Tullow Oil Share Discussion Threads

[djderry] 13/11/2023 15:35

I'm already invested Booty but I certainly appreciate your insights.

[bootycall] 13/11/2023 08:30

The new facility is effectively a mezzanine layer, ranking lowest in the repayment of secured debt … it should avoid massive broker fees and avoid the need for massively time consuming and difficult negotiations being played off against two sets of bond holders..all for agreeing marketing rights which is a common method of financing in these markets . I would like to see what redemption or other penalties for refinancing post agreement of the 2026 bonds. This might give them the wiggle room to even extend the 2026 debt maturities since it implicitly agrees to be subordinate to those notes.
Interestingly I believe i highlighted this type of opportunity in a post some time ago.

I will leave it to readers to decide if the credit committee of Glencore would allow themselves to provide up to $400m to Tullow it they thought they would be unable to finance over a billion dollars of bonds due 2026. It also suggests to me that concerns over certain retrospective tax demands from the Ghanaians have little chance of progressing as Glencore would have been all over that risk in DD. I think this deal is a master stroke. Once the 2026 bonds are dealt with (and repayment of the 2025 bonds must have been a critical obstacle) the shares should massively appreciate on a sensible oil price assumption. Booty


Please do not rely on the above post when making an investment decision.

[oilretire] 13/11/2023 07:33

hTtps://www.investegate.co.uk/announcement/rns/tullow-oil--tlw/tullow-secures-400-million-5-year-debt-facility/7876204

[alfiex] 13/11/2023 07:09

RNS Tullow Oil PLC Tullow secures $400 million 5-year debt facility

[xxnjr] 09/11/2023 10:00

Hi Bootycall,

Thanks for your input. Yeah, we definitely need to know more about the w/inj issues and where they are with that now. The FPSO has 3 w/inj pumps and at start up had a design capacity of 230 Kbw/d. Slide 12 of 2020 CMD Pres shows w/inj water upgrade plans to 270 Kbw/d (2022) and 300 Kbw/d (2023+). Then compare that to slide 5 of KOS results pres which shows a short high plateau period of 220K water in half of August, 2 troughs to zero and under performance either side in 3Q.

The 2 w/inj's recently on-line were J62-WI and J65-WI

J65-WI was mechanically completed on 30/05/23 and took 50 days to drill and complete.
J-62-WI TD'd on 19/01/23 after 24 days drilling but was awaiting down hole completion works start as at 30/6/2023. Good drilling performance there. So I guess the shortfall is either late commissioning of subsea/topside stuff or some issues with the water injection performance on the top sides?

Damn it! I'm gonna send IR a Q on this and will advise if get decent response.

As to the other stuff. Think they said Half Rig Year for Jubilee in 2024. Guess that means (possibly) some rig outsourcing? or (hopefully) new drilling on TEN to execute an approved POD. It's great news (if I understood it correctly) that Kosmos envisage working towards surplus well capacity (>120K) maybe to manage the peaks and troughs to get near/obtain plateau? as attaining say 140K could likely require some serious upgrade work? although I believe there is a slot on the deck to accommodate that.

Jan 2024 trading update will provide 2024 forward guidance but hope the company give a detailed update on the 15th next week!

[bootycall] 08/11/2023 18:07

Hi xxnjr.

I had already listened to the webcast and gone through the transcripts, but it was generous of you to take the time to print out extracts for everyone to see. Thanks on their behalf.
I am glad you cottoned to the $1.3bn Ten field development project mention. I frantically searched for the article referenced by the analyst which I presume is behind a pay wall. The fact that Kosmos stayed silent on the project ,but acknowledged their hypothetical 20% contribution , suggests things are very much in play. I do not think it unreasonable to suggest that with an FPSO in situ, any additional production would be very profitable. Furthermore, I think we can all agree that Rahul demands very high IRR for new projects. If the project is with the Ghanaians for approval, i feel it must be “oven ready”.

Re Jubilee..So now you have the transcript of the conference call you can appreciate that spending an additional $30m net to kosmos for two additional wells with a “very high” return is not bad news. Investor Relations is downplaying the nameplate capacity of the FPSO but i know it is 120kbopd…Paul McDade previously had plans to upgrade to 140kbopd ! For the time being the conference call established that for a modest upgrade to existing budgeted capex they can increase production in 2024 and “build out to the facilty limit faster”. The relevant passage states the

“ongoing drilling program on Jubilee that would build with additional producers. So ultimately now, it’s about building to the facilities limit in terms of well capacity, probably building slightly beyond the facilities limits. So we have degree of well capacity in reserve and then holding the field at that level. So we’ve accelerated some capital out of ’24 into ’23 to allow us to build towards that facility limit faster.”

Now we have established that for a sum of just US$30m spent in the next two quarters we will have to upgrade our future production expectations, and still
“have degree of well capacity in reserve and then holding the field at that level”

Now, I would agree that there is still potential for a 1kbopd downgrade on this years production because two well come at the start of the new year, but that is hardly a profits warning when you are increasing average production by 10-15kbpd next year ?

I would like to know more about the problem with the water injectors…this is an historic issues…but there was no reason for the recent sell off other than the recent fall in oil prices .

Please do not rely on the facts or opinions contained in the above post when making any investment decisons. Booty

[kulvinder] 08/11/2023 12:50

Have we stopped drilling for oil, the drop is relentless? If the update next week is not taken well, 20p is more likely here, wish I had cut my losses once the war in Israel started and sold around the 35p mark....

[xxnjr] 08/11/2023 09:03

Stuff relating to Tullow on Kosmos Q3 Webcast

"Jubilee produced an average of around 96,000 barrels of oil per day gross during the quarter, an increase of over 30% versus the previous quarter, with three producer wells coming online across Jubilee South East and the main field.

While we've been successful in production wells, there were some delays in providing the necessary water injection, which has had a knock-on impact on near-term production, which I'll talk about in more detail. On TEN, production in the quarter of around 15,000 barrels of oil per day was in-line with expectations and lower than the previous quarter due to a planned two-week shutdown. While working on the maintenance of the FPSO, we modified the gas train, and the rerouted gas is now being re-injected into the N'tomme field to support reservoir pressure and maintain production levels. This has resulted in around a 75% reduction in flaring, a major step towards our goal to eliminate routine flaring by 2026. The amended TEN plan of development and combined TEN and Jubilee gas sales agreement has been submitted to the Ministry of Energy for approval.

In the interim, we've extended the Jubilee gas sales agreement through the end of November at a price of $2.90 per MMBtu.

Turning to slide five, the start-up of the Jubilee Southeast development has driven a material uplift in production at Jubilee. Three producers were brought online during the quarter, taking gross production up to around 100,000 barrels of oil per day, a level not seen for several years. As I mentioned earlier, water injection rates in 3Q were lower than planned. This is partly due to lower uptime on the water injection pumps and partly due to the delay in bringing two water injection wells online, which were originally planned to start in 3Q. Post-quarter end, we did bring these two water injection wells online and are now ramping up water injections to support the elevated levels of production. The partnership had previously assumed we would farm out the drilling rig in Ghana in the fourth quarter.

This was to allow time to assess our initial three wells in Jubilee and high-grade the next set of wells. However, given the success in our well selection and drilling execution, we are now planning to accelerate an additional producer and water injector into the fourth quarter from 2024. This should allow for continued Jubilee production growth into 2024, with both wells expected online early in the new-year. The acceleration of this activity results in an increase in 2023 CapEx of around $30 million net to Kosmos. However, the expected returns are very high with quick payback. As a result of the lower water injection rates, the operator is now forecasting that Jubilee will produce around 85,000 barrels of oil per day gross for 2023, down from its previous estimate of 90,000.

This decrease is driving our lower production guidance for the year and is expected to result in one less 2023 cargo from Jubilee than previously forecast. It is just a timing issue, and our view of 2024 production is unchanged, with a shortfall in 2023 expected to be made up in 2024. While there are always challenges in bringing a new project online and optimising overall field performance, we are excited about the future potential of Jubilee and are continuing to work well with the operator to maximise cash flow from the field.

Q&A

Q.....you talked about the two additional wells you’re going to drill at Jubilee and Jubilee Southeast, I just — I want to make sure I understood. So you guys were going to farm out the rig, but then you decided you’ve got these two wells. One is in Jubilee, if I understand right, one is in Jubilee, one is in Jubilee Southeast, does this lead to a higher plateau or it’s just — or were these wells just kind of more reduce the volatility around that plateau in case you have some more of these water injection. Can you kind of frame it up for us what the…

A.....Andrew Inglis: Yes. It’s simply really around accelerated activity out of ’24 into ’23, which allows us to actually build towards the facility limit faster. So that additional water injection well is important because it allows us to address some of the water injection issues that we’ve been experiencing. And then the second well is a producer, which would come on in ’24. And then we have an ongoing drilling program on Jubilee that would build with additional producers. So ultimately now, it’s about building to the facilities limit in terms of well capacity, probably building slightly beyond the facility is limits. So we have degree of well capacity in reserve and then holding the field at that level. So we’ve accelerated some capital out of ’24 into ’23 to allow us to build towards that facility limit faster.

Q.....I’ve just got one more. I just want to confirm. So in Jubilee now additional producer-injector pair before year-end, but it’s still a plan for that rig to continue in 2024 with a three to four well annual program, I think that’s been talked about before by the operator.?

A.....Andrew Inglis: Yes. No, no, you’re right, Mark, in concept, that’s the proposal. About half a rig year, I would say, on Jubilee in ’24. And again, I think it was Charles’ question around the objective is to build the well capacity so that we’ve got the sort of reserve capacity beyond the facilities limit. And together with reliable water injunction, you then have the ability to sort of hold the plateau at that level. And then clearly, you then follow up with additional wells as that well capacity becomes tested. But so we’re on a good track now to sort of continue to move forward with Jubilee as we add those wells and fundamentally underpin the new wells with reliable water injection. So the increase in Jubilee is well described in terms of the forward activity set.

Q.....on the TEN gas development. I did see a figure in the press about potential cost of this. I just wondered if you would be able to comment directly about, what CapEx you see there, and how you would fund the Kosmos share?

A.....On TEN, the — I think the newspaper article talked about a $1.3 billion development, which would cover the full development of the next phase of the TEN POD. We would — our share would be 20% of that. And clearly, that spend would be forward spend through potentially ’24, ’25, et cetera. So — but we’re still waiting for progress with the Government of Ghana in terms of that spend. So we don’t yet have any firm timing for that."

Ends.

Anyone know anything about that newspaper article. $1.3bn gross spend on TEN over 2024/5 et cetera. TLW's share would be about $700m if plan is approved?

[xxnjr] 07/11/2023 17:54

Looking forward to reading your essay Bootycall.

[bootycall] 07/11/2023 16:08

XXNJR The only reason i am letting your full conspiracy mode run full force today, is that I am about to buy some more shares. Then, I will have fun putting the record straight including posting the missing info from yesterdays CC…..keep it up… delicious prices

[xxnjr] 07/11/2023 08:57

Not sure but most recent TLW CAPEX guidance probably assumed full use of rig but they were probably hoping to produce a rabbit out of the hat at year end with reduced CAPEX from rig outsourcing.

[badger36] 07/11/2023 08:43

If you tried to sabotage the future it would be hard to find a better way than this putative attempt to succeed but if effect destroy any semblance of confidence by over spending, extending and in the end never complete anything on time of achieve anything as promised

[xxnjr] 07/11/2023 08:28

Another snippet from the call was that TLW/KOS were originally planning to outsource the rig in Q4 (not sure if they or rig owner collect the difference at current high day rates) but now they are not so KOS will spend an extra $30m drilling 2 wells in Ghana q4. Spun as "we were going to have a drilling pause in q4 to see how the JSE reservoir performed but given good results we've accelerated drilling of 2 wells"

a sceptic might suggest the new wells under performed somewhat so we need to drill more wells.....

[xxnjr] 07/11/2023 08:07

Nothing could be that bad! But this has slightly dented the perception that 'NewTullow' are competent operators. Water injection seems to have under-delivered for a good part of the year. The thing is it was only the other week when Rahul was in S.Afr for that conference that he was bragging about Jubilee producing at 107K (from memory). One could suggest his unwise comments gave a slightly misleading impression of how things were progressing.

[alfiex] 07/11/2023 06:52

Yes going back to the days of Mcdade and co.

[xxnjr] 06/11/2023 20:00

As I suggested might happen; there has been a downgrade to 2023FY JUB Forecast.

KOS Call

".......w/inj rates in 3Q were lower than planned......as a result the operator (Tullow) has downgraded the JUB FY forecast from 90K bopd to 85K bopd....."

But let's not forget TLW had already downgraded JUB 2023FY from 95K to 90K bopd!!!; i.e we are now 10K bopd below their original mid-case estimate. Not brilliant and tends to reinforce my view that this company continually over promises.

[badger36] 06/11/2023 17:29

How many trip up are allowed before the responsibility is laid at the door of executives. All we have had are excuses

[bootycall] 06/11/2023 11:26

Yes, there was about a delay of 4-6 weeks getting Jubilee SE to full production … this was evident from the previous trading statement …but in my opinion ,extended production guidance for the years ahead is likely to be upgraded..which is a plausible outcome to be discussed at the next. As investors we should be looking to future guidance to determine share price performance. The two new injectors coming on stream after the quarter should comfortably take us above the 100kbopd gross per day…although I doubt we will reach levels above 115kbpd gross without a gas sales agreement….which may be imminent.
Normal decline rates often do not apply to new wells drilled in this field for the first couple of years, so lets see if the CC today provides sheds any further light. Booty


Please do not rely on facts and opinions expressed in above post when making an investment decision.

[mcsean2164] 06/11/2023 09:24

delayed due to operational issues


Feels like deja vu...

In nearly ten years invested with tullow the only value they have achieved I can recall is buying back their debt early.

[xxnjr] 06/11/2023 08:31

KOS Q3 results

Ghana

Production in Ghana averaged approximately 43,600 boepd net in the third quarter of 2023. Kosmos lifted four cargos from Ghana during the quarter, in line with guidance.

At Jubilee, production averaged approximately 95,900 bopd gross during the quarter, 32% higher compared to the previous quarter.

Three producer wells were brought online during the third quarter, taking gross field production up to around 100,000 bopd.

Post quarter-end, two water injection wells, which were delayed due to operational issues, were brought online. This delay coupled with higher than anticipated downtime of the water injection pumps within the quarter, resulted in a slower ramp-up in Jubilee production. This is expected to result in one Jubilee cargo lifting originally planned for Kosmos in the fourth quarter of 2023, being deferred into early 2024.

At TEN, [gross] production averaged approximately 15,100 bopd gross for the third quarter, in line with expectations, and lower quarter-on-quarter largely due to a planned two week shutdown.

The partnership has submitted a draft amended plan of development for a high-graded activity set at TEN and a combined gas sales agreement for Jubilee and TEN to the Government of Ghana for approval. An interim gas sales agreement for Jubilee associated gas has been extended through November 2023 at a price of $2.90/mmbtu while discussions are ongoing on a longer-term agreement.

[zingaro] 03/11/2023 18:42

I agree Alfiex. Lets hope they take a stake - but, probably they want it for nothing.

[alfiex] 03/11/2023 12:10

Personally I think Kenya may never happen, but if Kenya opt back in there is an incentive to give it the green light but conflicting reports saying Kenya committed to green policy. Basically who knows?