Tullow Oil Share Discussion Threads

[xxnjr] 17/7/2019 11:32

Between a rock and a hard place.

Oil Market over supplied. OP down. Debt remains high. share price down.
Guyana Fail. share price down.
Guyana success = more debt.
Only way out is asset sales.

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Premier Oil reduced debt by $180m 1st Half 19
PMO now forecasting 2019 Year debt reduction range $300m to $350m

$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$

Last TLW trading update suggested 2018 1H net debt reduction only $60m as a rounded number. Odd that supposedly High Cost UKNS is outperforming supposedly low cost Ghana. Suggests TLW need to get the cost cutting axe out, aiming it at HQ.

[subsurface] 17/7/2019 09:29

Don,t,Worry Mcsean2164 Tullow investors are used to it. Its been like this for years!

[mcsean2164] 17/7/2019 08:27

There's a lot of talk of an oil glut next year. Given poo now and current sp, shareholders will be in a bad way next year if Guyana fails ....

[subsurface] 17/7/2019 01:14

If you listen to Gil from ECO his intention to create share holder value,Best decisions that create share holder value.




And what did Tullow once say, Tullow is for the long term ,we want to be the best at everything we do?.
Tullow management have to grasp that investors are here to make money!

[billy_buffin] 16/7/2019 17:49

here here!

[subsurface] 16/7/2019 15:37

We have 3 main areas of operation Ghana, Uganda and Kenya two are a big mess
I think if Tullow do well in Guyana then we can find a way out of Uganda and Kenya too
they will eventually become less important,
Uganda will be circa 20 years to first oil at this rate
We cannot keep two of these operations in the portfolio Tullow must learn, we have all had enough!
From January letter to IR

Dear Mr Perry,
To Introduce myself I am a long term investor in Tullow and have follow its fortunes daily for 18 years .Tullow being my main shareholding .
The last 5 years or so have been poor due to many factors,some of which are out of Tullow,s control and some which are not.
It would seem that Tullow tried to grow too fast in the good times The money they have written off over the years has been staggering as well as the debt mountain from the Ten project has brought the company down along with its reputation.
On Top of that the Sea drill /Kosmos spat and the failure to get Uganda farm down completed and miss the latest debt target, though granted they have made inroads. has brought me to write this letter,
I want to express my thoughts on the way ahead for Tullow.


Ghana has proved itself a good place to be another block would be great

Model 1

The FPSO situations 3 to 4 years to first Oil has proved very good. and away from community problems and security issues

Model 2

Guyana Exploration Let others do the spade work, De Risk example Exxon both in drilling and politics

If we look at Uganda, Kenya Peru ,Comoros Islands Zambia Unstable or land locked countries without infastructue or laws/regulations that need pipelines that cross borders.are draining the cash from Tullow and Tullows management energy.
Uganda is a prime example 12 years since first drill ,You know the rest how many to production ?

I would shrink the company sell out Uganda farm down Kenya or sell off and pay down the debt mountain we have good cash generation and a chance of a transformational change with the drill bit ,look at staff levels again from the very top to the bottom , may be run the company with a CEO and a Finance Director and stop paying out for under performance.
Bring back Aiden would be positive event. lets turn Tullow around.

In conclusion keep model 1 model 2 as a strategy Sell down /exit the long term problematic assets to pay down debt mountain, and reduce Operating costs.

Thanks,

[billy_buffin] 16/7/2019 15:07

Frustrated McDade

[subsurface] 16/7/2019 01:45

Ghana,Blocks


Kenya not looking good



On a different project jusu to give a insight in to trying to do anything in Uganda


Road carnage and damage to the infrastructure. that could be be the next thing in Kenya,and when is the first load going to be exported,?

Tullow is mired in problems!

[j0sekl] 15/7/2019 19:26

All we can ask for is that they are aligned with the company and the people. Probably the work of consultant advisors who thought everyone could get rich quick by jumping blindly in. Fortunately Tullow's portfolio can weather this and that existing production growth is visible.

[subsurface] 15/7/2019 01:18

The dividend may of been re instated to help Tullow Ghana prospects
From my letter to IR
Ghana, As part of our shared prosperity we listed on the Ghana Stock Exchange we doubled it in size The Ghana investor sees Tulllow Ghana doing very well, great production and cash flow. The problem is the investor has seen the share price go from 31Cedi to below 12 and they lost the dividend, Bit of a Mess!
And just to cap it all Ghana National pension scheme were invested If they still are I would imagine we will have a lot of unhappy people in a place that is our jewel in the crown.
So for me The Lesson is we need to think things through ,great when everything is going well ,But we need to be careful!.

Tullow also got a rough ride at one of the share holder meeting in Ghana!

[subsurface] 15/7/2019 01:02

Hi Billy ,my understanding from reading various african press reports, Ghana wanted Exxon on the deep water block ,but the quality of the data was not good enough,
so they dropped out.
I have since read that Exxon are to open an office in Ghana and shoot there own.

Given that ENI got Ghana into a take or pay situation with the gas which Ghana are having trouble keeping up with,v Tullow giving the gas free, It felt like a kick in the Teeth for Tullow when we did not get a block.



Was the debt was used as leverage? On the money side perhaps Tullow have invested enough in Ghana or free cash flow is under pressure given the Guyana situation and debt mountain.
I was thinking Tullow may farm in later.

[billy_buffin] 14/7/2019 15:29

Ghana Web re recent bid round. Ghana reluctant to hand out data.

'Asked whether the inability to access relevant data on time affected Tullow’s chances in Ghana’s just-ended first oil-blocks bidding round, the astute energy expert said: “It might have been so. We certainly, as Tullow, made our position known to government that it was difficult to share data. We wanted to share data with investors and we had real difficulties. That was unfortunate; there was no need for that. One has to hope that we can learn from this'

[subsurface] 12/7/2019 08:17

AN extract from my letter to Chris at Tullow IR In January
Debt Issue
I am not a finance man but when we built up the mountain I started to learn about it by asking the question on Google what is an appropriate level for a mid cap oil company?

hxxps://www.investopedia.com/ask/answers/060315/what-debt-equity-ratio-common-oil-and-gas.asp

Common debt-to-equity ratios for oil and gas companies
Learn about the trend of debt financing in the oil and gas industry since the financial crisis as expressed through the debt-to-equity (D/E) ratio.
www.investopedia.com
hxxps://www.gurufocus.com/term/deb2equity/TUWOY/Debt-to-Equity/Tullow-Oil-PLC

Tullow Oil PLC Debt-to-Equity (TUWOY)
Tullow Oil PLC has a Debt-to-Equity: 1.43 (TUWOY). Tullow Oil PLC Debt-to-Equity description, competitive comparison data, historical data and more.
www.gurufocus.com
My Question is when do we expect to get to an Industry norm given that we have dividend to pay ,drilling in Guyana and Ghana and hopefully a share in a new block in Ghana? to pay for

As of 2018, the range clusters within 0.5 and 0.9 with crude oil prices trading in a range between $50-70 per barrel.


In there presentations Tullow talk about gearing in line with operating range 1-2x times based on spending allocation,Maybe the American way

[gersemi] 12/7/2019 06:21

11 July 2019

A Bargain Stock to Play East African Oil

British-based but Africa-focused, Tullow Oil could come up a gusher.

Its shares (ticker: TLW.UK) have the potential to jump 40% or more in the next 12 months, analysts say. Investors, they argue, are giving Tullow little credit for its prospects in East Africa.

“We would argue that there is little value being assigned to East Africa in the stock price,” a Barclays report says. It contends the stock is worth £3.10 ($3.88), 44% over a recent price of £2.15. That valuation is based on its earnings per share growing more than sixfold, to £0.36 in 2021, versus £0.06 last year.

Analysts at Goldman Sachs are even more bullish. They see the stock rallying 57%, to £3.37, within the next 12 months.

Certainly compared with much larger rivals, Tullow looks cheap. It trades at a price-earnings ratio of eight times its earnings over the next 12 months, versus 17 and 20 for oil behemoths Chevron (CVX) and Exxon Mobil (XOM), respectively.

That discount for Tullow reflects, in part, uncertainty over the East African projects as well as the company’s small size. (Tullow produces the equivalent of 95,000 barrels of oil a day; Exxon produces the equivalent of 4 million barrels.)

Last month, Tullow’s chief executive expressed optimism over negotiations with the Kenyan government over developing a significant oil find in the South Lokichar Basin, which the company says contains up to 4 billion barrels of oil. Around 560 million barrels are recoverable, Tullow says.

“I am particularly pleased with the significant progress we have made in Kenya, and the agreement with the government over a number of key commercial principles will greatly assist us in driving the project” to a final investment decision, Tullow CEO Paul McDade said in a statement.

And despite a recent stall in Tullow’s talks with the Ugandan government, investors should be optimistic, analysts say. Barclays sees “the potential for a fresh approach/structure to the deal that can be acceptable to all stakeholders,” yet notes that the timing remains uncertain. If an agreement does move forward, the Ugandan project could produce 230,000 barrels of oil a day at its “plateau” output rate, according to Tullow.

The company is also commencing exploratory drilling off Guyana in South America, with likely results announced within a few weeks, which could be “key catalysts for the stock,” Goldman says.

With a £3 billion ($3.75 billion) market cap, Tullow calls itself “Africa’s leading independent oil company.” It also operates in Asia and South and Central America. Some of those businesses involve oil production; other parts are in preproduction development as well as exploration.

“The appeal of a smaller company is that a notable find has a much larger impact on a company’s fortunes, and in theory you can make a lot more money,” says Adam Johnson, a former oil trader and founder of the Bullseye Brief financial newsletter. Of course, that also works in reverse, he notes.

Indeed, there are risks with Tullow. The talks in Kenya and Uganda could fail, and the exploratory drilling off Guyana might not yield any commercial energy resources.

Debt also weighs on Tullow’s stock price. The company has a debt-to-equity ratio of 152%, versus 17% and 10% for Chevron and Exxon, respectively.

Still, given that little upside is being priced into the current stock price, Tullow may be worth a bet.

-

[subsurface] 12/7/2019 05:31

Tullow problems ,Uganda, Kenya ,Debt,Management failure,and Attitude sort them out to make Great progress.Must do better!as my teacher used to write.

[j0sekl] 11/7/2019 20:41

mcsean2164 11 Jul '19 - 13:51 - 34396 of 34400
0 0 0
It's not the debt so much as the debt to asset ratio.

If we find something in Guyana the debt could be a lot less important,
--------

Those days are gone for now. Everything is on a project basis. Are shareholders making a return on their investment. That means covering the debt in timely fashion because it's a race against finance costs. It was Baillie Gifford among others who said battery technology, efficiency, clean alternatives, composite materials, might possibly bankrupt fossil fuels within the next generation. That's a real bear case but there is some directional truth to it. Not definite but nobody can ignore the risk this is a blind spot.

Self-finance, working capital, these are important. nobody wants to be diluted even if the asset grows:
1) asset valuation is unstable,
2) governments can renege as we've seen
3) OIP is still a preliminary estimate
4) conservative oil prices are still just forecasts
5) plus there is operational complexity which prevents accurate production rates..

So top-line, margins, book value, capex, cash burn... All could make for a disastrous worst case scenario.

Pay down the debt, or some of it is a prudent option. Look at how many E&Ps went under and their assets taken out on the cheap.

[j0sekl] 11/7/2019 20:36

mcsean2164 11 Jul '19 - 13:51 - 34396 of 34400
0 0 0
It's not the debt so much as the debt to asset ratio.

If we find something in Guyana the debt could be a lot less important,
--------

Those days are gone for now. Everything is on a project basis. Are shareholders making a return on.their investment. That means covering the debt.

Self-finance, working capital, nobody wants to be diluted even if the asset grows. The asset valuation is unstable, governments can renege as we've seen, and the oil estimates are still just forecasts. Plus there is operational complexity which prevents accurate production rates..

Pay down the debt is a prudent option.

[alfiex] 11/7/2019 18:05

mcsean2164 it is very reactive to oil price and always struggles to go up but down quicker than a brides knickers. Lets hope Guyana does come good.

[mcsean2164] 11/7/2019 17:12

Alfiex,

Increased oil price would also help. That's why I'm here.

[jimarilo] 11/7/2019 16:10

Galp eyes Namibia probes

Portuguese oil company Galp is pushing ahead with environmental approval processes for wildcatting operations in two licences off Namibia where wells could be drilled in 2020 or 2021. Parties have been asked to submit comments on draft scoping reports — a precursor to environmental impact assessments — by 29 July for activities in Petroleum Exploration Licences (PELs) 82 and 83 in the Walvis basin. (83 is in Orange basin) A 3D seismic survey over PEL 82 was carried out



Looks like Galp don't want to be left out and want to take advantage of discounted rig rates and any discovery from wells being drilled all around them, this year

Galp/Exxon are in PEL82 Walvis basin adjoining PEL44 M&P/Azinam/Exxon.

They also operate PEL 82 in the Orange basin adjoining Shell/KosmosPEL39, newly acquired PEL90 by Tullow, Total PEL56 and to the north PEL87 PCL

[alfiex] 11/7/2019 16:01

So if Gyuana does not come in we are just staying in this price range, disappointing to say the least.

[mcsean2164] 11/7/2019 13:51

It's not the debt so much as the debt to asset ratio.

If we find something in Guyana the debt could be a lot less important, if not look at last years results, with current poo virtually nothing off the debt.

[alfiex] 11/7/2019 13:34

Anyone got any idea how long it will take to get rid of current debt?

[subsurface] 10/7/2019 06:22

hxxps://oilnow.gy/featured/hammerhead-opened-pathway-to-potential-10-billion-barrel-province/
glad we got the tail end!

[subsurface] 10/7/2019 05:57

Sorry for my poor spelling Morale