Tullow Oil Share Discussion Threads

[mariopeter] 05/7/2018 09:53

Tick tock will there be an oil shock?

[bootycall] 05/7/2018 09:39

Barclays latest commodity price upgrade-moving Brent to $80/bbl (from $70/bbl 2019 & $65 for 2020)...upgrades European E&P sector view to positive from neutral. Tullow moved from equalweight to overweight.

[ifthecapfits] 05/7/2018 09:06

Iran talk perhaps. Non-ME oil would I guess do well in the event the Hormuz straight was closed - as has been threatened.

[thakars] 05/7/2018 08:55

did i miss something? share price up?

[aishah] 05/7/2018 08:37

Barclays Capital Upgrades - OVERWEIGHT, tp raised to 285p from 190p

[subsurface] 05/7/2018 07:21

hxxps://www.sec.gov/Archives/edgar/data/1509991/000104746911001716/a2201620zex-10_4.htm

Joint operating agreement

Section 4.2 Was the operating committee informed ? Kosmos are not the operators but they had a right under number 10 to discuss with the government drilling restrictions

SS

[mccracken227] 04/7/2018 22:52

rationaleee, taken from trading update last week.In October 2016, Seadrill Ghana Operations Limited filed claims in the Commercial Court in London against Tullow Ghana Limited (TGL) seeking a declaration that TGL was not entitled to terminate the West Leo rig contract for force majeure. Seadrill is seeking payment of $277 million from TGL, before interest and costs. The case was heard by The Hon. Mr. Justice Teare in May 2018 and the judgment is expected to be handed down shortly. If Seadrill is successful in its claims, Tullow expects that any resulting liabilities will be shared amongst the TEN joint venture partners and Tullow's estimated share has been recognised in a provision.Separately, Kosmos Energy is disputing, through an arbitration against TGL before the International Chamber of Commerce, its share of liability (c. 20%) of costs related to the use of the West Leo rig beyond 1 October 2016. This arbitration hearing took place in January 2018 and the tribunal's decision is also expected shortly. In the event that TGL is unsuccessful in defending the Commercial Court claims by Seadrill, the arbitration decision will determine whether Kosmos is liable for its share of the amounts payable to Seadrill.

[rationaleee] 04/7/2018 20:56

To get a view about TLW from Kenyans search Tullow Oil on Twitter in the Latest tab, and you will see how Kenyans view TLWs investment in their country.

On a seperate note, I did not find the word 'Seadrill' mentioned in TLWs annual results or the annual report? Surprised it was not mentioned at all, anywhere...

[bootycall] 04/7/2018 11:18

rationaleee The Kenyan protests are staged for the cameras. If you google you will find similar protests 12 months ago. Not much going on in Turkana. Many of the locals happy to hustle the Company for employment. Tullow could easily oblige the local population at very little cost to the project economics... once the politicians have divided their slice of the revenues attributable to the state! Whilst Kenya has security issues they are much better partner than the Ugandans who have put numerous obstacles in their way. Museveni tried to force the oil companies to build a large refinery and agree to large capital gains taxes etc.,Although Kenya discovered oil 6 years after Uganda they are closer to realising production.

[mariopeter] 03/7/2018 19:15

KOS saved on the rig cost too so need to cough up .

Good post Bootycall except for your year end projection of net debt. I expect net debt at year end to be $2.6b. Take off a further 200m if Uganda comes in but add more debt for cash out on the legal stuff. Free cash-flow in half one was seriously weighed down by accelerated cap-ex. My projection assumes 90000 boepd for the year and $75 Brent.

Of the $2.6b net debt $1.75b of that is properly structured bonds.


So heading into comfort zone fast.

[rationaleee] 03/7/2018 18:58

The tone in the TU was pretty clear. TLW expected to loose or else they would have mentioned something along the lines of defending vigorously.

"These fees amount to approximately $254 million. Tullow expects to be required to pay these fees within the next 14 days with Tullow being liable for a net amount of approximately $140 million, which compares with the provision of $128 million made in the 2017 Annual Report and Accounts."

They pretty much expected it and had already provisioned for in 2017 report. Possibly KOS could win too, on the back of todays result which essentially says TLW acted on its own on the rig decision, so why should KOS pay its share. Its a shame, another hit on debt reduction.

Plus there is Kenya protests clouding investment certainty imo. Would have preferred if we retained Uganda and gotten rid of Kenya assets. Hoping TLW management knows their core regions.

[bootycall] 03/7/2018 18:35

Up until now, Tullow has a pretty good record with legal spats, as Heritage know to their cost. Graham Martin, Commercial director at Tullow Oil until Jan 2016, was previously at energy law firm Vincent & Elkins and was extremely competent.
Tullow's approach to paying high rig rates was that they would get full cost recovery early in the project so it was a price worth paying....plus the fact they had no other option. In common with all other E&P's they had to apply emergency cash management when the oil price collapsed. The Government of the Ivory Coast tried to make an opportunist claim to the Ten field which was given short shrift by the Court. It is they who are responsible for the legal ruling forcing Tullow to cease drilling. Now many of us may feel a little frustrated with Tullow, but I agree with xxnjr1, Tullow had little option at the time than to claim force majeure. I am surprised the quantum of the award is quite so big ,but this may be reflective of the fact that alternative work for the rig was not easily available because of the state of the oil market.
Tullow will now be able to fulfil its Jubilee and Ten work programme paying a considerably lower rig rate of $200,000 per day for the Maersk Venturer for the next 4 years...and achieving much higher prices for production than would have been achieved had it stuck to the original schedule.
Now we know the outcome, lets hope that some of these costs can be legitimately added against cost recovery for the Ten field. If the tribunal in Ghana, due to announce their verdict imminently, finds in favour of Tullow and against Kosmos, then some of the payout might be able to be recovered in due course. Kosmos will now have 24 hours to stump up its share of the cash or lose its continued participation in the block.
The CFO of Tullow was quoted in the last week or so saying that Tullow should have debt of $3bn at the end of the financial year. As the Company had provisioned $128m against the claim in its cash flow and p&l...we should expect the debt level to increase to $3,012m. I am not jumping out the window just yet !

[xxnjr1] 03/7/2018 17:44

Agree with that frazboy. Seadrill drove a hard bargain in a tight rig market. TLW were paying over $600K/day on a 3 yr contract. The oil price collapsed unexpectedly, leaving Tullow et al over exposed. Throw ITLOS into the mix and you have a perfect storm. Exactly what was agreed at that time between TLW/APC/KOS remains to be seen. The judgement summary should become available online. It will make interesting reading.

[frazboy] 03/7/2018 17:32

GentsI'm guessing a bit here, but I would imagine that they expected to lose the case - they could not afford to keep the rig on at that time, so they chanced it. Tullow were on the brink a couple of years ago.Disappointing nonetheless

[parminder1969] 03/7/2018 17:28

You’re absolutely right- it’s a typical politician’s answer. Heads buried in the sand. With today’s price of oil, the shares should be touching £4.

[mcsean2164] 03/7/2018 17:22

Tullow is disappointed with the decision and maintains the view that it was right to terminate the West Leo contract for force majeure.

Really disappointing statement. They are completely delusional, they need to look within their organisation and try and understand how they lost $300million

Sickening idiots!

[fraserdean] 03/7/2018 15:41

They said it in mid-March 17

[xxnjr1] 03/7/2018 15:10

Is that from one of their filings, or from ICC documents?
(had a quick look on ICC but couldn't find anything)

[fraserdean] 03/7/2018 15:00

Kosmos are going for $49m

[alfiex] 03/7/2018 14:34

Chances are we will lose reading previous posts. The good news never stops coming lol

[xxnjr1] 03/7/2018 14:23

Andrew Inglis (CEO) and Brian Maxstead (Exploration) are Brits, but legal and finance at KOS are firmly in US hands. Not to mentention their US private equity backers.

[xxnjr1] 03/7/2018 14:17

looking at p121 of KOS 2017 10K they appear to be disputing
$11.3m charged in 2016
$4.96m charged in 2017

"....The disputed charges and related costs are expenditures arising from Tullow Ghana Limited’s contract with Seadrill for use of the West Leo drilling rig once partner-approved 2016 work program objectives were concluded. Tullow has charged such expenditures to the Deepwater Tano (“DT”) joint account. Kosmos disputes that these expenditures are chargeable to the DT joint account on the basis that the Seadrill West Leo drilling rig contract was not approved by the DT operating committee pursuant to the DT Joint Operating Agreement."

[nicebut] 03/7/2018 14:11

So KOS are only partners when they want to be..

Sounds like someone at TLW, not dotting the I`s and crossing the Ts

You can bet your life KOS would be up in arms if the drills had gone ahead successfully and then TLW said sorry you`re not involved :XX

`on the basis that the Seadrill West Leo drilling rig contract was not approved by the DT operating committee pursuant to the DT Joint Operating Agreement.`

[xxnjr1] 03/7/2018 14:08

Taken from a recent KOS filing:-

In June 2016, Kosmos Energy Ghana HC filed a Request for Arbitration with the International Chamber of Commerce against Tullow Ghana Limited in connection with a dispute arising under the DT Joint Operating Agreement. At dispute is Kosmos Energy Ghana HC’s responsibility for expenditures arising from Tullow Ghana Limited’s contract with Seadrill for use of the West Leo drilling rig once partner-approved 2016 work program objectives were concluded. Tullow has charged such expenditures to the DT joint account. Kosmos disputes that these expenditures are chargeable to the DT joint account on the basis that the Seadrill West Leo drilling rig contract was not approved by the DT operating committee pursuant to the DT Joint Operating Agreement.