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A lot has happened to Tullow in the last 18 months
Anticipated production of ~100k decreased to low 60 k
Highly hyped exploration drills have turned to be very disappointing to put it mildly.
Crown assets in Uganda which two years ago were valued at $1.4 billion were sold for $575 million, with Kenya potential still very much in doubt.
On the positive side, net debt has come down but as the result of asset sales rather than FC generation and gearing still remains very high.
In essence Tullow has turned from a high production, successful exploration company to medium production non -exploration company.
It begs the question of what is a fair valuation of Tullow in the medium term (next 12 -24 months) given all the above.
Quite a few posters on here think just because the oil price has recovered to what it was at the beginning of last year , the share price should be in excess of £1 , completely ignoring all the latest developments and showing a complete misunderstanding how much the fundamental prospects of this company have changed.
Overbought stock simply returning to a more fair valuation
People who bring up GME and hope something similar happens to TLW clearly don't understand the mechanics of what happened there . For info, such a scenario is not physically possible for Tullow.
Slift, I agree that it is unlikely we are going see a near total wipeout as the article suggested but after the delay to RBL I am convinced TLW's creditors are asking for an arrangement which is not going to benefit the shareholders. I've been staying on the sidelines since CMD . TLW can be an interesting investment once they re-finance but I'd caution anybody thinking about putting money in now - there is little upside potential and huge downside risk atm.
"Tullow’s management team has drawn up a credible new strategy. Dhir wants to plough resources into its prized but underdeveloped Ghanian assets, which he reckons have the potential to produce $7bn of free cashflow between now and 2030, including $4bn for “debt service and value growth”.
But bondholders must be fed up of hearing the “jam tomorrow” story. Heavey once pledged to “get back” all the value investors had lost and he’s been gone three years now.
A debt-for-equity swap now looks like a nailed on certainty. Shareholders are unlikely to be left with much – analysts at Stifel have previously estimated it might be less than 10pc of the equity – but it’s hard to see what the alternative is."
https://www.telegraph.co.uk/business/2021/01/27/beleaguered-tullow-needs-bite-bullet/
Tullow has dropped on every single trading update since Nov 2019 so with a fairly neutral /slightly negative (lack of RBL news)update what was really expected today?
In June Tullow had 6 months of hedges, now it has 3 weeks of good hedges.... See the difference here?
The Trump administration is poised to add China National Offshore Oil Corp (CNOOC) to a list of companies designated as owned or controlled by the Chinese military, Reuters reported.
Trump signed an executive order this month banning US investors from buying securities in those on the list - which includes Hikvision, China Telecom and China Mobile - from November 2021.
CNOOC has a 64pc stake in a publicly quoted division, CNOOC Ltd, whose subsidiary CNOOC International owns and operates the Buzzard field about 100km north-east of Aberdeen, with partners including Chrysaor and Suncor Energy, among other North Sea assets.
Buzzard is a key North Sea field, producing about 115,000 barrels per day in 2019, and CNOOC International is investing to avert a production decline.
Slift, I have similar views on CMD. While I appreciate their 10 year plan, they left a lot of questions unanswered.
This means there will be little to support the SP in the short term, unless oil goes above $55 in the next few weeks, which is unlikely.
The fact they avoided talking about refinancing makes me think some sort of equity raise will take place next year.
What I also found disappointing is the seemingly much lower FCF generated when oil goes up to $65 than was the case last year. Luck of exploration and cutting costs to the minimum also makes me think they are looking for a buyer for the business.
I believe the company has a future but there is quite a bit of uncertainty over the next few months. I decided to sell half my holding the day before CMD and sold the rest yesterday morning - staying on the sidelines until January.
Good luck to anyone invested.
Honestly did not expect such a strong rise today. LTHs finally being rewarded for the patience this share required in September , especially with clueless individuals like tootache constantly spewing nonsense about "technicals" telling them SP was heading down to 12p or 7p because magic lines tell them so. Best advice is stick to your guts and own analysis of fundamentals, as people on these boards rarely have a clue.
It is tempting to offload now before the CMD but then again I had the same temptation when SP was 23p.
They are the 'bogeyman' brought up by the people who do not know how exactly the stock market operates to explain any instances where the share they are invested in is not performing as they would like. MMs/share price manipulation is of course never mentioned when the share price rises 10 % in a day - in those instances the MMs are awesome, it is only when the share price pulls back when you are allowed to mention them :)
Dbno, have you ever heard 'I love you' from your father? Seriously, your constant need for recognision indicates some underlying issues. And please stop bragging about your virtual trading account where you always wait to see which way the market goes before informing the board of your "trades" - everyone realises it is total bs and it doesn't add anything to the discussion.
There will not be any 'boom' on confirmation of funds, it is all pretty much in the price. May see a small uptick but nothing significant.
Realistically it will probably consolidate somewhere in the low to mid 20s for now. The completion of the sale removes a lot of uncertainty. However, any talk of high 30s or 40s in the short term is ridiculous. Would have to see Brent in high 40s to see that.
If only you were as good at predicting price of PMO or oil... Maybe then you would not be sitting on massive losses.....
Really positive news for those who intend to hold these for longer. I pulled the gun too early and took a rather significant position just south of 20s after the trading update. It is quite tempting to just take the profit now and run but I think with the oil market tightening towards the end of the Q4 there is room for further gains.
My only concern at the moment is the CMD and whether shareholders are going to get screwed with D4E or some other arrangements that dilutes their stake.
Just shows how stupid it is to draw 4 year trend lines and talk about technical analysis on a highly volotile oil share.
And your strategy is drawing 4 Yr charts on a highly volotile oil share? "Formal training in TA" - you mean watching a few YouTube videos. Not so long ago you were saying and I quote " this will hit 12 p, not sure when but it will" so please stop with your 100 % accuracy of TA. You made a good trade and it made you believe that drawing lines on a chart gives you some sort of massive edge. Good old TA - always works on historical charts... Rarely gives any advantage predicting the future.
No, it looks like you made a mistake, are underwater and just unwilling to accept that...
That's right SK , the price will move and can move up in the next few weeks/months depending on a few factors. However, as of now a suggestion that PMO's stake is worth 3X more than what the SP suggests is pure fantasy.
shaf5 do you think a guy who has about 10 % success rate predicting direction of oil price moves is able to correctly estimate the value of the deal for PMO's shareholders ? Don't you think the institutional investors had a whole day to look at the details of the merger and take a position? Why haven't they done so already ? Are they waiting to see what DBNO does and what magic valuation he arrives at?