Tullow Oil Share Discussion Threads

[ifthecapfits] 06/12/2017 14:12

it's a volatile beast.

[ifthecapfits] 06/12/2017 14:12

Wonder what oil will do if Trump announces Jerusalem as the capital of Israel.

Usual fluctuations for TLW ID I would say.,

[investordave] 06/12/2017 14:04

Anyone care to speculate on why the share price is being hit so hard today? More shorting going on perhaps?

[xxnjr1] 06/12/2017 10:44

I wouldn't necessarily have expected an RNS for this mcsean2164. It will probably get a mention in the next Trading Update (10th Jan 2018). As a general rule I've found activity on the ground in the oil and gas space is inversely proportional to the number of RNS's a company issues!

[mcsean2164] 06/12/2017 10:06

xxnjr1,

Shouldn't such a massive change in ownership warrant an RNS? I wonder when they did it? Hopefully not when the were buying their future options! It seemed they went into full on panic mode in 2017, the only good thing about that was they panic'ed early when they issued the share capital and didn't wait until the bottom.

Can't understand how we are still below £2.00 with current poo.

[xxnjr1] 06/12/2017 00:10

Back to block C18 in Mauritania. Seems there have been some developments. Last time I looked at Tullow's License List, which was about 3 months ago, Tullow were shown as C18 operator with 90%. We knew Kosmos had subsequently farmed in for 15%. Now it appears Total and BP have done the same.



Total are now the operator, TLW are now down to 15%, with Kosmos, BP, SMHPM the other partners. It would be interesting to know what Tullow got (free carry etc) for the 75% given up. One issue I've had with Tullow, is that in recent years their farm in partners have tended to be small fry, which doesn't inspire confidence. At least with C18 they've landed some big fish.

Incidentally Total have also taken up C7, so thats gone now.

From the TLW license list, it seems Total have also farmed into Guyana Orinduik Block, via a deal with Eco.

[cbr60000] 05/12/2017 18:36

Nice one....all registered shorters reduce in the last wk, check out the link. Standings now a tad over 7%.Got to be good for general sentiment, right ?https://www.shorttracker.co.uk/company/GB0001500809/

[mcsean2164] 05/12/2017 12:26

Looks like a second test of the 200 ema

[xxnjr1] 05/12/2017 11:28

Thanks frazboy. delving deeper. Tullow used to operate C6, but relinquished the block and it's now operated by Kosmos. The prospect Kosmos are now drilling which straddles C12/C6 appears to be the 2012 vintage Sidewinder prospect Tullow were touting at that time.

Going back to the SMHPM blocks map. C7 appears to have no takers currently. But the 2 black dots just NE of the "1" in Fregate-1, are I presume Fregate-1 itself and another well, maybe Dana's Pelican gas discovery (you can ask EE about that!), or Cormoran-1 also operated by Dana

[frazboy] 05/12/2017 10:47

i am reading your posts xxnjr! for a man whose closest run-in with an oil company is a shell forecourt you're remarkably au fait with the business.

i'm still working my way through your posts, will respond with some unremarkable bits of info soon.

[xxnjr1] 05/12/2017 10:37

Hello me again. Have listed to Kosmos Q3 webcast again, starting at 56 mins in. And the tie-in well was Gharibi-1

The geophysical story in Lamantin we believe is different from Hippocampe and the reason we believe that is because we have a well about 19 kilometres away Gharibi-1. Which didn't quite get down to the Campanian primary objective, but it got into some sense several hundred meters above its horizon and so what we got is a calibration on the seismic velocities and the rock properties. That well was a dry hole, but it had hydrocarbon shows in it. And so, it's enabled us to calibrate geophysically the sands in a water bearing situation and then obviously compare that with the sands that we got in Lamantin-1 in the geophysical response of those and we see a clear difference.
So, unless we get a significant change in the geophysical parameters or the rock property parameters within that 20 kilometres we're much better calibrated than we were in Hippocampe.

So I'm puzzled Kosmos are not tying into Frégate-1, as TLW have relinquished C7.
Apologies for my miscellaneous ramblings on this subject ;-)

[ifthecapfits] 05/12/2017 08:03

Nice start to the day.

[xxnjr1] 05/12/2017 01:40

I had a nagging doubt about Gharabi-1 on Block C6 being the nearby well to calibrate Lamantin AVO. Why? Well I was kind of thinking if Gharabi-1 didn't get down to the horizons being targeted in Lamantin, then would Gharabi-1 really be so useful for calibrating AVO on the Lamantin prospect. So I had a look at Frégate‑;1, which was annotated on the SMHPM map and in the vicinity of Lamantin, and got a match from Tullow's 2013 Annual Report

The first well, Frégate-1, in the C-7 licence, was drilled to a depth of 5,426 metres and has encountered up to 30 metres of net gas-condensate and oil pay in multiple sands and the data will now be integrated with Tullow’s regional 3D seismic surveys. This wildcat well has achieved an important technical breakthrough by establishing a new oil play in deepwater Late Cretaceous turbidites. Whilst encouraging, further assessment and analysis will be required before follow up activities.

So I think this is the well Kosmos are tying their AVO into, and it's probably explains why Tullow went after C18, and Total went after C9.

[xxnjr1] 04/12/2017 23:12

I see XOM have taken 3 DW blocks offshore Mauritania

hxxp://news.exxonmobil.com/press-release/exxonmobil-acquires-exploration-acreage-three-mauritania-offshore-blocks

.....Blocks C22, C17 and C14 are located an average of 124 miles, or 200 kilometers, offshore Mauritania. Together they measure nearly 8.4 million acres in water depths ranging from 3,300 feet to 11,500 feet, or 1,000 meters to more than 3,500 meters. Following government approval of the contracts, ExxonMobil will begin exploration activities, including acquisition of seismic data and analysis.

I hope this SMHPM link works

hxxp://www.smhpm.mr/fr/index.php/component/content/article?id=53&=

C14 is outboard of the giant Tortue gas discovery by Kosmos/BP. So that makes sense.

And C17 & C22 are outboard of TLW's C18 Block (the one Kosmos just farmed into for 15%)

And then you've got Total to the south of C18.

Kosmos are now drilling an important well called Lamantin, in the north of C12, which is fairly close to C18. K's last well Hippocampe was a failure. The post well post mortem analysis indicated Kosmos had a false positive on the AVO, due to the absence of a nearby well to calibrate the AVO. So the AVO indicated Lithology, rather than the hydrocarbons K were anticipating. Kosmos say they shouldn't have the same AVO issue on Lamantin, as there's a nearby well (20kms) to help calibrate the AVO. Incidentally, that well was this one, operated by Petronas



Post that well Angus McCoss said something like; "Tullow lobbied the operator to drill a stratigraphic trap in the upper cretaceous, sourced from an underlying C-T section, but the operators priority was a large structural trap in a higher section". Lamantin seems to fit the generic description of what Tullow had wanted Petronas to drill. Definitely a well to watch.

So far, Tullow have spent a small fortune on Mauritania, with little success and some large write downs. Kosmos have spent a smaller fortune, but been very successful.

Post Kosmos farm in, C18 may well be one of Tullow's most interesting exploration blocks.
The other interesting block, for me, is Block 47 Suriname, which seems to be in a similar deep water slope setting, or base of slope, to XOM's large discoveries.

Alas, currently no plans divulged to drill either block. But bring it on please.

[frazboy] 04/12/2017 23:11

My mistake xxnjr, but hopefully the FID would be agreed soon after but could potentially drift.

[xxnjr1] 04/12/2017 20:21

Yes, I agree about the $65m - thanks to you both for clarifying that.
Where I differ slightly is that I'd expect $165m when the farm down itself gets signed off by Gov.UG The next milestone (FID) would trigger S50m, but that could be a 2H/18 event or later.

[frazboy] 04/12/2017 14:19

Sounds about right to me mariopeter, so i would expect $215m+ to be paid once the deal is signed.

[mariopeter] 04/12/2017 14:17

In the last trading update $65m of our 2017 capex budget (of $300m) is to be reimbursed in first half 2018. I presumed that to be on top of the $50m FID and it seems now the $100m signing fee as well. The quote:

"Forecast capital expenditure for the year has reduced to approximately $0.3 billion (net of accrual reversals) following a reduction of approximately $60 million made across the Group's East African assets. This Group forecast includes expenditure of approximately $65 million in Uganda which will be reimbursed once the farm-down completes next year."

[frazboy] 04/12/2017 14:01

xxnjr - yep, the question is when does that $700m carry start? This is from the January 2017 press release:

"A Sale and Purchase Agreement with an effective date of 1 January 2017 "

I figured that all costs, which are currently being incurred by Tullow, will be reimbursed once the farm down contract is finally signed. It could be that back costs prior to this date are also included but that's not my understanding.

[xxnjr1] 04/12/2017 13:45

From my notes on Uganda I have it as

"$100m on completion/ $50m FID/$50m 1stOil/$700m deferred* spend"

* deferred is my description, although the $700m could be a combination of back costs and CAPEX to 1st oil. I presume the deal was structured that way to reduce TLW's Ugandan CGT liability.

Hopefully the deal will complete in 1H 2018, but past history shows there has been huge political interference with the Lake Albert Oil Project from Uganda.gov, resulting in numerous missed deadlines.

[frazboy] 04/12/2017 12:30

The NS assets had a total decom provision of $264.6m end 2016 and $130.9m for Mauritania at end 2016. Production was due to have ceased in 2017 for Mauritania, so I'll presume $40m of decom costs for the next 3 years (?), and for the NS assets the abandonment is more spread out (some of it will have been done this year, the Thames valley assets (I think)) but most will be spread out over the next few years. Say $50m for the next 4 years for the NS (having taken 2017 into account?), so in total $90m for the next 3 years, dropping to $50m. All ballpark figures. I think this is include in Operating Expenditure, but would have to double check. It might all be a bit more compressed than that (completed in the next 24 months). Anyway, I've left Operating Expenditure estimates at $170m for the next couple of years, although this might be a little on the low side.

I'm not sure what you mean about "penalty cash" for Uganda - the deal payment has been delayed, and should be in 2018, as well as the FID payment. They'll also get paid the carry amount for 2017, and any expenditure for 2018 incurred up to the point the deal is signed in 2018, and of course, they shouldn't have to pay any further monies thereafter.

[mariopeter] 04/12/2017 11:30

Thanks Fraz amended the debt position in post 31119.

Will have a look at full year 2017 at those additional abandonment costs and tax. Had expected CMS to be finished in early 2017.

Noticed FID on Uganda has moved from end of 2017 to next year (should be a penalty cash release to Tullow) and have noted also deferred consideration is expected to be bigger than Capex so maybe a buffer there which we will likely not see until first oil in three/four years time .....when we don't need it.

Agree with you on Kenya but would want to see the cash (not have it tied up in the capex in 10 years time).

[frazboy] 02/12/2017 14:46

You need to correct your starting point, debt was $3600m on the 31st October... then cross reference your assumptions with the last set of accounts maybe? I think tax was around $80m, and operating costs (not operating expenses) were around $170m... on the topic of which I think those costs include abandonment exp for the CMS assets and Mauritania over the next few years, which will be quite a chunk of cash (Abandonment expenditure drops off after that)Anyway... that's how I ended up with around $400m for this year, and similar numbers for the next year or so (before exceptional income), but with good upside if we see higher oil prices (I seem to remember about $200m+ per five dollar increase in the OP, in terms of FCF)

[mariopeter] 02/12/2017 14:00

lonrho

Yes correct see below:

Fraz I have studied your post and find I did not allow for debt interest. I revised the figures above and repeated below. It is higher than 2017 due to reduced opex per barrel and the higher oil price on un-hedged barrels. Thanks for your input.

At $60 Brent we repay 600m debt plus spend $300m capex.
AT $70 Brent we repay 1000m (we drop the hedge) and spend $300m capex
AT $80 Brent we repay 1300m and spend $300m capex
Increases $300m with every $10 oil price increase

Debt $3600m at 31/10/2017 of which:

Convertible bonds $300m
Bonds $1300m
Bank debt $2000m

[xxnjr1] 02/12/2017 10:19

It would be great if Brent traded in the $60 to $70 range, as the extra cash thrown off would enable infill drilling to resume on the non-operated w.afr assets, boosting production, creating a virtuos circle.