Tullow Oil Share Discussion Threads

[mcsean2164] 03/7/2019 08:56

I imagine they'd issue themselves a huge bonus and more options! 😂. I guess share price would rocket, maybe double?

[manicat] 02/7/2019 23:47

same thing but worth reading

[ifthecapfits] 02/7/2019 15:44

That is good news mani. But share price doesnt think so.

[mcsean2164] 02/7/2019 01:22

In an updated statement, Tullow oil said it now expects to see first oil three years after FID. The firm had said it would reach FID by the end of this year.

Hmmm... I really hope Guyana works out! Could we sell the 50%?

[manicat] 01/7/2019 21:22

some good news at last from kenya

[romeike] 01/7/2019 16:42

The YTD gain in oil vs tlw has widened so a possibility of tlw gapping up has increased. Keeping my expectations low though while oil remains capped at 60 by world events.

[ifthecapfits] 01/7/2019 08:09

About ECO, but relevant to us too.

Explorers don't get any more exciting than Eco Atlantic - which is why I have been buying
By Gary Newman | Sunday 30 June 2019

30
Shares


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Private investors seem to love the boom or bust scenario that applies to many of the exploration drills for oil and gas, but is it really worth taking the risk on these types of plays?
In the majority of cases I would say not and I tend to avoid them these days – gone are the times where every drill used to see big share price rises for the companies involved, as a matter of course – as in the event of failure the share price tends to crash badly.
Generally the odds are not in your favour as many of these drills have a low chance-of-success, are in regions with little or no existing infrastructure to bring any discovery to market for years, and when smaller companies are involved, often they will only have the funds for one drill, so it is really all or nothing for them.
The upside is often the chance of making a large discovery which could be worth many multiples of the current share price.
One company which I seem to be seeing mentioned a lot recently is Eco Atlantic (ECO) which is about to embark on its first drill in offshore Guyana, where it has a 15% working interest and is partnered by operator Tullow Oil (TLW) with 60%, and Total with the remaining 25%.
It’s Orinduik block has best estimate prospective resources of nearly 600mmboe net to Eco and it is about to embark on two consectuive drills at its Jethro Lobe and Joe prospects, with the former exploring a cretaceous target, as well as the upper and lower tertiary turbidites.
But what makes these drills any different to any of the others, as others companies have also been in a position where they are targeting resources of this sort of size.
Geographical location is never any guarantee of success just because you happen to be located near to large existing finds, but in this case I would argue that it plays a bigger factor than normal as it is right on the edge of the area where ExxonMobil has already had great success and has discovered over 5.5 billion barrels of oil so far across the Stabroek area, with its Hammerhead block extending into Orinduik, and Eco’s block also being up-dip of these discoveries. Hammerhead found 197ft of oil bearing sandstones.
Exxon has already sanctioned the development of the Liza prospect, which is expected to produce up to 220,000bopd, and is embarking on a 30 well programme. It’s rig is currently testing the Longtail-1 discovery, with results due soon – if they are good and land during the Jethro drill it certainly won’t do any harm - and will then move on to drill Hammerhead-3.
Exxon has so far achieved a successful strike ratio in excess of 90%, and although that doesn’t guarantee that Eco will also be successful, it certainly bodes well and is why the Eco wells have a COS in excess of 40% for each well, which is about as good as it gets for an exploration drill.
Eco isn’t totally reliant on one drill either, as it is funded for these initial two wells plus up to a further six additional wells, so that certainly reduces the risk of a complete share price crash should the first drill prove to be a failure.
With everything else going on in the area, I would expect that in the event of success we would see a rapid move towards a situation where any finds are put into production, and the economics for the area are good – the neighbouring Liza field is expected to produce at $35/barrel for phase 1, dropping to $25 per barrel for phase 2, which makes it ones of the lowest cost major offshore developments in the world.

Given the size of its partners, funding shouldn’t be a problem for any development, and I would expect a deal to be done to help Eco to finance its share, should that stage be reached.
There is of course still plenty of risk involved and if the first drill fails I would expect to see the share price below the current level of around 70p, but also think it would quickly find some report with the second drill straight afterwards.
You could also argue that the company isn’t particularly cheap at £127 million market cap, given it is purely an explorer, but the amount of interest generated should it make a big find – and with likely a steady stream of further news to come – will make that look cheap, I believe (similar questions were always raised about the valuation of another favourite of mine, Hurricane Energy, but now that is producing and valued at nearly £1.05 billion).
So, if ever you are going to take a bit of a gamble on shares in an exploration drill, then I believe that this is the one to buy in for – I have done myself and it will be the first exploration drill for a small company that I’ve held shares in for a long time, as usually I don’t see the risk as being worthwhile.
It also seems like a good level to buy at as the share price has dropped back a fair bit recently and is well below the level that funds were last raised at a few months back. It would seem that the Canadians would agree, as the shares are dual listed on the TSX and are currently trading there at the equivalent of 86p, and it is unusual to see such a big discrepancy between that and the London price.
If this drill attracts the level of interest that I am expecting, then there may well be the chance to derisk some of your holding before results come, but this is one where I will be leaving at the very least part of my investment to run and see how things pan out several drills down the line.
For an exploration drill, I would rate this as about as strong a buy as you really get for that scenario, and if it is successful I can see a lot of upside from the current share price, just based on the first drill alone.

[manicat] 27/6/2019 09:39

Tullow seem to be using its debt as a poison pill to stay independent and Uganda is turning out to be a drag on the company. Guyana could change this company soon imo

[sarkasm] 27/6/2019 08:00

Investomania



4 attractive resources stocks? BP plc, Glencore PLC, Tullow Oil plc and Premier Oil PLC
Do these resources stocks offer growth potential? BP plc (LON:BP) (BP.L), Glencore PLC (LON:GLEN) (GLEN.L), Tullow Oil plc (LON:TLW) (TLW.L) and Premier Oil PLC (LON:PMO) (PMO.L)
June 27, 2019 Robert Stephens, CFA FTSE 100




BP plc
BP plc

The outlook for resources shares BP plc (LON:BP) (BP.L), Glencore PLC (LON:GLEN) (GLEN.L), Tullow Oil plc (LON:TLW) (TLW.L) and Premier Oil PLC (LON:PMO) (PMO.L) may be somewhat uncertain at the moment in my view.

Challenges facing the world economy, notably the trade war between the US and China, could cause demand for a variety of commodities to come under pressure.

Still, I think the BP share price offers investment appeal for the long term. The business has adopted a strategy which I think could improve the quality of its asset base, with investment in Upstream and Downstream segments having the potential to catalyse growth over the long run.

Although BP’s short-term prospects could be volatile due to geopolitical risks across a variety of oil-producing nations, I feel its long-term appeal could be high relative to its sector peers while it trades on a P/E ratio of under 12.

Tullow Oil’s update released this week showed that it is making progress in delivering its strategy. The company is seeking to increase production, while also reducing debt in order to strengthen its balance sheet.

Since the Tullow Oil share price currently trades on a P/E ratio of around 10, I think it could offer a margin of safety at the moment. With further investment in its exploration activities, I believe it could enjoy improved performance over the long run.

Premier Oil may also offer good value for money at the moment. The oil stock has a rating of around 4, which is among the lowest I can find in the FTSE 350 just now. This suggests that investors are cautious about its future outlook.

This is understandable in my opinion, with Premier Oil lacking the financial strength of some of its sector peers. But with the business expected to reduce debt and keep a disciplined stance on costs, I think it could beat many of its industry peers’ returns in the long run.

Glencore’s regulatory challenges may hold back its stock price over the near term, while macroeconomic fears may cause investor sentiment to further weaken.

However, with the stock having a P/E ratio of around 7, I think it could offer good value for money. Glencore’s focus on ramping-up production of materials used in electric vehicle batteries could lead to a tailwind over the long run.

[alfiex] 26/6/2019 13:14

Uganda has been problematic for years, needs to go. Banking on Gyuana as it seems the only hope of salvation.

[mccracken227] 26/6/2019 13:06

It seems debt not being reduced by any significant amount is the reason for poor share price, I have very little faith in management, they need to get a grip.

[mariopeter] 26/6/2019 12:58

Yes Xx struggling to make headway on eating debt. Well spotted on the 6 monthly fcf seasonality which does not exist and for noticing the star in the non-operated portfolio.

Would be great to exit from Uganda. They are owed the guts of $1b from the last farm down in Uganda. Uganda is eating up far too much capital and their government seems intent on dragging their feet and squeezing the throat of the golden goose. Relations between Tullow and the government are likely broken now that Tullow want out and have published the fact. The government will want them to sell to a new entrant and not to an existing partner.

Hope the drill bit is a success in Guyana as the capex is eating up a little too much fcf at the moment. Debt is still too high at $3b and you are right XX the historic parameters have been set badly for current production.

[xxnjr] 26/6/2019 12:09

So, according to the trading update
[my comments in bold]

.....In respect of the first half of 2019, Tullow expects to report revenue of around $900 million and gross profit of around $500 million. "Underlying free cash flow (before the 2018 final dividend payment) is forecast to be around $100 million for the first half of the year"
Or only $32m following $68 million dividend payment paid in May!!!

and around $450 million for the full year. "This figure is expected to increase to around $650 million following completion of the Uganda farm-down."
If it happens/said the same thing last year.....

As previously disclosed, Tullow expects its revenue and free cash flow to be heavily weighted to the second half of the year due "to the Group’s liftings schedule"
basically their current view of Ghana production forecast which may/may not be over optimistic.....

"and the phasing of both tax payments and rebates."
Although last year:-

2018 1H FCF $401m --- 2018Y FCF $411m
Therefore 2nd half 2018 FCF was only $10m
Not much evidence of timing effects there!

"Net debt is expected to be around $3.0 billion at 30 June 2019"
Net Debt was $3082m end 1st Half 2018, and $3060m end 2018 Year!!!.

It's a complete mystery how a company, that has in Jubilee one of the lowest breakeven developments on the planet, have got themselves into such a mess.

[mariopeter] 26/6/2019 11:45

Yes FCF is weak. Capex is vast at nearly $600m. Hope the returns are there in Guyana. Any prospect of capex falling next year I wonder. Full year fcf better at $450m mind you if it materialises.

[xxnjr] 26/6/2019 10:28

Strange, but apparently so,

working interest numbers
[eee for formatting]

2017
Jubileee 31,800 bopd
Insurance 7,400 bopd
===========================
Total 39,200 bopd
===========================

2018
Jubileee 27,700 bopd
Insurance 8,600 bopd
===========================
Total 36,300 bopd
===========================

2019 Full Year Forecast
Jubileee 33,700 bopd
Insurance 1,300 bopd
===========================
Total 35,000 bopd
===========================

[xxnjr] 26/6/2019 09:12

The star of the production show is non-operated Gabon.

Gabon 2018 FY 12,100 bopd
Gabon 2019 1H* 17,000 bopd
Gabon 2019 FY* 17,000 bopd
* forecast

+4,900 bopd
+40%

Had it not been for Gabon, the numbers would have been worse.

To be honest, I'd prefer if Total were the operator in Ghana.

Maybe that will happen post their acquisition of OXY's ex-Anadarko AFR assets?

[mccracken227] 26/6/2019 07:43

Always jam tomorrow for Tullow, but tomorrow never comes, hence the share price stuck in this rut.

[frazboy] 26/6/2019 07:24

Disappointing FCF. Even allowing for the fact it’s second half weighted,
why on earth did they reintroduce dividends? It reads like they want out of Uganda completely

[tas11osc] 26/6/2019 05:59

Kenya Signs Deal With Oil Firms To Build Crude Facility

[alfiex] 25/6/2019 21:53

Thanks frazboy, heads scrambled a bit now! But not a major disaster for Uganda. Poo up a chunk now so hope for a good update fingers crossed.

[frazboy] 25/6/2019 20:40

I would err on the side of caution and say 50% of the value of the farmout which I think was for $950m for Uganda. Call it $200m for Kenya (probably generous). And then take eco's market valuation for it's 15% stake in offshore Guyana (say 2/3rds of its market cap is attributable to Guyana - probably more) and multiply by 4 to get the value of Tullow's 60% stake, and then you have Ghana (for which Kosmos provide a proxy valuation for Tullow's assets in their YE valuations of Jubilee and TEN (somewhere between $4 and $5 billion dollars, to Tullow, I think) and then you have the other WA producing assets ($500m+?) and the remaining exploration assets (zero?).So, Uganda is the obvious source of short term disappointment, or, perhaps disappointments at the producing Ghanaian assets but i have my fingures crossed for those

[alfiex] 25/6/2019 19:46

Hope your right frazboy, Uganda been a real drain and Kenya not far behind. Any idea what is in the share price for Uganda?

[frazboy] 25/6/2019 18:39

Nah. More a macro bet/vehicle to ride any OP weakness - they’ve already built their economic model (the basis of their last shorting campaign), they just need the OP to do its thing, and watch Tullow’s shares drop - if there’s something tullow specific that I would be worried about it’s Uganda, and the possibility that Total pull out of the farm out - that could be a definite company specific downside. Just my tuppence worth