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Marcel,

The only thing I'm going to suggest is that the valuations you came up were totally unrepresentative as your 'numbers' overlooked the realities of the governing PSC.

Marcel,

May I suggest you ask your co-pilot if the plane is about to crash :-)

Ok let's try this (without more than/less than symbol)

If R is less than1 profit oil is split 50%/50% between Kenya and Contractor

If R is between 1 and 2.4999 profit oil is split 65% Kenya and 35% contractor

If R is greater than 2.5 profit oil is split 75% Kenya and 25% contractor

Sorry that got lost in space/time. The Kenya PSC R factors are

If R 2.5 profit oil is split 75% Kenya and 25% contractor

Marcel - You would need to work out the 'R' factor as (as is usual under a PSC) and under the general guidelines of the Kenyan Petroleum Act profit petroleum is shared between the host government and the contractor depending on 'R'.

If R 2.5 profit oil is split 75% Kenya and 25% contractor

Formula:

R-factor = (Cumulative Revenue) / (Cumulative Expenses)

1. Cumulative Revenue:

the total amount of money earned from the sale of oil and gas produced from the project over a specific period, typically the entire contract duration.

2. Cumulative Expenses:

This includes all costs incurred by the contractor during the project, including exploration, drilling, production, and other related activities.

Yes Marcel TLW get your '30%' which becomes 24% after Kenya itself backs in. The Q is 24% of what? Even if most of us don't really understand the above it's pretty clear TLW are not getting 30% (or even 24%) of 130K. Given production decline, planned and unplanned annual outages, the profit oil ratios determined under the PSC etc etc then the actual volume of oil due is a lot smaller than you suggest.

Trouble is GOK remain the gate keeper. So nothing happens.

No $40m + $40m + $40m. No FID. No royalty. No 'back in'. That seems a worse deal to me!

Why? It's a good deal under the circumstances. Kenya was going nowhere as the government rightly concluded Tullow were incapable of developing the resource due to their diminished financial capability.

30% (before 20% Kenya.gov back in, if exercised) of that is still not bad but it is not 30% of 130K as some believe.

A further reality check. What will Kenya Annual Production be at Yr 5 of production? Yr 10 of production?Name plate is 130K. Actual achieved will typically be c. 90%, or 117K bopd. Looking at the ESIA for the original 80K bopd development. Production was 72K bopd for Yrs 1/2/3, declined to 50K bopd for Yr 5 and further declined to 25K bopd by Yr 10. That suggests for the enlarged 130K project, production in Yr 5 when back in could be exercised would be c. 80K bopd declining to kind of42K bopd in Yr 10.

TLW's PSC's for Kenya blocks with oil say: Block 13T - "The Contractor is entitled to recover its petroleum costs (i.e., costs and expenditures incurred by the Contractor in exploration, development and production) up to an annual cap of 65% of all crude oil produced and saved from the development area(s) in the applicable fiscal year." Block 10BB - "The Contractor is entitled to recover its petroleum costs (i.e., costs and expenditures incurred by the Contractor in exploration, development and production) up to an annual cap of 55% of all crude oil produced and saved from the development area(s) in the applicable fiscal year."

Fact check from AI FWIW....."In oil developments, the typical period for recovering contractor costs through cost recovery oil (CRO) can vary, but it generally falls within a range of 4 to 5 years. The Production Sharing Contract (PSC) or the relevant fiscal regime dictates how much of the production is allocated to CRO, and the specific terms may vary by country or project."

Reality check. Total Energies FID'd Uganda on 01/02/2022. First oil now anticipated sometime 2027. 5+ yrs to first oil. Kenya will have a similar timeline. Plus another 5 yrs, or more, of contractors cost recovery means 'Back in' unlikely before 2035 at the earliest.

Odd. Released just now. But it's for 2022!

How timely. Thank you Tullow. You can see how revenue gets diminished under PSC's here

https://www.tullowoil.com/application/files/2316/7958/7310/2022_Payment_to_Government_Report.pdf

Note $2.2m paid to Kenya last year as well.

Marcel - "lol, 30% in the pocket." Err, yes and no. As under the Production SHARING Contract (I believe) the Kenyan host government receive between 78% and 50% of revenues, post contractor full cost recovery, which is the milestone that enables 'back in' to be exercised.

J Bond - "was selling Gabon for 300m really a good deal?" Ideally it would have been better to keep it for the reasons you mention even though (apparently) for 2025 Gabon was FCF neutral. Others are calling the shots as you say. $300m post tax didn't seem unreasonable to me but then I'm not terribly clued up on the financial stuff! Although Jubilee requires new wells to keep it going it is the major (only, even?) generator of FCF which pays back the debt.

Looking at Petrocom's data. SCF/bbl and as a result GOR have both basically been fairly stable for the last 10 months. Kosmos told us water voidage replacement was 100% of target in 1Q. All good there. Tullow told us there has been increasing water cut + some under performing wells. My conclusion is they need to drill more than the planned one producer + one water injector this year to arrest the decline (unless there has been an outage to account for the apparent low production suggested by tanker off loads post shut down production restart). Agree given the dire state of reality vs company projections timely monthly reporting of Jubilee production numbers would be helpful. Without the data this is becoming uninvestable.

Hi Antonvb - "So looks like Jubilee was producing 63K bopd in March. What to make of this…. really not sure. Need to see the figures for May I guess. Fingers crossed they fixed whatever was broken during the shutdown." No sign of an improvement so far. I posted this in the other place 2 days ago before Petrocom updated their data. "7 May '25 - 08:34 - 61343 of 61345 Another Uh-oh I'm afraid! The next tanker arrived when AIS indicated it would but it's been hanging around. Thought the offload would start on the 5th, then the 6th, then today but apparently not. It's possible some oil is going into ullage given low OP (hope so!) but if not Jubilee now in the low 60's." So no sign whatsoever of better production numbers despite voidage replacement being above 100% in 1Q. It is very concerning.

Supercooper - ENI (i believe) get about $8.50 for their piped ashore processed gas vs TLW's $3 for raw gas. I'm probably getting into fantasy land here but ENI's FPSO (which processes gas) is only 40kms SE of Jubilee FPSO which itself is gas plumbed into the TEN FPSO. So in fantasy land, assuming ENI has spare capacity (now or in the future) ENI could take a stake in TEN and process TEN gas on their FPSO for export simply by building a 40km gas pipeline from Jubilee to their FPSO. But it's probably a pipe dream!

Supercooper - Well the current GPP at Atuabo was specifically built to process/condition Jubilee gas and thats where the plumbing from the FPSO goes. So if somebody else were to build another GPP it would still need to be in the same place unless they build a spur line for unprocessed gas to another location. Not an expert but basically (I believe) there aren't any alternative GPP's in existence and if there were how would you get the unprocessed gas there? ENI process/condition their gas onboard their FPSO so it is exported in a more or less sellable form. Unfortunately when Tullow designed their project at that time they said something like "the real value in the gas is to facilitate the production of oil". As a result huge quantities of gas have been flared. That is no longer possible going forwards for Net Zero scope II emissions compliance so the majority of what was flared will have to be re-injected. Maybe additional gas export is possible at some point..... who knows? But as usual we need hard facts from Tullow. Not empty talk!