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The last half year TLW report said

"As a result of the licence extensions to 2040 the JV partnership expects to realise a material increase in gross 2P reserves." then it went on to say "..... Tullow will publish its 1H25 reserves report in September and expects a reduction based on the incorporation of first half production data and field underperformance at Jubilee. The recent sanction of riser base gas lift, the potential uplift associated with new incremental drilling targets and licence extensions are expected to offset the reduction in due course." So what is it? "Material increase" or "offset the reduction"?

2 points.

Cost of wells. Surely the current batch of wells will cost more to drill since the day rate for the same rig has increased from about $240K/day to $420K/day? Spread rate (for the other vessels involved in the drilling campaign) will presumably also have increased?

Reserves. I think you'll find Kosmos's Reserves are audited to more stringent US rules than TLW's UK audited reserves. If you check KOS's 10K - I think/imagine you'll find K have booked (far?) less reserves than T for essentially the same equity share of Jubilee?

Sorry - link

https://petrocom.gov.gh/field-production-data/

Rhd3 - it would be good if petrocom published the production data! I'm just speculating but weak production could be down to rising GOR - but we won't know until Petrocom furnish the numbers. I did email Tullow about this just to check my previous thoughts were along the right lines.

Q to Matthew in IR.

"Would I be right in thinking (what I call) the 'processing capacity' of the FPSO to handle associated gas is currently about 250 mmscfd?

A: That's right though, with compressors (injection and export) at capacity and inclusive of fuel/flare, our gas handling capacity (GHC) is c.250 mmscf/d."

Follow up Q to Matthew: "I have always assumed that, if the volume of associated gas being produced by Jubilee Field exceeded the GHC of the FPSO, then the GHC would act as a constraint, with oil production having to be restricted to a number that emitted less gas than the GHC. In that the correct way to think about this?

A: yes - I have spoken with the technical team and you are correct in your assertion."

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As we can see from petrocom data the amount of gas being emitted from Jubilee has been rising (223mmscfd in June) even though oil production remains weak. We need to see the latest data - please Petrocom. Is the associated gas now at 250 mmscfd? (not all sales as some gets flared, reinjected etc).

Flavius, stepping back a bit, there was a plan (drill lots of jubilee wells to get it to 100Kbopd sustained) and use cashflow from that to refinance the bonds. Sadly as we know the drilling didn't work out as anticipated and coupled with the lower OP - the anticipated FCF failed to materialise - hence the refinancing impasse. They were overtaken by events and had no plan B. But perhaps the size of the debt pile dictated that Plan A was the only realistic escape path? Hence no Plan B? We will probably never know the answer to this.

Anyway it is what it is. I'm sure most of us have had the odd poor investment from time to time but we dust ourselves off and get back on the horse and recover. That is what we do! I wish you Flavius (and others here) every success for the future. GLA.

I don't blame corrupt african regimes for TLW's demise. Certainly gov.Ghana, gov.kenya, gov.uganda haven't exactly been facilitative but TLW's demise is purely down to greed, failure to govern risk profiles and just crap management and oversight by the board. They got too deep into Uganda when they doubled up their position there and then found it difficult to exit. They got too deep into Kenya and ended up in an expensive cul de sac. They got slightly too deep into Ghana when Rahul pre-empted APC's sale to Occidental Petroleum. They got too deep into drilling 21 Rahul Ghana wells without having up to date seismic. And before that they got too deep into drilling expensive 'high impact' exploration wells all over the atlantic, indian ocean, caribbean, the barents sea and elsewhere! Other stuff went wrong as well. But basically it has just been a failure to properly evaluate risk.

JMax - I see from Marcel's quote that you have apparently written "I called this situation over a year ago, but the idiots criticised me :)" Would you be kind enough to provide the link for that so I may give you some credit :)

Other Forms of Liability Management Transactions

Beyond amend and extend, companies employ several other LMTs to manage their debt in times of distress:

Tender Offers: The company offers to buy back its outstanding bonds from investors for cash, often at a discount to the original value, using cash on hand or proceeds from new financing.

Exchange Offers: The issuer offers to exchange existing bonds for new bonds with different terms, such as a longer maturity, different interest payment structure (e.g., converting cash-pay interest into payment-in-kind), or different collateral.

Consent Solicitations: The issuer asks bondholders to approve certain amendments to the existing bond terms (covenants), such as relaxing restrictions on the company's actions, which typically requires a majority vote to be binding on all holders. This is often combined with a tender or exchange offer in a process known as an "exit consent".

Uptiering Transactions: This more aggressive strategy involves the borrower and a supportive group of majority lenders amending the credit agreement to allow the issuance of new debt that is senior to the existing debt, effectively subordinating the claims of non-participating creditors.

Drop-down Transactions: The company transfers valuable assets to an unrestricted subsidiary (an affiliate that is not an obligor on the existing debt), which then uses those assets as collateral to raise new, senior-secured debt. This structurally subordinates the existing creditors who no longer have a claim on those specific assets.

These transactions are complex and rely heavily on the flexibility and specific language within the original bond or loan documents. They are a critical part of a company's toolkit for navigating financial difficulties outside of formal legal proceedings.

I'm definitely not an advocate of relying on chatGPT to guide investment decisions as I feel you can gain a better understanding just by reading between the lines of a companies press releases and reports. Anyway not withstanding that I googled A&E and LMT, which returned the following.

".....When a company has difficulties renewing (refinancing) its bonds, "amend and extend" and other "liability management transactions" (LMTs) are out-of-court strategies used to modify existing debt terms to avoid a potential default or formal bankruptcy. These techniques provide the borrower with more time and financial flexibility to improve its situation.

Amend and Extend (A&E)

An "amend and extend" is a common LMT where the borrower negotiates with a majority of its existing creditors to push back the maturity date of the debt. This is typically done without involving all creditors and avoids the complex and expensive process of a full refinancing in a challenging market.

In exchange for agreeing to the extension, the participating bondholders typically receive more favorable terms, such as:

A higher interest rate (margin) on their extended loans.

Amendment or extension fees.

Potentially a better or more protective covenant package.

The goal is to give the company more "runway" to improve its financial performance or wait for better market conditions, while also providing an incentive for existing creditors to agree, as the alternative might be a costly and uncertain default scenario.

The only person who knows the answer to that is RG.

Year end net debt guidance has been revised up by $100m to $1.2bn now.

Also not "gas receivables due from the Government of Ghana of c.$100 million which are yet to be received. Total receivables due from the Government of Ghana (including TEN development debt and overdue cash calls) stood at over $200 million (net to Tullow) as at the end of October. Tullow is working closely with the government and its various agencies to resolve this situation."

Tullow have an uncanny knack of issuing trading updates and/or results on days when the overall market is in something of a flash crash or crash. Looks like they may be about to this again.

Err.... sorry for being thick in these matters but what does "£50,000 combination of CFDs and Spreads at 6p a share" mean? You gain if SP goes up? or you gain if SP goes down? Or what?

Few$$$+,

ref your GPT answer. Megutfeel reckons

Successful Debt Refinancing: it's possible but perhaps "we are make good progress, blah! blah! etc" will be the narrative?

Stronger-than-Expected Production: We already know that is not the case.

Kenya Asset Sale Completion: Probably imminent but Kenya Parliament need to rubber stamp first.

Positive Reserves Update: I'm sure they will make some positive noises about seismic and future potential upgrades but maybe nothing concrete in terms of revised reserves now?

Improved Free Cash Flow: I'm kind of thinking guidance on that front will be the same, or even downgraded a tad.

Sorry to sound slightly downbeat. Just guessing, could be wrong. But anyway we'll soon know. But I'm happy you haven't added more at this juncture.

"It's actually quite interesting putting all this into ChatGPT, as it completely takes out the emotion."

Well maybe but not sure if that is entirely true as without seeing the Q asked of GPT it's difficult for us to judge how much emotional bias went into the actual Q? And what about "gut feel"? Does ChatGPT have any yet? The only thing that is good about ChatGPT afaics is GPT (and AI) are creating massive energy demand! :)

Sensible advice JBond. It's worth googling what happened to the Asfari family who owned a chunk of Petrofaq. "As part of its restructuring, Petrofac will result in no residual value being retained by existing shareholders, which includes the Asfari family. This means that the existing shares held by the Asfari family and other shareholders will be effectively wiped out, as creditors and new investors take control of the company. The restructuring plan, which includes new funding and debt reduction, is designed to give control to those providing the new capital, not the current shareholders."

In other words even though TLW's low SP precludes dilutionfrom the issuance of new shares the shares could still be potentially worthless.

Anton - ref the well count - the Environmental Impact Assessment for the original 80K bopd development used to be on Tullow's website. That 80K scheme envisaged 321 wells drilled from 33 well pads. Rahul's revised FDP increased the output by 50% to 120K which I assume would require more wells. Let's just say the well count is probably somewhere between 300 and 450.

120K bopd would require about 450 wells? Wells are in the 2,300m to 3,000m range. At least 40 days to drill and complete? That's a lot of drilling rigs!

It will probably get approved as there are now insiders, local companies involved. Tanking the stuff by road to Mombassa (or Lamu) is a bit of a challenge notably the bit from fields to Nairobi. I guess they could consider using that new built std gauge Chinese railway from Nairobi to Mombassa? This would reduce the vehicle parc of trucks required and reduce truck round trip durations. Lots of wells need to be drilled to get from say 3000 bopd to say 30000 bopd. Probably about 50 wells? Cannot remember. Anyway looks like stuff is happening but agree it will be some yrs before Tullow benefit. They need to stay solvent first.....

Not an expert in these matters but would suggest getting anywhere close, or better than 10.25% is unrealistic. TLW's debt has been downgraded a number of times since the 2026 notes were issued which means the interest on any new bonds (if any were issued) would likely be higher as investors would demand a higher premium due to the debt downgrades.

And don't forget the Glencore RCF for TLW was done at SOFR + 10% (about 14.5%?) and there have been two downgrades since then.

Also worth noting Enquest (who aren't in a hole as deep as Tullow) recently secured $800m of RBL at SOFR + 4%. Don't see how Tullow can better that (assuming they can refinance - which is a big "IF").

Obviously "IF" TLW can refinance there is useful upside but if they cannot shareholders may get wiped out.