Member Info for xxnjr

J.Bond,

Thank you for your thoughts. Totally agree with your analysis. The only thing I would add is that reserves revisions over the last 4 yrs have been negative in Ghana despite all the wells drilled suggesting it's not exactly a guaranteed cert that the outcome of the 4D Seismic will be positive. Maybe the bond market is reflecting these reservations on reserves?

Seplat have done well on their bonds

Seplat Energy Plc (the "Company") announces that it has priced its offering of $650 million in aggregate principal amount of 9.125% senior notes due 2030 (the "Notes"). The Notes will be issued by the Company and guaranteed by certain of its subsidiaries. The gross proceeds of the Notes will be used to (i) repurchase Issuer's outstanding 7.750% Senior Notes due April 2026 (the "2026 Notes") and (ii) pay transaction fees and expenses (the "Refinancing" and, together with the Offering, the "Transactions").

Joek1,

Yep sorry you got me there. Brain fade on my part!

Sadly it doesn't work like that. Past expense would normally be recovered through the Cost Recovery mechanism (by allocating more oil than due under w/int) but if Kenya threw Tullow off the project as they have been unable to finance it, or bring in farm in partners who could, then that wouldn't happen.

Gross debt is $1.785bn now.

Cash now is ? Net debt now is ? but was $1.45bn at Y/end.

Net debt usually increases in 1H, due to Ghana Tax Payments and the mandatory $100m '26 bond repayment on 15/May.

Seplat have only just bought MNPU for about $1.1bn. That got them 395m bbls of 2P reserves.

Why would they want to buy TLW's 165m 2P for $250m + $1.45bn debt?

Had a look and found an old LAPSSET pressy from 2011 on one of my discarded PC's. The plan to combine oil exports with South Sudan was part of the original plan. So nothing really new there. Back in the day they were envisaging up to 500K bopd from SSudan but with decline since then would imagine that figure would be lower these days.

Sorry it was one trading update ago!

Gabon: Whilst that is the latest info from TLW that update was from 2, or 3 trading updates ago and it wasn't mentioned in later update(s). No news from the operator whatsoever. So my guess would be

It's a very small 'discovery' as they tend to be in that postcode.

Maybe it could be tied back if commercial? Who knows? But since the operator can't be bothered to talk about the matter I'd suggest it's probably nothing to get excited about given our former CEO's tendency to highlight numerous upsides that failed to arrive, or be delivered. Even in a success case it's unlikely to move the needle.

ps.... I never understood the logic of Rahul's last deal in Gabon (asset swap with Perenco). Only made sense if they wanted to sell it!

Basically 60% is hedged at $59

(unless the OP is higher than $89)?

Thx Anton.

Any evidence that Tullow presented, or had a stand at eapce25?

You would have thought they would have had one?

Well we don't really know the nature of the talks. This is what KOS said on their call @ about 46 minutes

"There needs to be clear value accretion for our shareholders, and most importantly, free cash flow accretion, which -- given our focus on leverage reduction, it absolutely has to be part of any transaction.

So that's what we did on the Oxy deal, for instance, so as you sort of come back to Tullow, I think the short answer to you is are we planning to look at it again?..... and the answer is no. You sort of know the background David, we were at a very, very preliminary stage before we were forced to put out a press release at end the talks.

We obviously had no intention of using Kosmos as currency at the current depressed [SP] levels, which was a view shared by our shareholders."

So yes. The SP was one important factor as already undervalued and it dropped further when the talks were outed by I wonder who?

Ref Kosmos. It was only a very very preliminary discussion from Kosmos's point of view. Sadly someone leaked it to the market. Probably someone rather desperate in Tullow perhaps? Who knows. But anyway KOS have said they terminated the discussions following feedback from their shareholders and furthermore they aren't minded to resume discussions.

Correction. I don't get the geography :) Eldoret and Isiola (through which the product line passes) aren't exactly in alignment. So probably the crude line as you say!

Well yes I get the geography:) But petroleum products and crude are not the same thing. And I think he mentioned the purpose of the corridor (or the pipeline) was to establish Kenya as a petroleum hub (rather than an export hub). Could be clumsy use of language. Anyway I guess we'll find out in due course.

Anton and others,

May I just inject a note of caution on Kenya. First of all let me mention I don't really follow Kenya at all as my position for the last 5 yrs has been sceptical that anything will happen. Ok I could be wrong. But if something did happen that would be a bonus.

But anyway to my point. Thanks for that Twitter link Anton. My concern is that the minister (or whoever he was) specifically said "Product" pipeline. Not "Crude" pipeline. So I'm wondering if this is an initial section of the Lapsset Lamu - Ethiopia product pipeline rather than something to do with Tullow?

https://lapsset.go.ke/oil-pipelines/

Actually the 2026 bond offering said

"We intend to add new hedges across 2022 to mid-year 2024, for approximately 75% of our production entitlement through to the second anniversary of the Issue Date and approximately 50% of our production entitlement from the second to the third anniversary of the Issue Date, targeting a price floor of $55/bbl for our new hedges while continuing to allow upside participation to oil prices. Once these new hedges are in place, we expect our hedging program will protect approximately 41 mmbbls of our production entitlement through to the third anniversary of the Issue Date, and we believe this hedging program could protect up to approximately $2.0 billion of revenue, calculated as 41 mmbbls hedged multiplied by an assumed price floor of $55/bbl, and assuming an oil price of zero. Within two weeks of the Issue Date, we intend to have 50% of the new hedges in place, with a further 25% in place by the date falling 90 days after the Issue Date and the final 25% in place by December 31, 2021."

Not sure about that JMAX. They definitely had to hedge 65% or so of the next 24 months of production when the 2026 bond was arranged, with the hedges having to be placed within an agreed time frame of signing and at a time of weak oil prices. However after that there was more freedom to do as they wish (IIRC). But even if for arguments sake the banks forced them to hedge 60% why would the banks insist hedging at a low oil price, rather than say $70?

None of us are in a position to know but I tend to feel that Rahul is responsible for the suboptimal hedging policy as he seemed to base strategy on the assumption that oil was forever going to trade between $80 and $90+. No he wasn't the CFO but I imagine he was the one calling the shots. Could be wrong of course.