interest payments that are due take the cost to around $20-$21 a barrel. The spending on Ghana and capex adds $13 a barrel. So it is when it is below $40 on Brent the company has problems. The price of oil today which is still under the hedge for another 5 months is $57.

Will it bounce

At the current price of 45.8p it is pricing in $51 per barrel for Brent oil for the entire 2020 year. They are wiping out all FCF earnings along with $100M loss on top and the $20M in redundancy savings. Its a jungle out there.

Besides the 11% held by Sam, a lot of investment bodies are holding large chunks of Tullow. Around 42% is held by 14 individuals and companies. There is no requirement for early payment of bonds. All they need to do is sell half the Kenya block in 2020 and they have another 12 months to sort everything else out.

The problem is that some assets have major issues to exploit. In parts of South America water for mines is an absolutely critical issue. So unless there is an RNS from an explorer with a significant find where ore can be trucked or a small distance to a existing mine plant, HOC share price is going to struggle. A Shanta like RNS that came out this morning is exactly what this company now needs.

https://news.yahoo.com/un-brokered-libya-talks-end-103616369.html

Continue talks on 18 Feb so little change on that front.

The broker notes are extremely poor on Tullow. The company has two extremely strong support lines at 36p and 39p as its well below fire sale price down there. If yo believe the company can achieve the $150 FCF target for 2020, then the correct price for the share is 69p providing they sell assets this year to cover the June 2021, $300M debt payment.

The above is opinion as you should always do your own maths but I hope your figures and judgement are not to dissimilar to mine. Our analysis is probably better than any brokers who do not spend time on it.

I suspect they may be selling half the Kenya asset to resolve 2021 debt issues. Lot easier to sell smaller assets at this time. It gives the new CEO some head room and time to evaluate exploration prospects and to look over the remaining Kenya block. Kenya Tullow staff is then proportionally adjusted to project size.

The company is making it clear that the production side is staying put. The big issue here is Uganda and whether the Government can decide anything. In my opinion the 2025 bond needs to rollover as it is not Tullow Oil trying to delay things and the Uganda project is really that bond against that asset.

I should add the company is worth more than the sum of all its debts. This is not Afren. This is a company with lots of property on the monopoly board and the Ghana one has a hotel on it. Uncle Sam buyer is intelligent and is one of those guys where success breeds success. A different story can unfold here. It will get to the point where a lot of investors might have a small punt on a share that prices every barrel oil prospect, resource and reserve production all well under $1. You can not buy a hamburger at that price.

Tullow was the worst performer in the last 12 months in all of FTSE bar a grand total of just 6 companies on AIM. (Like funding circle, Ted Baker, Metro Bank, Kier.) So if anyone wants a smashed up stock to buy this is the place.

Then you might think golly what is the impact on Coronavirus on nearly every share sector bar utilities where people turn up the heat and just watch telly and perhaps staple super market shops to get local supplies and some health companies and funeral directors. Quite a few of the stocks have some catching up to do with an almighty Tullow crash. A lot of them have debt and suddenly a Tsunami of consumerism stops. All and sundry issue new production outputs or service cuts and join Tullow's new deflationary outlook. The shorters and market makers then have a field day to go and choose what equity to hospitalise next. Of course if a smashed up stock already gets hit than be ready to snap up the bargain if offered. I just wonder if Tullow will get that much attention with so my other share bubbles to burst in the panic. Far better to crash something 70% from a great almighty height than knock off another 10% here.

The answer to one of my questions at least. Below $50 and Russia is likely to have an impact on them as well. So they are more keen to find out if a 600,000 cut will really work. USA shale companies are finding it difficult and we could see some Rigs close off this month. USA consumption of oil may also be going up again. So it may all come together.

Just need to find a drug that stops coronavirus in its tracks with minimal side effects.

Its difficult to for say £250 and you have to follow the share price all day.

The two hourly and four hourly chart have gone one way for awhile. I was expecting a relief bounce at least at one point. The share is hedged. It is absolutely clear the Kenya asset is to be sold. 2021 debt all taken care of and restructured outfit. 7 weeks to Marina result.

Brent is moving up. Come on baby lets get back to 50p.

48.06 order buy which I took a little off at 49.63. So the game of fetch was hit after all.

Does anybody have a good analysis of how the Brent price pays out in the coming months. Will it drift down to $40. When and what price does production match up with likely demand?

Does not want to play fetch for my order placed at 48p.