Tullow Oil Share Discussion Threads

[eipgam] 22/5/2012 18:09

just this second opened it via Google news. If you go direct to your link, you have to register. Thanks.

[85gary] 22/5/2012 18:04

Sorry about that......first time it let me straight in, second time i had to register in order to copy and paste. Lesson to be learnt....copy and paste first time.

Springett oils Tullow's growth plans

21 May 2012

Founded a little over 25 years ago in a small town 35 miles south of Dublin, which gave the company its name, Tullow Oil is one of the UK stock market's great success stories. In the past 10 years, revenues have increased from £76.6m in 2001 to more than £1.4bn in 2011.
Ian Springett

Ian Springett

Ian Springett, who joined in 2008 as chief financial officer after 23 years with BP, talked to Financial News about Tullow's plans for East Africa and South America, the company's banking relationships and financing needs, and whether its fast recent growth can be maintained.

What sort of shape is the company in at present?

Last year was a big one for Tullow Oil. With the Jubilee field in Ghana starting production, we transformed our financials. We more than doubled our operating cashflow. With the farm-down [the sale of part of the firm's stake in oil fields] in Uganda with CNOOC and Total, we received $2.9bn in cash, which gave us a very strong balance sheet. But the engine room from ongoing production is also strong.

What impact has that infusion of cash had on the company's plans for the future?
Drilling for profit: Tullow Oil is one of the UK stock market's great success stories

Drilling for profit: Tullow Oil is one of the UK stock market's great success stories

It is very much part of our funding model and how we planned to finance our significant exploration programme. Some of the best opportunities in front of us are those that are already in our portfolio, such as the Ten project [a cluster of offshore discoveries in Ghana]. We always look at external opportunities, and we prefer to farm in than acquire. We do look broadly, but we're very selective.

What are the short-term priorities for Tullow Oil?

It is very much continuing to ramp up production at the Jubilee field in Ghana. We've got the next phase of development we started there back in February. On top of that is the Ten project, which we're taking towards a sanction [the point at which the relevant government gives an oil company a production licence, which enables the field to be developed] hopefully in the middle of the year.

With Tullow, it is often all about the big exploration programme. There are big wells we're drilling in a number of places in Côte d'Ivoire, Kenya, Ethiopia, and Guyana. There is a lot of activity, with a big exploration programme, and we're selectively developing those sites.

Where are you looking to invest?

We follow the geology, rather than the geography – we're primarily looking to invest in stratigraphic traps and rift basins. We look in Atlantic margins, and we've continued our success in Ghana along the coast; we're looking in Sierra Leone, Liberia, Côte d'Ivoire and into Mauritania. We've also had success in South America in French Guiana, and we've got more acreage there. We've got a well drilling in Guyana now, and will have one in Suriname in, probably, a year.

The other big area is East Africa. We're looking to replicate the success we've had in Uganda in Kenya and Ethiopia. There is also investment in some of our mature fields – in Gabon, Equatorial Guinea, and of course the North Sea on both the UK and Dutch sides.

-- Regional proposition

How big an opportunity does East Africa, a region that is relatively unexplored, represent for Tullow Oil?

We're very excited. We've had significant success in Uganda. We've built up some considerable expertise there, and the acreage in Kenya and Ethiopia is about 10 times what we've got in Uganda. We've identified seven major basins, and a number of sub-basins within that. We have about 80 or so leads and prospects already identified. We've been using the technology and capability we've already developed in Uganda to really get a quick start in Kenya. Our first well looks like it has been a success. It is a very good start. We have a very strong proposition in the region.

Can you discuss your plans for South America?

We have licences in French Guiana, Suriname and Guyana, and we recently acquired a licence block in Uruguay too. We have confirmed that there is a similar geology in French Guiana to where we've been successful offshore of West Africa. We've drilled our first well in the basin in French Guiana. It has been successful and we'll now drill an appraisal well later in the year and another exploration well on a different structure. We've farmed in our licence in French Guiana to Total and Shell, and there is the basis for an opportunity of an offer there.

What pressure is there on the company to make ever bigger discoveries?

I've been with Tullow for three and a half years. The number of new basins we are trying to open now, compared to when I joined, has increased significantly. We very much see ourselves as a key exploration company, which is a market leader in terms of our exploration department – as good as, if not better than, many of the majors. We're absolutely positioning the company to have the major needle-moving impact we've experienced before.

-- Refinancing plans and bank relationships

Could you provide an outline of plans to refinance your debt facility?

We have quite an aggressive capital spend, which we finance from a combination of cashflow from operations, from portfolio activity and from debt. Our basic logic is we fund exploration from cashflow and farm down activity periodically, and we fund our development from debt. We have a significant debt reserve-based lending facility, which is $3bn plus, and we also have a corporate facility.

We recently refinanced the corporate facility, which expired at the end of 2011, for a further three years. The longer-term seven-year reserve-based lending is in its fourth year, where you would expect to refinance, so routinely we'd expect to refinance the reserve-based lending this year. To diversify our sources of debt, we will probably have some form of initial high-yield bond in the back end of 2012 or early 2013.

You recently named Morgan Stanley and Barclays as corporate brokers, replacing incumbents RBS Hoare Govett and Bank of America Merrill Lynch. How did you come to pick those two banks?

There are a number of factors around the strength of the team and the existing FTSE clients they have. Most of all, however, it is based on their understanding of Tullow, their thoughts on what we needed to do differently in the next phase of growth, and how they would work with our investors. It was very much about understanding which two brokers are best equipped for the next phase of Tullow's growth.

Do you pick the two best brokers, or those that you think will work best together?

Two is a good number, and it is better than one. You initially pick who is best, but certainly over time there are certain things you want to be delivered over all.

They have to be technically very good: the coverage has to be good, the analysts have to be good, the people you interface with have to be good. You need to make sure the top guy isn't only going to turn up at the presentation, but that, week in week out, the guys on our investor relations team are going to know who they are going to be dealing with, and that relationship is going to work.

How open are you to working with other banks?

Even though corporate broking is important, we don't believe broking provides entry to the inner circle of Tullow. We're willing to work with all our banks.

We don't see broking as an exclusive appointment that guarantees all the ancillary business.
We have banks that are good at lending money, or good at hedging instruments, and are particularly good on advice around high-yield bond issues for example. Our door is always open to the banks that support us. We have 24 or 25 banks in our debt facility and we treat them all equally.

• This article originally said that Tullow Oil was looking to invest in stratigraphic traps in rift basins. The firm has clarified it is actually looking to invest in stratigraphic traps and rift basins

[eipgam] 22/5/2012 16:09

Hi Gary... can you c&p or should I register?

[bushwhacker] 21/5/2012 22:13

yes they have an interest of 50% in South Omo block in Ethiopia -

[bushwhacker] 21/5/2012 22:13

yes they have an interest of 50% in South Omo block in Ethiopia -

[85gary] 21/5/2012 21:03

Kenya, and maybe Somalia / Puntland, Somaliland do look interesting oil plays imo. Kenya is key to export for Uganda and longer term Ethiopia. I can easily see South Sudan exporting in this direction too as I mentioned previously, especially if Ethiopia interests work out, so AOI a good fit for Tullow imo.

Not sure if this link works, but you can access it via AOI website. I'm sure south Omo is already on Tullow's radar.

[eipgam] 21/5/2012 20:37

Maybe TLW will buy someone else..... it's been a few years since a deal. I wonder if they are looking at AOI. They will know exactly how much they are worth... the Hardman and Energy Africa deals were very good for TLW

[mccracken227] 21/5/2012 20:26

PCOK do you not think they are a bit too big for a bid now? who could afford TLW?

[ben chod] 21/5/2012 17:44

if? what do youmean

[pcok] 21/5/2012 16:31

Topped at 13.92 and topped again today. If Kenya comes in and the S American play is proved...big ifs I know but...this may double.

Oil not going out of fashion soon and poss bid bubbling so in my view a core holding in any adventurous p/folio...it is the majority stake in mine (used to be IMG and transferred most into TLW).

Fingers crossed!

[ben chod] 16/5/2012 21:14

the directors arealways full of it and enthusiasm

[eipgam] 16/5/2012 19:56

Thanks P27.... got any other news? or any idea where they may buy for production? North Sea perhaps?

[peter27] 16/5/2012 19:44

At the AGM today trhe directors seemed full of enthusiasm for the future and hinted that they are looking at aquisitions to increase actual production.

[eipgam] 16/5/2012 13:16

Tullow sees growth
StockMarketWire.com
Tullow Oil said its performance to date in the first half has been excellent. In Uganda, the Group completed the $2.9bn farm down to CNOOC and Total.

The group said it is now progressing with exploration, appraisal and development activities.

The Ngamia-1 well onshore Kenya has opened a new basin and de-risked significant prospectivity in the region.

In Ghana, remedial work on the Jubilee production wells is progressing well, Jubilee Phase 1A development has commenced and the Plan of Development for the Tweneboa-Enyenra-Ntomme (TEN) project is expected to be submitted later this year.

Further potential basin-opening exploration campaigns have also recently commenced in Guyana and Côte d'Ivoire.

In addition, the Group remains on track to deliver total net production of 78,000 to 86,000 boepd for the full year.

Year to date financials are in line with expectations.

Capital expenditure for 2012 is expected to be in the region of $2bn.

As of 30th April 2012, net debt is approximately $0.5bn and un-utilised debt capacity is approximately $2.7bn.

Tullow said it is continuing to deliver outstanding results from its high impact, exploration-led growth strategy. The Uganda farm-down and strong production performance give Tullow a firm financial foundation to carry out its extensive work programmes in Africa and the Atlantic margins. Tullow is confident that, having delivered industry-leading basin-opening exploration success already this year, and with key developments progressing well, the Group will deliver further significant growth in 2012.

[eipgam] 15/5/2012 17:03

There is quite a lot about the Kenya op in this new presentation by their partner AOC (TSX:AOI)

[jeremy55] 15/5/2012 15:19

Volvo

what is your view on the Deeper Target, currently being drilled in Kenya by Tullow/Aoi ? , Do You expect them to Hit Net Pay ?

As if deeper hits , on top of the Shallow, The stocks will go absolutely exponential.

Exciting time's.

[hectorp] 15/5/2012 12:34

I don't think '5 years' apart from a collapse of the EU and a flight from equities and also many bonds.
I have miuch of my wealth as gold.
Rather I am thinking support on TLW chart is around 1180p. I have no present position here.

Possibly crude will have doubled in 5 years, by the same token I suppose that gold shall too.
This is the same sort of rise as the Chinese 5 year plan ( ie 15% compound basic wage and also consumer consumption rise).
Crude will be a very good long at some point again too.

[phillis] 15/5/2012 08:04

H

.. and over 5/10 years?

[ben chod] 14/5/2012 21:12

dodgy dictationsoftware that sometimes wraps words lookslike you bought a lemon with your speech recognition product

[bogotatrader] 14/5/2012 20:56

Bring on the Kenya news......

[zingaro] 14/5/2012 20:35

benchodpleasecheckyourpunctuationbeforepostingasitshelltoread

[ben chod] 14/5/2012 20:28

finncaps tenner predictiondoesnt seem that way offif this continues to slide short term blip