Tullow Oil Share Discussion Threads

[mercer95] 22/3/2017 13:15

How can a rights issue not be bad, it means the company is cash strapped, like me

[bookbroker] 22/3/2017 13:07

Kenyan Govt. will do all it can to ensure revenue from oil maintained, strife or no strife, the leaders like the stuff called cash!

[alexgc] 22/3/2017 12:19

Thanks Mercer, like every BB there are people with strong opinions. I tend to operate in the grey area because I am not privy to all the information required to know precisely what is going to happen. I do use the filter facility quite quickly though.

[alexgc] 22/3/2017 12:12

Olieslim, I am with you regarding standing on the sideline. The links you posted were very interesting, from there I deduced that the cost of extracting oil is decreasing rapidly, which in my mind will mean that supply will surpass demand moving forward. I can't say how I came up with $60, I guess it was just seeing the price not getting about $58 for quite some time. Since oil is influenced by so many factors and I am no oil expert I can easily be wrong. Many of the oil producing nations are hurting with the lower prices, that could easily kick off a war which could bring a lot of new factors to consider.
wrt Kenya I have also heard that there is a whole lot of unrest, more with land invasions of farms, but this could easily extend to industry as well. There is a drought in East Africa and when people are desperate they will do desperate things.
There are just too many uncertainties with TLW at the moment. Obviously some people may disagree and that has no effect on the money in my account (or lack of)

[mariopeter] 22/3/2017 09:20

"And the general news from Kenya doesn't look too good"
Having difficulty finding anything to support this statement. Any guidance Oileslim?

Are there limiting factors on refinement of shale in the US or not and why have Exxon just announced a $20b investment in this area which will take time of course?

[mercer95] 22/3/2017 08:34

Good post Alex, ignore Phillis,he sounds like a bully

[phillis] 22/3/2017 07:28

Alex
Don't talk through your back passage

Rights issues happen all the time for lots of different reasons

[olieslim] 21/3/2017 23:47

Thx alexgc.

I'm on the sideline watching atm and I don't feel the need to jump back in without further news. And an opportunity ofcourse.

Maybe this can illustrate the 'question', which actually was a questioning of your $60 expectation (I took it like that) because imo you might as well have said capped by $80 or $120. Anyway see the graph in the following:
I'd say TLW is in the curve?, not ahead.

Re your cap: RDSA just said, and they are going in big, shale will be profitable for them even at $20 but offshore only at $60.


And the general news from Kenya doesn't look too good. Nothing or very little to do with the company, but the environment is turning hostile fairly rapidly now and it won't take much to turn it into a hell hole aka civil war. The latter probably sparked by the neighbors (borders have a different meaning there) or because of intervening and backfiring at the .gov

You could be right about the share price going lower now because in the short term the bearish momentum is driven by the paper trade that foremost wants to reduce their (net)longs on oilprice.

Then, the biggy, in the background there is the correction lurking the main markets are craving for. Inevitable, but it seems still a way of. Unless the PoO is going to trigger it ofcourse. The epic selloff could indeed take TLW that low.

Anyway, gl.

[kuss1] 21/3/2017 23:38

Tlw have admitted that growth is 3-5 years out. They moved quickly on the rights issue because they have an ear to the price of oil imo. They also mentioned that the oil market has changed in recent years so they are aware of the dynamics of the industry. But to be blunt, they just have too much debt and the oil price is heading south. These corporate actions disturb the market, too. A long-term gamble given their assets perhaps, but I just don't see the driver behind the price at the moment...

[alexgc] 21/3/2017 22:15

And I would say watch out for a dead cat bounce, I see this going below 150

[alexgc] 21/3/2017 22:12

Olieslim, I am not quite sure what your question is but I will not be looking to get back into TLW short term as I see oil capped at $60 (as Fraserdeam said) As soon as prices rise above that then shale oil becomes economical and supply is increased. I initially thought that increased demand from India and China would create more demand but that doesn't seem to be happening. With the rate of technological advancements engines are becoming more efficient and this will probably continue at a faster pace. The one reason that I could see for oil going up would be the reduced investment in exploration and existing supply reducing at some point. Since TLW is directly effected by the PoO this needs to be a huge consideration. I am sure someone will have the break even price that TLW needs not only to extract but also to service their debt. It seems by going to the market they are aware that even after TEN has come online they are not capable of doing so without going cap in hand to their shareholders. I was in Barc, RBS and TW. who also had rights issues and from that I learnt that you are going to be in for a long time if you ever want to be back to the price when it was announced. As far as I know barc and RBS still haven't got there. In my mind there is something really bad in a company if it has to do a rights issue. Up until Friday I still had faith in TLW recovering but that all vanished with the announcement

[olieslim] 21/3/2017 18:08

Alex, Fraser, if Brent goes (it's trying right now) goes through $50 tonight will you wake up at $46?

I really don't like what they do to the goats but at the least now it looks they'll have to come of them to throw some dough against the screen.

[mariopeter] 21/3/2017 12:29

My apologies net debt will be $3.9 (not $2.9) after rights issue proceeds. Still a huge de-gear. May have to release some mullah from the farm out of Kenya which is enormous. Edited the post above. Thanks Frazboy.

[fraserdean] 21/3/2017 11:37

POO likely to stay 50-60, shale output will rise with anything higher but costs of drilling shale wells now up with demand so they are not as profitable, external costs of developing offshore oil down 30% to 40% sine the highs and internal operator costs are also much lower, they can now make a profit at $50 but it takes time to feel reassured of this, drilling tie-back wells such as ghan to existing facilities, and onshore in kenya much lower break-even.

[robo175] 21/3/2017 10:50

I believe they are hedged to $60 now.

[alexgc] 21/3/2017 10:44

I personally don't see oil prices going anywhere soon. Fracking costs have come down significantly over the last few years and this will put a cap on the PoO. For this reason I don't see oil stocks going anywhere for quite some time. Last year TLW had a hedge for quite a chunk of oil in the $70s, I assume that this has expired now and TLW will be selling their oil at a much lower price, even though the PoO is higher. (I may be wrong on this) I have sold out of TLW for a massive loss as I see the share price drifting lower in the next few months, probably close to 130. There are other shares out there will less risk and uncertainty.

[frazboy] 21/3/2017 10:34

The debt isn't $2.9bn

[mariopeter] 21/3/2017 10:21

It seems they want to try and keep hold of more of the Kenyan assets and will probably farm down (like Uganda) so they get a free carry on development costs.

Debt now moves to probably $3.9b (corrected) and will be approx 150% of equity which is more manageable now (particularly as you have a West African subsidiaries throwing out $1b of cash each year at $50 oil). Expect share price increases (maybe after we go ex-rights) because of this massive de-gearing and de-risking.

One would have expected the Saudis to have had a chat with the Russians to see if they could all firm up on their oil supply restrictions. Also don't forget the medium term for oil as these three years of under-investment will have caused supply problems. Don't think the electric car market will have done too much damage by the time these supply shortages turn up.

[casino444] 21/3/2017 10:19

I,m only trying to be helpful , What about flipping a coin ,

[phillis] 21/3/2017 08:58

Typo is correct
Underwriting is insurance
The underwriters get their fee and hope they dont have to work too hard to dispose of any not taken up

EDIT: the underwriters are ultimately on the hook but it is rare for them to be left with stock

[steve73] 21/3/2017 08:33

thanks for that clarification typo...

[typo56] 21/3/2017 08:21

For those unfamiliar with lasped rights rump placings, here's what happened in the case of RPC, dated 27 Feb. In other words, lapsed rights were worth about 240p per right (a fair price at the time). The proceeds went to the shareholders, not the underwriters.

Following the announcement earlier today regarding valid acceptances under the Rights Issue announced by RPC on 9 February 2017, RPC confirms that Deutsche Bank and Jefferies have procured subscribers for all the remaining 3,455,880 New Ordinary Shares for which valid acceptances were not received, representing approximately 4 per cent. of the total number of New Ordinary Shares, at a price of 905.0 pence per New Ordinary Share.

The net proceeds from the placing of such New Ordinary Shares (after the deduction of the Issue Price of 665 pence per New Ordinary Share and the expenses of procuring subscribers including any brokerage and commissions and value added tax thereon) will be paid (without interest) to Shareholders who have not taken up their entitlements pro rata to their lapsed provisional allotments, save that individual amounts of less than GBP5 will not be paid to such persons but will be aggregated and retained for the benefit of RPC. Cheques in respect of any such amounts are expected to be despatched to the relevant Shareholders by no later than 10 March 2017.

[typo56] 21/3/2017 08:07

TLW marked up a bit this morning, on DB upgrade.

[typo56] 21/3/2017 08:06

What you shouldn't do (IMO) is to buy before and NOT take up your rights, as this will simply be handing on any benefits to the underwriters (perhaps, unless the share price drops below 130).

Actually I've tried to point out the underwriters don't benefit. They don't receive fully paid shares at 130p for any rights that are not taken up by holders. They get placed, and the proceeds go to the lapsed rights holders. The holders receive pretty much the same as if they'd sold their nil paid rights in the market (i.e. TLW ex rights minus 130p). So if you let your rights lapse you're not exactly losing out, it's equivalent to selling part of your holding.