Tullow Oil Share Discussion Threads

[phillis] 12/3/2022 13:18

NiceBut
I see your lad is doing his bit in Bucharest

Crawly also doing his bit in Antigua

Pity about TLW

[watfordhornet] 12/3/2022 10:06

Not very cheery!

[florenceorbis] 12/3/2022 09:36

Oil hits $115, yet the Tullow Oil share price sinks. What gives?

Andrew Mackie | Thursday, 10th March, 2022

As a value investor, I am always on the look-out for cheap stocks to add to my portfolio. On the face of it, Tullow Oil (LSE: TLW) looks like a good candidate. Its share price is down 75% over the past five years.

However, the primary commodity it produces, oil, has been soaring during the past year.

So, has the market completely under-valued the company’s potential?

Let’s delve a little deeper.


A heavily-indebted business

Tullow Oil is a company that has been in trouble long before the pandemic struck.

In 2019, the Africa-focused business reduced its production guidance due to drilling problems.

When the pandemic struck, it was forced to take significant impairments and exploration write-offs totalling $1.2bn.

At that time, its net debt stood at $3bn, resulting in a gearing ratio of three times.




This matters hugely, as in order to secure a debt refinancing package with its creditors, in May 2021 it was required to hedge the price of oil in order to stabilise income.

In 2022 and 2023, 75% of its sales volumes have a ceiling price of $78 and a floor price of $51.

In 2024, this will be reduced to 50% of sales.

This turned out to be terrible timing for the business, as oil prices have surged over the past six months and are now well in excess of $100 a barrel.

Given the hugely cyclical nature of the oil industry, there is no guarantee that prices will remain elevated beyond 2024.


Longer-term prospects

When a share price falls 95% over an extended 10-year period, that raises alarm bells for me.

It could be because the wider industry is in decline (a factor clearly not present here).

It could be attributed to the fact that the company possesses a dwindling asset base.

Or it could simply be a poorly run business.

However, the company was able to survive the worst crisis to hit the industry in 30 years.

Tullow’s key assets in Ghana, the Jubilee and TEN oil fields, have significant oil reserves.

The Jubilee field in particular saw production rise 29% throughout 2021 as new wells were bought onstream.

To date, only about half of its expected reserves have been produced.

There is also significant development work just outside Jubilee.

There, the company’s estimated ultimate recovery is 170m barrels of oil, of which only 10% has been produced to date.

With the successful refinancing of its debt complete, the company’s immediate cash flow problems look behind it.

It intends to use the raised cash for working capital purposes.

This includes a capital expenditure allowance of $350m to maximise the value from the Group’s producing assets, as well as exploration activities.


Is Tullow Oil a buy?

Although it has a number of high-growth, short payback projects in the pipeline, it is very difficult for me to look beyond the immediate headlines.

Revenue, total production, and realised oil prices were all down on 2020.

And this is all set against a wider commodities industry that is enjoying something of a renaissance.

Net debt only fell by 12.5% and stands at $2.1bn. That is two times the market cap of the firm. With the oil price hedge in place for another two years, I just can’t see revenues moving upward significantly from here.

Therefore, I won’t be buying.

[florenceorbis] 12/3/2022 09:26

Oil hits $115, yet the Tullow Oil share price sinks. What gives?

Andrew Mackie | Thursday, 10th March, 2022

As a value investor, I am always on the look-out for cheap stocks to add to my portfolio. On the face of it, Tullow Oil (LSE: TLW) looks like a good candidate. Its share price is down 75% over the past five years.

However, the primary commodity it produces, oil, has been soaring during the past year.

So, has the market completely under-valued the company’s potential?

Let’s delve a little deeper.


A heavily-indebted business

Tullow Oil is a company that has been in trouble long before the pandemic struck.

In 2019, the Africa-focused business reduced its production guidance due to drilling problems.

When the pandemic struck, it was forced to take significant impairments and exploration write-offs totalling $1.2bn.

At that time, its net debt stood at $3bn, resulting in a gearing ratio of three times.




This matters hugely, as in order to secure a debt refinancing package with its creditors, in May 2021 it was required to hedge the price of oil in order to stabilise income.

In 2022 and 2023, 75% of its sales volumes have a ceiling price of $78 and a floor price of $51.

In 2024, this will be reduced to 50% of sales.

This turned out to be terrible timing for the business, as oil prices have surged over the past six months and are now well in excess of $100 a barrel.

Given the hugely cyclical nature of the oil industry, there is no guarantee that prices will remain elevated beyond 2024.


Longer-term prospects

When a share price falls 95% over an extended 10-year period, that raises alarm bells for me.

It could be because the wider industry is in decline (a factor clearly not present here).

It could be attributed to the fact that the company possesses a dwindling asset base.

Or it could simply be a poorly run business.

However, the company was able to survive the worst crisis to hit the industry in 30 years.

Tullow’s key assets in Ghana, the Jubilee and TEN oil fields, have significant oil reserves.

The Jubilee field in particular saw production rise 29% throughout 2021 as new wells were bought onstream.

To date, only about half of its expected reserves have been produced.

There is also significant development work just outside Jubilee.

There, the company’s estimated ultimate recovery is 170m barrels of oil, of which only 10% has been produced to date.

With the successful refinancing of its debt complete, the company’s immediate cash flow problems look behind it.

It intends to use the raised cash for working capital purposes.

This includes a capital expenditure allowance of $350m to maximise the value from the Group’s producing assets, as well as exploration activities.


Is Tullow Oil a buy?

Although it has a number of high-growth, short payback projects in the pipeline, it is very difficult for me to look beyond the immediate headlines.

Revenue, total production, and realised oil prices were all down on 2020.

And this is all set against a wider commodities industry that is enjoying something of a renaissance.

Net debt only fell by 12.5% and stands at $2.1bn. That is two times the market cap of the firm. With the oil price hedge in place for another two years, I just can’t see revenues moving upward significantly from here.

Therefore, I won’t be buying.

[fizzmiss] 11/3/2022 20:37

The market does not agree. Check out the share price manipulated performance !!!!

You can try and put as much lipstick on a pig as you like....... its still a pig.

Raúl, IMHO, is out of his depth and should resign

[thommie] 11/3/2022 20:25

Re hedging.After listening to the webcast, besides the plans to monetize the gas without nearly no capex (which is ofc super positive) I was positively surprised by the 2022 hedging, as it is far better than I thought by the info they gave us before on it and it explains why the realised oil price post hedging was so high for january and february.They hedged 75% of the guidance production for 2022. Thats 42,5k bopd. But 15% of them are straight puts, which means they only protect the downside and leave full exposure to the upside. So effectively only 60% of the guidance before pre emption is hedged. After pre emption only 55% are capped at 78$\bbl. That means in reality 45% of tullows production will profit from the full spot price of oil. In 2023 they dont have straight puts anymore, so actually 75% are capped at 75$\bbl (without pre emption, so with it, it should be only 70% as well). BUT... as we know tullows production should be starting to grow hard in early 2023, if a 2nd rig is contracted it will be even more, so in the end I guess on 2023 production there will also only be around 50% capped with the rest having full exposure to the oil price upside. Not so bad as many here still think it is...

[misca2] 11/3/2022 17:07

Bp
360.4 -0.85%

Shell
1,963.6 +0.40%

TotalEnergies
45.59 -0.24%

Eni
13.036 -0.52%

TULLOW OIL PLC (TLW)
51.2 GBX -2.70%

TLW is a pure play the others are not of the same product mix so today less affected especially when one considers indebtedness and interest rate rises risks

ONE DAY DOES NOT MAKE A SHARE RISE OR FALL IN A STRAIGHT LINE

At present all oilies a stuck in a rut

[alfiex] 11/3/2022 17:01

Ftse 100 up, ftse250 up, oil 113 whats distressed other than Tullow?

[wolfofhounslow] 11/3/2022 16:32

If you read about the interest payments and current fcf at 86 you'll know why it's a bad thing...Raul has sold the shareholders

[mcsean2164] 11/3/2022 16:25

So we're currently getting an average price of $86.5 per barrel. Doesn't sound that bad. Nothing has changed. Hard to see why it's such a bad thing....

[dealy] 11/3/2022 16:25

The company is performing fine. The markets are distressed.

[fizzmiss] 11/3/2022 16:13

The share performance says it all with reference to confidence in the management's agenda. IMHO

Everyone within and involved with TLW do seem to be raking in millions whilst investors get shafted.
,
I would suggest investors read up on historical skulduggery that occurred with PMO, and invest here accordingly.

[kulvinder] 11/3/2022 15:42

Even Director buys yesterday could stop this going lower...big mistake Tuesday, should have known better then to hold into results... probably back to 40p next week at this rate of downward movement.

[wolfofhounslow] 11/3/2022 15:35

Tullow Oil is a company that has been in trouble long before the pandemic struck. In 2019, the Africa-focused business reduced its production guidance due to drilling problems. When the pandemic struck, it was forced to take significant impairments and exploration write-offs totalling $1.2bn. At that time, its net debt stood at $3bn, resulting in a gearing ratio of three times.This matters hugely, as in order to secure a debt refinancing package with its creditors, in May 2021 it was required to hedge the price of oil in order to stabilise income. In 2022 and 2023, 75% of its sales volumes have a ceiling price of $78 and a floor price of $51. In 2024, this will be reduced to 50% of sales.This turned out to be terrible timing for the business, as oil prices have surged over the past six months and are now well in excess of $100 a barrel. Given the hugely cyclical nature of the oil industry, there is no guarantee that prices will remain elevated beyond 2024.

[alfiex] 11/3/2022 11:42

Bouncing up and down again for no reason. Who would buy this? On paper looks like a bargain at this price but just maybe fizz has a point re Rahul!!

[xxnjr] 11/3/2022 10:52

Everyone is looking, even little Panoro.

[subsurface] 11/3/2022 10:37

Africa Oil also said they were looking XX.

[dealy] 11/3/2022 10:36

they don't have the balance sheet.

[xxnjr] 11/3/2022 10:30

Reckon its tother way round. The majors are exiting mid life assets in W.afr and the buyers are either private equity or small mid-caps like Tullow. OK we haven't done anything yet but Rahul has clearly telegraphed acquisitions are part of the strategy going forward.

[dealy] 11/3/2022 10:04

maybe 100p

[badger36] 11/3/2022 09:39

Heard that when it was 16 pounds and the CNOC was a suited At 50'pence ????

[dealy] 11/3/2022 08:29

All the majors have to replace Russian oil with another source. Acquiring Tullow would be a positive step. Also a strong balance sheet could improve hedging and interest costs. Has to be in play soon