Tullow Oil Share Discussion Threads

[subsurface] 15/9/2022 23:36

One man said he filled up his Car and it doubled its value

[fizzmiss] 15/9/2022 20:40

Cannot believe oil has drooped from $132 to $90 and still the crooked garages and the government, endorse £1.68 at the pumps.

Now ask yourself why inflation is so high, UK is the most crooked country in the world.

[kulvinder] 15/9/2022 17:59

Well the rise above 50p did not last long back below 50p again....paint just will not dry it seems...

[subsurface] 15/9/2022 12:21

Kenya Keith Hill.lets hope!

Once the deal has been completed, the companies could drill more exploration wells. Hill predicted this would double the size of the asset from around 500 million barrels to 1 billion.

[xxnjr] 15/9/2022 11:12

The ever optimistic Keith Hill of Africa Oil presented in Scandanavia the other day. He feels Kenya will be "signed in the next month, or so". Body language on TLW's call also optimistic. Reckon it is basically a done deal. Just waiting for gov.Kenya to get their act together. Will be a bit of a game changer if it happens for the CNE deal.

[xxnjr] 15/9/2022 07:36

as per webcast

mcs - listened again and debt was down to $2bn on 31/8/2021

ss - point was made that TLW's Ghana revenues are offshore. Not in an oil sense but in the sense that payment for oil as per their PSC is made externally and doesn't enter the country. It seems Ghana is an economic basket case these days and may raid oil and mining cash but since TLW's cash is offshore not at risk.

all - TLW has a lot of resource to develop but no cash to do so. CNE has a lot of cash but not a lot of resources to spend it on. Together they are stronger. TLW need CNE. CNE don't necessarily need TLW as CNE could use their cash to buy resource elsewhere, or return the cash to the hedge funds who bought in after deal announced and existing holders of course.

I thought the stand in CFO came over very well on the call.

[badger36] 15/9/2022 07:08

Unless we see a positive drilling results the deal is dead. The 75% required has not a hope in hell Rabbit and hat surprise or it's dead

[waldron] 15/9/2022 02:47

Deal still on


Tullow Oil ‘committedR17; to Capricorn merger


Terry Murden, Editor | September 14, 2022



Tullow Oil said it remains committed to its planned all-share merger with Edinburgh-based Capricorn Energy, despite the reservations of key shareholders.

Those objecting to the proposed tie-up include Kite Lake Capital, Palliser Capital, Legal & General Investment Management and Schroders who say the deal undervalues Capricorn, previously known as Cairn Energy, the explorer founded by former Scottish rugby international Bill Gammell.

Capricorn’s board supports the merger, but last week the company’s chief executive Simon Thomson admitted that ‘alternative transactions’ were being explored after unnamed parties expressed interest.

The deal requires approval from at least 75% of Capricorn shareholders, a threshold that might be in jeopardy if hedge fund investors who have been critical of the deal turn their derivative investments into direct shareholdings.

Rahul Dhir, the Tullow chief executive who would head up the enlarged group, said today that his company was “fully committed” to the combination.

“We firmly believe that the proposed merger has the potential for material value creation by implementing a combined business plan which accelerates investment in key projects and delivers very significant synergies,” he said.

But there are concerns among Capricorn shareholders that the two companies’ assets are incompatible and that Capricorn’s cash pile would be used to help reduce Tullow’s net debt.

The terms of the deal would involve Capricorn shareholders ending up with about 47% of the enlarged business which would produce in the region of 100,000 barrels of oil per day with capacity from its existing assets to increase that to 120,000 by 2025.

[mcsean2164] 14/9/2022 20:26

xxjnr,

Many thanks, that's good re debt, it's not spiraling in the wrong direction but worrying that it's hitting a plateau especially at 10.25%. In saying that, I really hope they are using some free cash flow to buy their debt.

Realistically, we don't need to consider bond rollover until maybe mid next year which means we don't have to bargain with CNE. Still, I think we should walk. The deal looks okay-ish given the interest rate on our debt (thanks Dorothy) but it's not that good. Not enough to justify the huge amount of bad press coming from CNE investors imho.

[subsurface] 14/9/2022 20:13

Ghana economic woes deepen with rising inflation


Ghana’s economy continues to worsen by the day, with figures released by the Ghana Statistical Service painting a grim picture.

The rate of inflation rose to 33.9% in August, up from 31.7% in July.

The cost of housing, water, electricity, gas and other fuels shot up by over 46%.

Many are concerned things could get worse as transport unions have also announced a 30% increase in fares with effect from next week.

Some Ghanaians have attributed the economic situation to mismanagement and corruption.

But the government insists it is due to the combined effects of the global pandemic and Russia’s invasion of Ukraine.

Ghana is now seeking a bailout package from the International Monetary Fund (IMF).



Tullow are looking at what they can do to help as per the webcast.

[xxnjr] 14/9/2022 13:49

mcs2164 ..... your net debt Q?

Basically because "First half free cash flow of $(205) million (negative), which includes an arbitration payment of $76 million (outflow), Uganda FID payment of $75 million (inflow) and Ghana pre-emption consideration of $126 million (outflow), but excludes the benefit of over $200 million revenue relating to two Ghana liftings, which took place in early June but for which cash was received shortly after 30 June 2022, on 1 and 5 July respectively."

Those underlying numbers would have looked much better without arbitration -$76m and pre-empt -$126m but with those two liftings +$200m.

Presumably to the tune of about +$400m. At least in my simple head.

They did mention the August net debt position on the call but have forgotten actual number given. It was more encouraging:)

Bonds:-

$800m 7% due 01/03/2025
$1800m 10.25% due 15/05/2026


Rain stopped. Sunny here. Gone for a bike ride :)

[bootycall] 14/9/2022 13:26

@xxnjr I noticed that….all I can say is that you are unlikely to book any commercial 1P reserves without a revised field development plan. The latest successful well in Enyenra does not appear factored in, let alone the situation in Ntomme. Slide 11 of the full year results for 2021, quotes reserve life based on “wells on production”. Whilst accepting that it is prudent not to book into 1P reserves quite yet, the inference in slide 23 of the full year results is that “production growth from defined projects” will have to be incorporated into reserves when the projects are officially sanctioned.
Don’t forget, this is a Company that downgraded its Enyenra reserves because of poorly executed multi zone completions in channel sands when ..IMO not, because the reserves were not there. I do not believe that all the partners took the same approach from memory.

To look at the real prospectivity, lets hope we get some colour on the 3C reserves because it is that potential that will reward shareholders in the longer term. Look at the non associated gas opportunity in Ghana often quoted as between 1.5-2 TCF gross…this will not be booked until a new GSA is agreed… I believe there are more valuable NGLs in the associated gas from Jubilee (compared to Ten) which are stripped out. Not sure what happens to those when there is no official agreement in place for production in excess of the agreed 200bcf.

So, in short, the Company is openly acknowledging the existence of new reserves… is guiding to 9% CAGR growth between now and 2025 largely from new wells in defined projects (slide 23 FY) but has yet to put a number on it…..until a field development plan is formally agreed.


As I said, Rahul would like to take a bow at the Capital Markets Day…once “some anticipated Government approvals” have arrived. I couldn’t possible imagine what he is referring to ? I am glad you are keeping me on my toes xxnjr, but you have to sometimes read the tea leaves to see the inevitable! Booty

Please do not rely on the accuracy of my opinions when making an investment decision.

[mcsean2164] 14/9/2022 13:19

Many thanks booty and xxjnr for detailed analysis.

Does anyone know why debt has risen?

Also, any ideas when the bonds are due to be repaid, i.e. do we need to look for more funding before or after Capricorn?

Shame no tullow Investors are kicking up a fuss about the CNE offer. We have the ability to generate cash. They have cash that's being inflated away...

[xxnjr] 14/9/2022 12:03

Latest reserves data can be found on slide 7 of


Data for Ghana is as per y/end 2021 adjusted for Ghana pre-empt additions less production. No revisions recorded as a result of drilling. (Apart from a tiny increase in non-op.)

[badger36] 14/9/2022 10:53

If it was not for the tax refund from India Capricorn would be kaput Strutting around after a one off and lucky-given the atmosphere and corruption in India - is not exactly my idea of a good investment Tullow need cash, Capricorn needs average and flow ...

[bootycall] 14/9/2022 10:53

@xxnjr. You forgot to mention the improved reservoir quality characteristics of the “failed” well, which should improve recovery field recovery percentages … despite water wet at this location… I believe the pre drill expectation was to delineate field extent but they hoped for a stratigraphic play with connectivity between fields…which was a long shot. You may recall a previous injector well on Ten “surprisingly” discovered hydrocarbons..but was not added to reserves as it was not drilled as a producer.
As for the FIVE wells out ready drilled and completed but yet to come on stream (2 on Ten in Q4 and 3 in Jubilee in 2Q 23)it is obvious they will make a large impact but the company wants to elaborate only at the CMD. Why ? Probably because the merger document will want to verify every single component of forward guidance.
As you know from the Kosmos conference calls the major upside at Ten is now becoming self evident. Rahul has admitted he has more “short cycle” high payback opportunities which require a second rig but his board has not allowed him to deploy one..yet…which is rather stupid in retrospect since rig rates have risen in the intervening period.

If you look at the 2021 year end presentation they hoped to have gearing down to 1.5X by year end 2023. We are now talking year end 2022 ! ….that is without Jubilee South East kicking in with at least 3 successful wells in a new area which is likely to produce for an extended period of time before going into decline. When Tullow first discovered Jubilee many years ago, about 20% of the wells produced at over 15k bpd each ! Rahul will know from the logs what production he is likely to achieve which is why he is upbeat.

[arlington chetwynd talbott] 14/9/2022 10:45

Tullow or Capricorn - which is the better company?

[xxnjr] 14/9/2022 09:55

Booty - Sorry for taking issue but this is what TLW said at year end

"The addition of undeveloped reservoirs in the Tweneboa area, accessible from the Ntomme riser base area, and the extension of the Enyenra field development to the north and south of the core developed area, introduce a similar volume of undeveloped STOIIP as the core areas. Tullow and its JV Partners will start to target these new areas in 2022, with two development wells planned in the Ntomme riser base area. Investment in infrastructure will allow these to be brought on stream from 2023. Furthermore, an additional production well is planned in the undeveloped Enyenra North area in the fourth quarter of the year."

How does that square with your assertion that "The strategic well at Ten, which was unlikely to produce has been misinterpreted by punters as a failure?....."

[badger36] 14/9/2022 08:18

Thanks BootyPity you are not on the IR team

[bootycall] 14/9/2022 07:46

Remember…watch guidance on the production profile at the Capital Markets Day…the drilling programme is ahead of schedule but the sub sea work can only progress at its normal pace. If the Company says they can achieve with one rig what they previously assumed would need two…is that such a bad thing ? Duh ! Watch the next reserve report. The strategic well at Ten, which was unlikely to produce has been misinterpreted by punters as a failure but have you seen the revision in reserves ? Rahul does not explain properly that the well was designed to test the outward delineated area of the reservoir. The Board are pathetic at communicating the obvious. When these wells come on stream you will see a totally different picture. Rahul’s strategy is to optimise life of field revenues (expiry of licence) by concentrating capex upfront, to allow optimised total return. YOU DO NOT EXPECT TO SEE LARGE SCALE CASH GENERATION until the wells are on stream !

After this year, decommissioning costs abate and the new wells will be tied in.Most importantly the company will be unshackled from a punitive hedging profile (oil price permitting) and people will start to see Ten’s potential which is exceptional…..Whoever advises the Board on their press releases should be sacked in my opinion. The IR is just doing its job quite effectively.

Then we have Kenya. The new President is I believe actively supports this project and has been heavily involved. I believe the delay may relate to paperwork on the Indian side,if it is similar to the experience Cairn had dealing with Government controlled entities like ONGC. When completed, I believe that the Kenyan deal will be a major fillip to the share price. Then we have the gas contract for Ghana where Tullow openly talks about 2 TCF of potentially untapped, mainly unassociated gas, which may allow a revised agreement bringing high impact revenues to the Company.

So, if you can’t be bothered to wait until Rahul struts his stuff at the Capital Markets Day, just keep moaning…because I am not listening to the amateurs. Just watch what the big boys do and later complain you were robbed. I will be watching the bulletin boards to remind you. Having said all that, shareholders should really expect their Board of Directors to spell these things out…but our non execs appear to want a quiet life…time for change methinks.

Post Conference Call Rahul has described the riser well as a “disappointment “ … whilst the latest Enyenra well was better than expected . He has not elaborated on why the well was described as “strategicR21; or its pre drill expectation… or why reserves improved . I give up !

Please do not rely on the facts or opinions in the above post when making an investment decision. Booty

[xxnjr] 14/9/2022 07:16

Yes KULVINDER. Net Debt was $2.13bn end 2021. Now $2.33bn.