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The scary thing is that Panmure note is already out of date as it's only base on what was happening in 1Q per the trading update. Production since Jubilee FPSO restart post shutdown appears even weaker. It's possible (I suppose) some production is going into ullage but you can only divert 10K bopd for 60 days before you get a very large oil slick offshore Ghana. We'll know after about 2 more cargos. Without oil going into ullage we would appear to be below 65K.

Continues ......."Although a takeover might offer the most realistic exit route for shareholders, Panmure sees limited interest after a previous suitor walked away. With little margin for error, few near-term growth drivers and deteriorating financial flexibility, the broker’s view is clear: it is time to exit."

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Sadly there are more pressing matters than Kenya. Everyone should read this (originally posted by sarkasm in the other place)....."Stockopedia

Tullow downgraded to sell as debt pressures mount and refinancing risks grow

Published: 12:15 23 May 2025 BST

Panmure Liberum has downgraded Tullow Oil PLC (LSE:TLW) to a 'sell', warning that the company remains trapped in a cycle of weak production, asset sales and mounting financial stress.

The broker slashed its target price from 21p to 9p, citing a bleaker outlook for cash flow and an increasingly urgent need for refinancing.

The downgrade follows a first-quarter trading update that kept full-year production guidance flat at 50,000 to 55,000 barrels of oil equivalent per day.

However, that figure is flattered by the inclusion of production from Gabon, an asset Tullow has since sold. Adjusting for this disposal, production is expected to fall by around 10,000 barrels a day.

Performance at the company’s flagship Jubilee field in Ghana continues to disappoint, with water injection issues limiting output. A new well is planned for the second half, though it is not expected to materially reverse decline rates.

The group's debt burden remains the central concern. Net debt stood at $1.6 billion at the end of the quarter, and although asset sales in Kenya and Gabon are expected to bring in 340 million dollars this year, Panmure forecasts net debt will still be $1.1 billion by December.

That is $200 million higher than the broker’s previous estimate, reflecting ongoing negative free cash flow at $65 per barrel oil.

Refinancing risk is front and centre. Around 1.3 billion dollars of debt matures in 2026, and Panmure warns that unless the group secures new facilities well in advance, a liquidity squeeze next year looks increasingly likely.

The broker said: “We see little value for investors as the company remains a distressed seller of assets with no growth likely.”

Even with asset disposals, Panmure believes free cash flow generation will remain constrained unless oil prices recover materially.

Leadership instability adds another layer of uncertainty. Richard Miller continues as interim chief executive but is expected to return to his role as chief financial officer once a permanent successor is appointed.

No timeline for that appointment has been given. While the broker acknowledged Miller’s efforts in completing asset sales quickly, it questioned how attractive the role will be to external candidates given the company's fragile balance sheet and limited growth prospects.

The equity valuation remains disconnected from operating performance. Tullow is guiding for $750 million of earnings before interest, tax, depreciation and amortisation this year, down 19% from 2024.

Sales are expected to fall by more than a quarter. Panmure’s updated model reflects lower cash generation and higher debt, dragging down net asset value by 12p per share and pushing the

".....And has $1.6bn of net debt before asset sales." Looks like gross debt is comprised of

2026's: $1,285m @ 10.25%

Glencore: $400m @ (SOFR + 10% =) 14.3%

SSRCF: $150m @ (Ref Rate + 4.5%=) 8.75%

Gross Debt: $1.835bn ..... meaning cash is maybe c.$225m

Simple interest on Gross Debt is about $200m p/a or approx $10 more than this time last year which shows what an uphill struggle it is. Obviously the near term incoming $380M will reduce that.

"....an increase from year end due to the timing of liftings."

That is kind of Tullow spin. May give the impression to some that it was just a timing thing that will cancel out or be reversed down the road. No! Wrong! The reason liftings were delayed is due to extended and extending intervals between offloads as it now takes more production days to fill a tanker than before. Lower production eventually catches up with you as in a 365 day period you end up with less offloads which means less revenue.

(that was in reply to tman)

Err not really! What's not to like about Tullow winning their case and recovering $256m on behalf of the partnership!

This really demonstrates that hedging at $59 was inappropriate for the business given Tullow's debt load and TEN FPSO lease commitment!

Not much flesh on the bones of today's AGM update. Production guidance unaltered but there's always scope to reduce it later depending on how it goes (the tanker isn't offloading today either). Maybe the main takeaway is that without the announced asset sale proceeds and (hopefully) the $50m gas payment then the underlying business would not generate any free cash flow over 2025?

Did anyone notice the last Gabon SPA release revealed some additional disputes

(I) High Court dispute with Vallourec

On behalf of the Group and Tullow's Jubilee field joint venture partners, Tullow Ghana is claiming from Vallourec Oil and Gas France ("Vallourec") losses of approximately £256 million, arising from the supply by Vallourec of defective tubular goods, which Tullow believes constitutes a breach of contract from which Tullow Ghana and the Jubilee field joint venture partners have suffered loss.

In June 2015 (as amended in August 2015 and October 2015), Tullow Ghana and Vallourec entered into standstill agreements which provide that neither party will proceed with a claim unless a party gives the other 28 days' notice to terminate the applicable standstill agreement, which was terminated on April 21, 2023. Tullow Ghana filed the Particulars of Claim and the Claim Form with the Commercial Court on May 22, 2023. The case is funded by a third-party litigation funder.

Vallourec's Defense was served on November 17, 2023, and Tullow Ghana issued its Reply to the Defense on December 22, 2023. Tullow Ghana took part in two rounds of mediation on November 28, 2023 and March 4, 2025 to seek an early resolution as part of the pre-action protocols, in parallel with the commencement of proceedings to preserve limitations and the formalities of service being complied with. No settlement was reached at the mediation, but the parties will continue to keep the mediation route open for a potential settlement.

On April 26, 2024, a Case Management Conference took place where the judge decided that there should be a Preliminary Issues Trial on seven issues due to be held between May 20-22, 2025.

(II) TechnipFMC Ghana Limited

Technip Ghana Limited ("TFMC") is claiming sums from Tullow Ghana in respect of the Jubilee South East Contract in the amount of US$64.2 million (plus interest and legal costs). TFMC is claiming that the contract is largely reimbursable and that Tullow Ghana has failed to pay all reimbursable sums due thereunder. TFMC also alleges that Tullow Ghana has withheld certain sums it is not entitled to withhold. Tullow Ghana argues that there are certain sums that TFMC has claimed which it is not entitled to be paid under the contract, and Tullow Ghana has made permitted deductions.

The Jubilee South East Contract is governed by English law and the dispute has been referred to arbitration under the rules of the London Court of International Arbitration. The hearing is scheduled for December 2025. Settlement of the dispute is a possibility.

Well I didn't read these boards at the time but to be fair to Anton, Rahul on 2 separate occasions whilst giving presentations said production was over 105K. That is when I lost trust in Rahul as at that time when he said that, tanker loadings indicated that wasn't really the case. Yes - production might have been 105K+ when they first turned on a well (which happened to coincide with his attendance at conferences) but it didn't translate into a monthly production number.

That tanker is not loading today which indicates weak production continues.

Ooops! Too much sun. Thought today was Monday. It's actually Tuesday! So that should read "I think it may start loading on Thursday. Suggesting production kind of 67K - 69K. (If tomorrow 73K)

"Someone asked about the next tanker for Jubilee. It arrived this AM 16/May but as previously mentioned ETA Jubilee was a result of an event in Angola. So it's anchored in the waiting area. Not really anticipating any loading for at least 4 days. We'll see."

It's been 5 days now and tanker still in the waiting area. I think it may start loading on Wednesday. Suggesting production kind of 67K - 69K. (If tomorrow 73K)

Drilling Rig Ghana - Probably started drilling late hours the 19th/early hours 20th. AFAICS it's drilling on the SE edge of Main Field. Not JSE proper - although Rahul tended to call everything 'JSE' in that area, even though it wasn't. Looks very close to J-66P. Or could even be a re-entry of J-66P.

Who said anything about the AGM? - Of course not by the AGM! "should the refinancing get done" means whenever it gets done (if it gets done).

Dunno their reasoning but probably to do with perceived refinancing risk but anyway and FWIW - "Jefferies cuts Tullow price target to 10 (12) pence - 'underperform'."

Would imagine a decent rerate should the refinancing get done!

"wonder if this had anything to do with the production drop in Jubilee?" It sounds like a recent and new event.

Anton - The initial 2 wells, that is 1 producer and 1 water injector, are AIUI being drilled on Legacy seismic as the newly shot 4D won't be fully processed in time.

The drill ship arrived at Jubilee this AM. In the normal course of events would anticipate a spud within 24 to 48 hrs.

Gogadget - that is a good Q. I'm on the way out now but I think you'll find the reason for that is mentioned in the report you've referenced.