Tullow Oil Share Discussion Threads

[yeah man] 03/6/2016 08:13

doubling UP ?

[nicebut] 03/6/2016 07:26

4m trade there.... Someone doubling down?

[yeah man] 03/6/2016 07:19

The only way is up for crude claims Opec as it declares the worst is finally over following decision not to cap output

Saudi energy minister Khalid Al-Falih said ‘the worst is clearly behind us’, while Iraq’s deputy oil minister Fayadh al-Nema predicted prices could reach as much as $65 in the coming months.


Read more:

[investordave] 02/6/2016 17:12

How very clever of you; and your motive for posting along these lines is what? Congratulations for making it to my ignore list. Needless to say, I won't miss your inane, biased ramblings.

[wexboy] 02/6/2016 16:41

2016 – The Great Irish Share Valuation Project (Part II):

Company: Tullow Oil (TLW:LN)

Last TGISVP Post: Here

Market Cap: GBP 2,173 M

Price: GBP 238.2p

Tullow’s probably one of my biggest & most ambitious TGISVP calls to date. Back in 2012, at 1,543p per share (close to its peak), I predicted a near-80% decline with a fair value of 339p. Just imagine the howls of outrage from TLW shareholders at the time…of course, the irony today is that I was being overly-generous! But this wasn’t some prescient bet on an oil price collapse – despite being one of the few resource stocks deserving of a P/S & P/E multiple at the time, I couldn’t ignore the mathematical logic of the long-term discounted value of its proved-up assets in-the-ground vs. its net debt burden (which was actually much lighter then). But as happens so often with over-valued stocks, price & valuation don’t necessarily converge – negative trigger(s) may be required. In the end, the oil price collapse was the obvious trigger here, but production issues with the Jubilee Field & a Ugandan tax battle were also reminders of the operating, financial & political risks facing an increasingly African-focused company.

TLW management’s done its best to respond to collapsing revenue & earnings – by re-focusing capex on W Africa, slashing costs & head-count, eliminating a major portion of the exploration budget, and getting rid of the dividend. And fortunately, debt service is technically not an issue – the company’s continued to generate a healthy $1.4 billion pa of operating cash (on average in the last two years) vs. an average $0.2 billion pa in finance costs paid. The real problem (& perhaps opportunity?!) is actually the TEN Field – perhaps fearing a worse alternative, Tullow & its lenders opted for an all or nothing bet on TEN’s development. Which means TLW’s actually averaged $(1.0) billion FCF pa & net debt’s doubled to $4.5 billion (as of end-April) in the last couple of years, with nothing tangible to show for it yet…production & reserves are down in the last five years, production costs are up, and everything’s now pinned on timely (so far, so good) & successful TEN production.

An asset-based valuation is the only one that makes sense here now. My standard in-the-ground valuation of a barrel of oil equivalent (based on market and M&A multiples) was $10 per proved boe, with a 50% discount for probable boe, and occasionally I’ll include contingent resources at a 75% discount. Obviously, such a valuation must necessarily discount long-term price, geological, operating, political, tax, etc. risks over a life of years & even decades. As a rule of thumb, it tends to approximate 10% of the average spot price. Post-oil price collapse, this 10% rule doesn’t make sense…I think it’s prudent to adopt an $8 per proved boe valuation & to discount in similar fashion. Tullow now has 322 million boe of proved & probable reserves (see p. 170), which we’ll value at $6 per boe (assuming a 50:50 split). It also makes sense to include its 975 million boe of contingent resources at $2 per boe. Of course, we must adjust for the company’s latest net debt figure, and it’s only fair to include net derivatives of $0.6 billion (representing profitable oil hedges):

(322 M boe Proved & Probable * $8 * 75% + 975 M boe Contingent * $8 * 25% – USD 4.5 B Net Debt + 0.6 B Net Derivatives) / 1.4623 GBP/USD / 912 M Shares = GBP 0.2p

Yeah…

You read it right: I reckon Tullow’s essentially worthless at this point. Now, let the foaming of the mouths re-commence… If it’s any consolation, this absurdly precise price target is purely academic. Because, as with most (potentially) distressed companies, there’s a completely binary outcome to handicap here. Clearly, the profit (& more importantly, the cash flow) on a TEN boe that’s actually produced & sold this year should be worth far more than my discounted in-the-ground/under-the-seabed valuation. So maybe TEN starts up on time without a hitch, maybe production hits 100 K bopd net next year, maybe the oil price doubles, maybe Tullow can slowly dig itself out of this hole… But who knows, the oil price may take another sub-$30 dive, TEN may suddenly hit a disastrous production (or political) issue, the lenders may finally lose patience and/or force a horrifically dilutive equity raise on Tullow, short-sellers become more aggressive, whatever… Time will tell, but my price target stands right now.

Price Target: GBP 0.2p

Upside/(Downside): (100)%

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For related links/graphs/files, and more TGISVP analyses/price targets: Google the Wexboy investment blog.

[bakedbean57] 02/6/2016 13:54

My hindsight one says get out...

[amaretto1] 02/6/2016 13:27

Whats the chart saying ??

[bakedbean57] 02/6/2016 13:06

5 million shares in 1 hour this morning then very flat... What's the story morning glory?

[jovi1] 01/6/2016 11:55

for me time to top up again
Opec will not do anything and what they saying need to be taken with a pinch of salt maybe two, they all trying to increase as much as possible anyway.
the economy will be the main reason for POO movement with dollar second reason.
my forecast is TLW 290 by October and IAE 74

[hearts1] 31/5/2016 21:09

Waiting till after OPEC meet to do anything, Brent may be volatile.

[chickenrun1] 31/5/2016 13:40

Added more to my long term holding today.

$55 looks a reasonable target for Brent Crude.

[investordave] 31/5/2016 13:28

Scumbag shorters maybe?

[bakedbean57] 31/5/2016 12:51

Eroded here 10-15% in a couple of weeks with oil relative

[investordave] 31/5/2016 11:33

Why are all of the oil companies doing so badly today when the POO has barely moved?

[cricklewood] 28/5/2016 11:33

Leoneobull
28 May'16 - 08:19 - 27074 of 27074 0 0




Anyone else take nyboy 's advice? Glad I didn't

[leoneobull] 28/5/2016 08:19

https://www.fool.co.uk/investing/2016/05/27/50-oil-winners-and-losers-premier-oil-plc-is-up-385-against-just-11-at-bp-plc/Anyone else take nyboy 's advice? Glad I didn't

[cricklewood] 28/5/2016 08:14

WTF, are ye sprawling about the poo is back over $50.

[bakedbean57] 27/5/2016 16:18

Lack of volume and interest killing momentum here as well.

[trader365] 27/5/2016 15:47

bakedbean my time frame is slightly longer than 10 minutes. I'm both long TLW since 180p and short brent crude from 50.15

Oil down today but my EXI up 4.7% go figure

My point being that people read BB's to gain info as to what happening in a company. People can see the oil price for themselves, constant posting every tick in the oil price clogs up the board.

[bakedbean57] 27/5/2016 09:43

Trader 365 it can move in a relative ratio to oil... Not an exact 1:1... And yes other fundamentals come into play but at the moment it's sync to oil price indices note drop last 10minutes on oil then TlW etc. Appreciate over long term it will be a greater ratio but for now you have to be Naive not to think this isn't linked to POO

[nicebut] 27/5/2016 07:07

Lansdowne have increased their short again to 2.71%. Explains the drop in one respect.