Tullow Oil Share Discussion Threads

[kevjones2] 18/4/2016 16:38

dlku - 15 Apr 2016 - 09:40:40 - 26502 of 26567

"My target 183p on monday after nothing goes on on sunday"

[wookie77] 18/4/2016 15:39

yeah diku why are you posting old news...Jefferies? Who are they? LOl

[ifthecapfits] 18/4/2016 15:18

Short by any chance diku? We all saw that last week.

[dlku] 18/4/2016 14:08

odey been shorting this one

[kevjones2] 18/4/2016 14:01

Holding up very well so far.

[dlku] 18/4/2016 13:57

JEFFRIES


Tullow Oil (TLW LN): Jubilee Turret Update - The Solution is a Major Project
Rating UNDERPERFORM
Price Target 166.00p
Price 193.40p
Bloomberg LSE: TLW LN


Key Takeaway
Speaking at length with Tullow management this morning clarified the timeline to a potential Jubilee Turret solution: 2-3 months to decide on 1 of 3 potential solutions then a further 9-12months to implement (either offshore or including taking the FPSO into dock). In the meantime, the new production off-take set-up will mean lower field rates.


The Jubilee FPSO turret bearing has been confirmed damaged (no longer able to rotate). Long-term remediation options are being evaluated with an initial view the issue “can be resolvedâ̈́4;�. In the meantime the vessels required to restart production offtake "are in placeâ€� (principally a dynamically-positioned shuttle tanker and a storage tanker for liftings) but c.2 weeks more are needed to safely implement production start-up (with additional time to ramp up).


Speaking to the company at length this morning (COO) the timeline for resolution is 2-3 months to decide on 1 of 3 engineering solutions and 9-12 months to implement the chosen one:


Replace the necessary parts of the Turret in-field to allow it to rotate once more. Essentially this would be fabricating and installing a new rotational ball-bearing race above the old one. One has to appreciate the size of these parts to understand the engineering this would require.
Convert the Jubilee FPSO to a “spread moored anchor set upâ€A533; essentially by-passing the need to rotate around a Turret. Currently, 2 tug boats (and a 3rd on standby) are effectively doing this job - holding the FPSO on a fixed heading - because with the turret unable to rotate, any rotational movement of the FPSO (due to sea current/wind etc) places huge stresses on the Turret anchor chains. (we are available to explain in more detail).
Bring the FPSO into dock and replace the entire Turret. In our view, the apparent scale of the engineering involved would make this solution the most realistic (and safest) long term option.

These are all major projects in themselves but as ever with hardware issues we are confident the engineers will resolve the problem and crucially, it is not a reservoir problem. However, regardless of insurance recovery possibilities the Turret situation does impact asset value. For example, we find it hard to imagine the Jubilee Full Field Development plan will be sanctioned until the production facility (FPSO) is fully resolved. Ironically, we had already seen that sanction at risk of further delay simply due to TLW drive to reduce overall group capex.


Production guidance will be reissued once the new off-take procedures are confirmed as working (101kb/d Jubilee gross prior to shut-in TLW 35%, KOS US 24%, APC US 24%). With on-going RBL debt re-redetermination process (end April for news) and ND/EBITDAX reaching 6.5x by 1H16 on our numbers (before the turret issue), we see further risk to the shares despite the insurance claims already field. We recently Downgraded TLW to Underperform specifically due to news of this Turret issue adding to operational issues at Jubilee since First Oil at end-2010. Our Core NAV for TLW (mostly all Ghana value) is 115p/sh. To get to our target price of 166p a further 56p of East Africa "upside" is required.



jeffries only target is 166p :(

[dlku] 18/4/2016 13:56

trapdoor here .

[max_cady] 18/4/2016 13:53

This is struggling to stay put, it will have to fall.

[dlku] 18/4/2016 13:44

bac to 180p for this one mates

[mcsean2164] 18/4/2016 12:25

azalea,

Totally agree, it's insane for Saudi to ask them to freeze at sanction levels.

Saudi are trying to turn people against Iran when in fact they are the problem....

[leoneobull] 18/4/2016 09:47

Soaring oil demand in China rescues OPEC
AMBROSE EVANS-PRITCHARD

A dramatic build-up in China’s strategic petroleum reserve and surging demand for imported crude oil are likely to transform the global energy markets this year, regardless of any production freeze agreed by OPEC and Russia this weekend.

Chinese credit stimulus and a 20pc rise in public spending has set off a fresh mini-cycle of growth that is already sucking in oil imports at a much faster pace than expected.

Barclays estimates that the country will import an average of 8m barrels per day (b/d) this year, a huge jump from 6.7m b/d last year. This is arguably enough to soak up a big chunk of the excess supply currently flooding global markets.

Standard Chartered said Chinese imports could reach 10m b/d by the end on 2018, implying a supply crunch and a fresh spike in oil prices as the market is turned on its head.

Energy consultancy Wood Mackenzie says $400bn in oil and gas projects have been shelved since the onset of the commodity slump. A great number of depleting fields will not be replaced.

Feifei Li, Barclay’s oil analyst, said China is in a rush to fill four new storage sites of its petroleum reserve coming available this year. “It is an urgent priority of the government to fill up the tanks while the price of oil is cheap,” he said.

Fresh storage is likely to average 250,000 b/d, five times the level last year. The pace will rise further in the second half of the year.

China is building vast underground rock caverns in the interior of the country as a top national security priority, fully aware of the way Japan was squeezed by the US fuel embargo in the late 1930s. It aims to boost reserves to 550m barrels and ensure a 90-day buffer to resist an external supply shock.

China’s own output of oil has fallen by 200,000 b/d over the last year as PetroChina and Sinopec slash investment, while demand has continued to grow.

Car sales are expected to rise by 6pc this year and Chinese customers are switching to bigger models. The International Energy Agency forecasts that Chinese petrol demand will jump by 8.8pc this year, and jet fuel by 7.5pc.

Some of China’s oil imports are rotating back out again into the world market in the form of diesel as the so-called ‘teapot’ refiners burst on the Chinese scene, but this may be less of a threat than originally feared.

Set against the China effect - and against fast rising oil demand in India - the OPEC meeting in Doha is almost irrelevant, though it could lead to wild moves in the short run.

Traders are waiting nervously to learn whether the loose accord reached by Saudi Arabia and Russia in February can be broadened to other countries, or even whether the freeze can survive at all as Iran demands its pre-sanctions share of the market.

“They are not going to leave the meeting slamming the door because they know that would be totally counter-productive, but I don’t expect much,” said Ole Hansen from Saxo Bank.

“The producers are nearly all maxed out so a freeze is not going to make much difference at this stage,” he said. Russia’s oil minister Alexander Novak has played down expectations, talking only of a “gentlemen's agreement” to restrain excess supply.

Prince Mohammad bin Salman, Saudi Arabia’s deputy-crown prince and de facto ruler, was even blunter, giving a strong hint last week that his country would not let arch-rival Iran eat into its market share.

"If all countries agree to freeze production, we’re ready. If there is anyone that decides to raise their production, then we will not reject any opportunity that knocks on our door,” he told Bloomberg.

Tanker surveys indicate that Iran’s exports have jumped by 600,000 b/d so far this month, a huge rise that offsets the entire cut in daily US shale output since last July. The US rig count has fallen by 80pc. The latest shock data from Iran have stopped the oil rally in its tracks, depressing Brent crude by $2 to $42.50 a barrel over the last two days. Adding to the gloom, Tehran said it is not even sending its veteran oil minister Bijan Zanganeh to the meeting in Doha. Ultimately what happens in China and matters far more than OPEC choreography. The country has overtaken the US this year to become the world’s biggest importer of crude and the authorities are once again injecting a huge stimulus into the economy. "This looks like an old-styled credit-backed investment-driven recovery, which bears an uncanny resemblance to the beginning of the "four trillion stimulus" package in 2009," said Wei Yao from Societe Generale. She said the Chinese housing market is "on fire" and total credit has jumped to a 20-month high of 15.8pc. Whatever happens this weekend in Doha, the recovery in oil cannot be far behind.

[leoneobull] 18/4/2016 09:46

Citi: Here’s why oil prices may rise

Oil prices may be tanking in the wake of a failed attempt to freeze production, but Citi is betting on a recovery in prices.

Citi is forecasting declining supply from some producers, such as Venezuela and Nigeria, while inventories may finally see some drawdowns.

Oil prices may be tanking in the wake of a failed attempt to freeze production, but Citi is betting on a recovery in prices.

Citi is forecasting declining supply from some producers, such as Venezuela and Nigeria, while inventories may finally see some drawdowns.

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The bank now expects Brent and WTI prices at $39 and $38 a barrel respectively in the second quarter, up from forecasts of $31 for each. For the third quarter, Citi now forecasts Brent at $46 a barrel and WTI at $45, up from its previous forecasts of $41 and $40, respectively. For the fourth quarter, it held its forecasts steady at $52 a barrel for Brent and $50 for WTI.

That's despite the failure of a summit in Doha between the world's largest oil-producing countries to reach a deal on Sunday to freeze output in an effort to boost crude prices which have tumbled from levels well over $100 a barrel in mid-2014 amid a global supply glut.

The conference's failure sent U.S. crude futures down 5.6 percent to $38.10 a barrel in early Asian trade, while global benchmark Brent futures fell 5.66 percent to $40.66.

Oil prices may be tanking in the wake of a failed attempt to freeze production, but Citi is betting on a recovery in prices.

Citi is forecasting declining supply from some producers, such as Venezuela and Nigeria, while inventories may finally see some drawdowns.

ADVERTISING

inRead invented by Teads
The bank now expects Brent and WTI prices at $39 and $38 a barrel respectively in the second quarter, up from forecasts of $31 for each. For the third quarter, Citi now forecasts Brent at $46 a barrel and WTI at $45, up from its previous forecasts of $41 and $40, respectively. For the fourth quarter, it held its forecasts steady at $52 a barrel for Brent and $50 for WTI.

That's despite the failure of a summit in Doha between the world's largest oil-producing countries to reach a deal on Sunday to freeze output in an effort to boost crude prices which have tumbled from levels well over $100 a barrel in mid-2014 amid a global supply glut.

The conference's failure sent U.S. crude futures down 5.6 percent to $38.10 a barrel in early Asian trade, while global benchmark Brent futures fell 5.66 percent to $40.66.

Nigerian oil minister Emmanuel Ibe Kachikwu (C) arrives for the organization of Petroleum Exporting Countries (OPEC) meeting, in the Qatari capital Doha, on April 17, 2016.
Oil pares some Doha-related losses; energy stocks sell off
Even without an output freeze, Citi expects the supply glut may ease.

"After nearly two years of relentless stock builds, oil markets appear to be approaching a period of sustained draws, bringing key benchmark prices back to the $60s by 2017," it said. The bank expects a drawdown of supply may emerge over the summer, with demand from refineries set to increase.

At the same time, Citi expects supply may begin to ease. It expects non-OPEC production to fall by more than 1.1 million barrels a day this year.

"With petro-states confronting internal instability, risks of disruption point to a potentially more bullish market, while macroeconomic risks pose a lower probability of more softness ahead," it said.
It expects Venezuela, Nigeria and Algeria to all see declining supply growth on lack of investment, political instability and social unrest, while Iraqi output may flatline. In particular, it expects Venezuelan output could fall by around 200,000 barrels a day this year.

But Citi isn't expecting too much demand growth to ease the glut, adding that's due to -- not despite -- low oil prices. It noted that from 2003-2015, around 55 percent of global oil demand growth came from oil-exporting regions.

"High oil prices were bullish for oil demand," it said. "That feedback loop now is running in reverse."

[billionaire1] 18/4/2016 09:43

expected we d go sub £2 thankfully not

[wookie77] 18/4/2016 09:42

Wow what a comeback! Did not expect that.

[azalea] 18/4/2016 09:11

Iran who historically had an OPEC quota to export 4m bpd, is not going to agree to a freeze at 3m bpd. The whole point of doing a deal on nuclear enrichment was so it could export more oil to pay for refurbishing its oil fields to then export at least 4m bpd and thereby boost its overall economy; which has been severely hampered by the embargoes imposed by the West.

[wardrv] 18/4/2016 08:32

As a long term investor in TLW the Doha failure to agree is just the best outcome. TLW have a hedge in place for a significant amount of this years production, they will survive the downturn in oil prices. The longer the oil price is low the more worldwide production will be knocked out and investment cut back and the greater the SnapBack in prices, this is the Saudi game and with TLW producing 100k bopd at $80 - $100 we won't be hovering around 200p. Holding oil at $40 for the rest of the year should do the trick.

[runwaypaul] 18/4/2016 06:45

US WILL DESTROY THIS TO 160/170.gl

[runwaypaul] 18/4/2016 06:34

RUN FOR THE HILLS

[puzzler2] 18/4/2016 05:26

The oil price this morning at $41.35 is better than I expected and no worse than just one week ago when the market was climbing - probably because an agreed production freeze at January levels would have made no practical difference anyway.

[dlku] 17/4/2016 23:40

should open up 20p and then get sold off

[kevjones2] 17/4/2016 23:14

Meh, I'll stick with Tullow. There'll most likely be a drop tomorrow but I'm looking at 2017/8. Long term investments often work.

[hearts1] 17/4/2016 22:30

I have cash ready, but will maybe wait a few days to see what happens.I'm still put off by the turret issue until they announce how they are going to deal with it and update production guidance for ROY.I might instead look at IAE if there's a fall. Was looking at LEK also, does anyone have opinion on it?Nigeria puts me off slightly!

[swerves1] 17/4/2016 21:56

We could be in for a tough day tmoro for oil stocks!