Tullow Oil Share Discussion Threads

[anslow] 03/4/2020 09:17

Next leg up coming

[tidy 2] 03/4/2020 09:15

Keep in mind MM games. I was offered 16.685 to sell a bit earlier.

[grupo] 03/4/2020 09:15

RNS Number : 6582I

Tullow Oil PLC

03 April 2020

News Release

Tullow Oil Business Update

RBL redetermination confirms debt capacity of $1.9 billion and headroom of c.$700 million

Further cost savings identified

3 April 2020 - Tullow Oil plc (Tullow) provides this update following the successful completion of its RBL redetermination and identification of further cost savings as the company continues to adapt to the challenging external environment.

Les Wood, Chief Financial Officer, commented today:

"Securing the ongoing support of our RBL lending banks and confirming our debt capacity has been important given the current challenging environment. Today's positive news verifies the strength of our producing assets and robust hedging strategy which underpin the RBL and, combined with the further cost savings we have identified, confirms the strength of our liquidity in the medium-term. Nevertheless, strengthening the balance sheet continues to be a key priority with the Group seeking to raise proceeds in excess of $1 billion through portfolio management.

"Elsewhere in the business, Tullow is responding well to the challenges presented by the Coronavirus pandemic with strong controls and processes in place to allow the business to operate as close to normal as possible in spite of these difficult times."

Reserves Based Lending (RBL) facility

Tullow is pleased to confirm that it has completed the bi-annual redetermination of its RBL credit facility with

$1.9 billion of debt capacity approved by the lending syndicate. As a result, the Group has c.$700 million liquidity headroom of undrawn facilities and free cash at the start of the second quarter of the year. This level of headroom is deemed appropriate by the Board considering Tullow's much reduced future capital commitments.

Tullow has voluntarily reduced facility commitments from $2.4 billion to c.$2.2 billion, effectively accelerating the first scheduled commitment amortisation from October 2020. The reduction in debt capacity and commitments will result in a reduction of finance costs. The next scheduled amortisation of $211 million (commitment reduction, not repayment) will therefore be in April 2021. This amortisation schedule continues every six months until final maturity in 2024. The next contractual maturity in Tullow's capital structure is the $300 million Convertible Bond in July 2021.

Cost savings

As previously announced, Tullow took actions to reduce its planned capital expenditure (capex) for 2020 by c.30% year-on-year. Following another review of planned activity, the business has identified further savings and is now targeting capex of c.$300 million in 2020 (down from c.$350 million) and decommissioning expenditure of c.$65 million (down from c.$100 million).

Savings have been identified primarily through the deferral of activities across the portfolio and through savings that can be realised by ongoing farm-down activities. In Ghana, for example, savings will be made through the early termination of the Maersk Venturer rig and the deferral of some well activity, combined with the removal of any non-critical work that does not focus on safety and asset reliability.

While focus has been on further capex reductions, Tullow continues to invest in projects yielding good returns and the Board has agreed to progress the next phase of the Simba development in Gabon which will pay back before the end of 2021 at $30/bbl.

The Group's underlying operating costs remain less than $12/bbl, with Ghana operating costs at c.$9/bbl. With the benefit of the Group's hedging policy and production remaining on track within the Group's 70-80 kbopd guidance range, this results in a free cash flow breakeven oil price of c.$35/bbl for the rest of the year.

Hedging

As outlined at Tullow's Full Year Results, the impact of reduced oil prices is mitigated by the Group's robust hedging strategy. Tullow has 60% of its 2020 sales revenue hedged with a floor of c.$57/bbl and 40% of 2021 sales revenue hedged with a floor of c.$53/bbl. Tullow's realised oil price in January and February 2020 was c.$62/bbl and following the recent price drop, hedging receipts of c.$30 million are forecast for March 2020.

COVID-19 (Coronavirus) update

The health and safety of Tullow's staff continues to be the Group's top priority and Tullow continues to carefully monitor the ongoing COVID-19 pandemic. Tullow has experience of managing infectious diseases of this nature following the significant contingency planning put in place during the West African Ebola outbreak in 2014. In our principal offices, Tullow staff are currently working from home in line with Host Government guidelines with negligible disruption to the business.

Production operations in West Africa have not been affected by COVID-19 as yet. In addition to the existing Infectious Disease mitigation plans already in place, Tullow is requiring all personnel to self-isolate in Ghana for two weeks before transferring to our FPSOs to ensure that the risk of a COVID-19 outbreak offshore is minimised. In the event that a case of COVID-19 is discovered offshore, robust mitigation and personnel evacuation plans are in place to ensure that the impact of any outbreak is minimised and operations are maintained.

[maxplus2] 03/4/2020 09:14

Brent up and WTI is also up

[anslow] 03/4/2020 09:14

Buying pressure will prevail, onwards and upwards

[grupo] 03/4/2020 09:13

Tullow Oil reserves-based lending review confirms US$1.9bn capacity

As expected, it confirms US$700mln of headroom and at the same time Tullow has detailed a further US$50mln of savings.
Tullow Oil PLC - Tullow Oil reserves-based lending review confirms US$1.9mln capacity

Tullow Oil PLC (LON:TLW) has redetermined its reserves based lending facilities, confirming US$1.9bn of capacity and US$700mln remaining headroom.

This is in-line with Tullow’s expectations, previously revealed in last month’s financial results statement.

Tullow also told investors that it has voluntarily reduced its facility commitments to US$2.2bn from US$2.4bn – which brings forward amortisation otherwise due in October and will reduce financing costs. The next scheduled amortisation (via reduced commitment not repayment) of US$211mln will be due in April 2021.
READ: Tullow Oil swings to US$1.6bn loss

The company noted that its next contracted debt maturity is July 2021, for US$300mln of convertible bonds.

"Securing the ongoing support of our RBL lending banks and confirming our debt capacity has been important given the current challenging environment,” said Les Wood, Tullow chief executive.

“Today's positive news verifies the strength of our producing assets and robust hedging strategy which underpin the RBL and, combined with the further cost savings we have identified, confirms the strength of our liquidity in the medium-term.

“Nevertheless, strengthening the balance sheet continues to be a key priority with the group seeking to raise proceeds in excess of $1 billion through portfolio management.”

Tullow repeated that it has already measures that will reduce capex for 2020 by 30%, and, now following another review of its business has detailed further savings targeting anther US$50mln of capex savings in 2020, taking its budget to US$300mln from US$350mln.

The company is deferring a number of activities across its portfolio along with savings that can be realised through ongoing farm-out activities - for example, in Ghana it will terminate a contract for the Maersk Venturer rig and defer some well activity.

It meanwhile, added that it will continue to invest in projects yielding good returns. For example, it has greenlighted the next phase of the Simba development in Gabon, which is due to achieve pay-back by the end of 2021 based on US$30 per barrel crude.

Operating costs in production businesses are marked below US$12 per barrel, and, for Ghana it is cheaper at around US$9 per barrel.

It has around 60% of 2020’s production hedged, with a floor price of US$57 per barrel, and, 40% of next year’s output is covered at US$53 per barrel.

Tullow said it would have a free cash flow breakeven oil price of c.$35/bbl for the rest of the year, based on production between 70,000 and 80,000 bopd.

The company continues to take steps to operate through the pandemic including, for example, fourteen-day self-isolation for staff prior to their deployment on offshore installations to minimise the risk of spread at its facilities.

Production in West Africa has not yet been affected. It noted that, as a result of experience gained through 2014’s Ebola outbreak, it has significant contingency planning in place.

Proactiveinvestors

[pione3r] 03/4/2020 09:12

Has the demand of oil doubled recently?

[dickiebird2] 03/4/2020 09:12

Looks like a gap to fill around 23p !!

[tidy 2] 03/4/2020 09:11

Where is BigSEasy hold on that news and Brent up. OPEC meeting Next week. Unlucky but with shorts needing to find 140m shares to close its an easy buy and hold for bags from here.

[whatsthepoint] 03/4/2020 09:11

The shorts are not going to just roll over they will have to fight hard to create some big shakes day traders need to keep buying to create a bigger squeeze. They have deep pockets.

[anslow] 03/4/2020 09:08

The squeeze is on 20p + by midday

[orchestralis] 03/4/2020 09:07

I'm not selling. There in my ISA.

[tidy 2] 03/4/2020 09:03

Shorters need to find 140m shares here. Trying not to post BOOM but there you go.

[tidy 2] 03/4/2020 09:02

OPEC+ meeting may occur next week - reportToday 07:02A meeting between the Organization of Petroleum Exporting Countries (OPEC) and its allies may be held during the next week, TASS reported on Friday, citing an unnamed source.The insider claimed that the meeting was initiated by Saudi Arabia, but did not provide details on the format of discussions.Breaking the News / MS

[wildsheroo] 03/4/2020 09:02

Don't sell, sit tight on your shares

[joe king1] 03/4/2020 09:02

Nice rise

I bought Genel too, it's also heading north.

[newswseller] 03/4/2020 09:01

Hahaha no chance

[tidy 2] 03/4/2020 08:59

Major squeeze is on. 50p possible short term. 70-100p med imo

[qs99] 03/4/2020 08:55

agreed, 20p short-term target DYO

[tidy 2] 03/4/2020 08:55

Mms offering 16.685 just now. Auction?

[anslow] 03/4/2020 08:55

MMS just woke up they no what's coming

[tidy 2] 03/4/2020 08:54

Probably 50p short term.