Why on earth would you hedge Oil output here Tony ????
Oil is just on the cusp of recovering from the longest bear market on record and with exploration spending cut to the bones will overshoot massively to the upside over the next 3 years as a massive shortage ensues to at least $150 a barrel again thats when you start hedging.
OPEC countries are short on cash and want at least $100
Looks very good to me, including the hedge with 45,000 bopd, 2,599 more than this time last year and at a lower price but they will adjust as necessary going forward and make decisions as to the hedging requirements as things develop.
Everything as expected, especially the debt reduction going well. What's more TLW's income and accounts are in $US, which protects it rom those Brexit fears that are being voiced (again). (just for stratty).
Hence why it has gone up further without retreating much and ignoring RSI and stochs overbought and just about everything else. A future hedge at $70 is worth a lot more than $50 or $60. The news itself was fully priced in regarding all the other issues imop. If it was heavily hedged at lower oil price and done within the quarter a peak would have been delivered and the SP retreated as I speculated out before. I am amazed they have not hedged more of their oil production. It implies huge inflationary pressures elsewhere if oil keeps going up.
Recovery mode: Higher production and prices put Tullow Oil on firmer footing
2 HOURS AGO
Tullow Oil showed the benefits of increased production and higher oil prices when it announced a surge in cash flow and a sharp fall in debt on Wednesday.
The UK-listed oil explorer said it expected to have generated $500m of free cash flow in 2017, beating previous guidance for $400m.
Net debt was expected to fall by $1.3bn to a year-end level of $3.5bn after the completion in November of a $2.5bn refinancing with lenders.
The trading update highlighted the recovery under way at Tullow after a torrid period of financial stress and operational disruption during the oil market downturn of the past three years.
Paul McDade, chief executive, said the company was now positioned for growth after strengthening its balance sheet and increasing production from its Jubilee and Ten fields in Ghana to an average 89,100 barrels a day in 2017, at the high end of previous guidance.
Mr McDade said new projects in Uganda and Kenya were progressing, while new licences acquired in Ivory Coast and Peru opened significant new exploration opportunities.
With our diverse low-cost assets and high-graded exploration portfolio we have a strong foundation to grow the business and further reduce our debt, he said.
Full-year revenue was forecast to be $1.7bn, with gross profits of $800m.
I'm only running profits at the moment so don't have a great deal to gain but hope for a good rise.
Then thoughts will turn to selling. There doesn't seem to be any point while the oil price is rising as it is and as regards recent discussions on here it's difficult to see Tullow being overbought with that background either. However, I'm sure the market as a whole is. It's in a crazy place. I also think it's prudent to watch the dynamics behind the oil price closely to see if it's getting ahead of itself. When the pullback comes I think it will be rapid and large regardless of Tullow's health.
Credit Suisse says its time to buy oilfield services stocks. The oilfield services sector - after suffering the sharpest decline in history followed by the sharpest recovery - is back to what appears to be at least a three-plus year run of somewhat normal growth,
A recovery of the services companies is a good sign of an oil sector recovery.
Another thought crossed my mind. I checked the FTSE 100 and the bottom position is occupied by Hammerson with a market cap of £4.233bn. TLW will overtake that at a share price of £3.06. It hadn't previously occurred to me that the rights issue was such a success that it actually reduced the gap between it and the FTSE 100. Another 85p gained a recovery specific to the oil sector could bring it back in reach of the FTSE 100 and that will bring in buys from all of the index trackers etc. It's not likely to happen tomorrow but it's worth keeping an eye on.
"WTI $61.73 +29c, Brent $67.78 +16c, Diff -$6.05 -13c, NG $2.84 +4cA modest up day yesterday, somewhat led by product prices in the US which is not surprising given the bad weather out there. As forecast, distillate stocks are running down as US ..."
Tlw was the easiest stock to detect the peak in the exploration cycle when the initial success of the Zaedyus well was not rewarded sufficiently. That was my cue to sell my position and stay away from that sort of risk in the sector.
Even though I may have made the right macroeconmic call on that
risk aspect in the sector it is still a very difficult task weeding out the truth tellers from the liars on the quality of their producing assets. Very few companies in extractive industries spend less than their operating cash flow and few give information on their depletion curve or they will hide negative information on a non producing asset.
With that said a weak dollar policy is good for most commodities so this sector should have positive momentum barring any negative surprise in operations.
im still in and holding. Is tomorrow priced in already or will it fall back. who knows. sell on news etc
But I have decided to hold and will buy more if it falls back to 200 or lower as Im confident tullow will go much higher than todays price in the coming weeks and months. I will start taking some off the table north of 320p+ maybe not
kenj, well let's just let bygones be but I regard it as a good trait to stick to ones opinions if they are based on research and substantiated facts. Debate is a healthy thing as long as it doesn't deteriorate into personal attacks and research is stimulated by disagreement so let's hope that we can stay constructive.
For now I make no apologies for being a supporter of TLW because I think that the management has shown quality in difficult times. The share price has suffered along with the entire sector and TLW suffers from being that "leveraged play" but I believe that the recovery will come and we need to be in a positive frame of mind if we are to take advantage of that. If I didn't think TLW was a good investment I'd just sell and go away. I do find it difficult to reconcile persistent negativity on any bb because I can't see why any reasonable person would retain a negative interest in a company except purely for financial gain. That doesn't mean that we should all turn into sycophants. The system should work to encourage investors to put their money into the support of longer term success to achieve a financial return, not to just find ways of making a quick buck. Those who don't like a company should just walk away, not invest in it, or attend the AGM and voice their views. That's where my dislike of institutional short selling comes in, but that's another issue.
It's an unfortunate fact that negativity on a bb tends to attract the manipulators. That may also be true of positivity of course but it is far easier to spot with negativity because of the reasons I mention above. If I appear a bit too enthusiastic that may be because I am used to stating my case with conviction, not arrogance.
I'm not a medieval Knight or a Millwall supporter by the way, but I don't see anything wrong with either group, I'm sure that both contain(ed) the usual mix of good and bad. We shouldn't categorise people, that's the root of discrimination.
Good luck to you for 2018 also. There's plenty of potential in TLW for all.
Thank you for your very detailed reply Brummell. I am pleased to see that it was rather more humble than is usual for one of you posts, but not I am afraid totally accurate. And while I am sure that it was not meant as such, I take your statement that I am "no gentleman" as a compliment.
"You'll never see a short seller admitting a loss" Brummell
Well you're right there Brummell, and we have never seen you admit to a loss either, despite repeatedly ticking the BUY box and praising this stock to the gunwales as it crashed to earth from over £13 in 2012. Just look at that chart that Shugg1e posted, it is not good reading.
"I made some good points but I also made some mistakes in my argument. As soon as I realised that I admitted them and apologised to you directly. You now try to manipulate even that situation by saying that I refuse "to admit defeat when it is clear that you are wrong". The opposite is patently the truth." Brummell
That's not quite the way that I remembered it Brummell. I'll re-post your apology, as you seem to have forgotten exactly what you said.
"kenj, have you ever woken up to the recognition that you have been utterly wrong about something? Well I have, twice now, and I can't understand how I reverted. I can only put it down to an uncharacteristic stubbornness, an unforgivable failure to clarify my thoughts on the issue and a lack of shorting experience. At least I defended my position to the very end and went down fighting against overwhelming odds. My apologies for the vigour with which I defended that untenable position." Brummell 4 Apr 2017
The stubbornness that you admit to is far from uncharacteristic, it has always been a feature of your posting. It took ages for you to finally admit that you were wrong, and your own words "I defended my position to the very end and went down fighting" says it all. We are supposed to be having a debate ( I am a shareholder too), but you view any differing view as a challenge that has to be answered, with a fight to the death. You sound more like a medieval knight, or a Millwall football supporter than a Tullow shareholder. Apologies to any Knights Templars, or Millwall fans reading this, but you have both had a bad reputation over the years.
Anyhow, I feel that this discussion has gone on for way too long, and we are in danger of boring the other posters to death, if we haven't already. So I will wish you well for 2018, and try not to jump down your throat in the future.
The 10 day indicator above the monthly indicator is practically on 100% and is red hot. Every time this has occurred for Tullow since it was traded on the market has led to 15% or so corrections. It does not rule out a higher rally peak in later weeks. The one month stoch reading is showing a modest read which supports tomorrow delivering a potential peak price.
I do not own any and have no position. One way to fool the stoch readings is a shock drop of 10 or 15p and then it moves up before the end of the trading day with hardly no change. Whatever happens it looks as if it is set up for volatility and may be fun to trade.
Shorts down again in today's list with one new declaration by Odey. He has reduced his short again from 0.82% to 0.77%, bringing the total declared shorts down to 5.21%. He clearly doesn't see TLW as overbought right now.
You need to improve your comprehension. I was agreeing with you about TLW's primary aim being to make money and therefore questioning why you were making such a fuss about the production/exploration thing. The important fact is that production is how TLW funds its exploration. It should not therefore be valued as a producer when its real value derives from exploration.
You shouldn't make unfounded assumptions about the investment activities of others either. I don't discuss trading for reasons I have stated but any investor has the right to trade his holding to gain value, that isn't a privilege that is restricted to short sellers. I've done my research, come to the conclusion that TLW is a good company and invested in it and that's why I post positively about it and oppose those who try to influence and deceive others out of self interest.
The rights issue gave those shareholders who (like me) took it up in full a significant buffer against volatility. They are now sitting on a profit of close to 70% on their new shares with no dealing costs or trading stress. I certainly expect that profit to increase in future and give me a far greater total benefit across my entire holding in the fullness of time. As for short sellers making a profit, you just have to look at some of the professionally managed positions that are publicly declared to see that they have lost millions by shorting TLW at the lows. You'll never see a short seller admitting a loss but you'll see plenty saying that they have made a fortune. No uncorroborated boast should be believed but the profit on that rights issue is an incontrovertible fact.
You have sunk to an all-time low in your personal attacks on me because I don't say things that don't suit you. At the rights issue I took exception to your claim that the opening share price could be predicted by a mathematical formula. I pointed out that the calculation was theoretical. Attempts to convince other investors that it is an unavoidable fact have an obvious and selfish motive. I stick by that view. I then allowed myself to be drawn into a side argument that I was not really interested in at a time when I was trying to keep an eye on my TLW rights. Hardly a pasting, I made some good points but I also made some mistakes in my argument. As soon as I realised that I admitted them and apologised to you directly. You now try to manipulate even that situation by saying that I refuse "to admit defeat when it is clear that you are wrong". The opposite is patently the truth. I don't admit defeat but we are all allowed a few mistakes, especially if we admit to them and apologise. I regret to say that you, Kenj, are no gentleman. I suspect that is about as strongly as iii will allow me to phrase it.
Not overbought at all as long as oil maintains its current level
You just can not use that factor with commodity shares i follow the commodities when they keep rising and the shares flat line that is your sell trigger, at the moment oil is flat and the shares are still rising so its still on a buy signal.
The trading update should be all good news. Those who took up the rights and held them are all now happy and have a very good buffer against volatility as they are within a hair's breadth of 70% profit on those rights. The debt refinancing went smoothly in November and the company's statement of its plans to accelerate repayment adds a lot of optimism for the future. Further development of the fields in Ghana is going bring more good news not just on production, it will bring more farm out opportunities. All set for a flying start to 2018 I think.
Tony, don't forget that this follows a period of TLW being seriously oversold in terms of it's own performance and situation. The fact is that the doom and gloom merchants influenced the share price but were wrong and the market will realise that more and more as debt reduces and TLW moves further into positive cash flow.
In technical terms, according to my RSI TLW has been neither overbought nor oversold for some time now, it is recovering from showing oversold back in June. I make it that the RSI was just over 67 at the close today so not yet technically overbought, but at a level that you could reasonably expect after a strong recovery. I think that TLW could continue to improve steadily without showing overbought.
It does, of course, depend on how you are looking at the RSI. I prefer to use the Wilder 20 day. The Simple RSI and the Exponential do show slightly overbought but I think that is to be expected after that recovery and the haste with which some short positions are being closed. I wouldn't say that either are seriously overbought.
As always I think that the main factor is the oil price. You also have to remember that TLW is very astute at hedging and has now had plenty of opportunity to strengthen its hedges. If the price does drop along with the oil price I'll see that as another buying opportunity.
Correction most likely. Tullow run was helped by falling dollar and rising Brent oil price, rising demand from weather and pre-Chinese New year take off. Delayed Tullow maintenance in some of its production fields also helped the SP. Most of these could well swing the other way fairly soon. Tullow has enjoyed a good run. The exit door gets rather small when everyone leaves at the same time.
I am disappointed, but not surprised, that you find that statement controversial. It is why, any and every company, starts up. Tullow are not a charity or some philanthropic organisation. It is time you stopped putting Tullow on a pedestal, Brummell.
Tullow as an investment have been an absolute disaster these past few years. Only shorters and day traders have made any profit on this company. So that obviously counts you out.
Tip for the new year: stop acting like the official spokesman for Tullow.
It is your pompous pronouncements and put downs of anyone who disagrees with you, or dares to post anything less than positive, that gets you in all these spats. Your stubbornness and refusal to admit defeat when it is clear that you are wrong, only makes you look foolish.
And don't forget the pasting that you took from me and other posters recently in discussions about rights issues, and shorting. You clearly knew little about either subject, but stubbornly continued arguing a lost cause.
"Tullow Oils Ghana unit has awarded Danish Maersk Drilling a four-year contract for the Maersk Venturer drillship, to be deployed at the Jubilee and TEN fields offshore Ghana. The two are among the most promising new fields discovered in Africa in the last few years."
Hope you managed to get a good night's sleep Kenj.
"Their primary aim Brummell, is to make money."
Well that's all that matters then isn't it. Why make so much fuss? You really have to stop getting in such a fluster about petty semantics, you'll have more time to do proper research. How's your digestion bearing up?
Amusing as it has been this really does have to be my last word on the matter. Sorry to disappoint you but there are far more pertinent and interesting things to do. An interesting week ahead and an even more interesting year.
And TLW is a public bb not a private email facility. Do try to keep up yourself.
Another extremely long winded post to extend and confuse the argument. Your usual tactic when you are losing, Brummell.
"Kenj, you seem to be suggesting that I don't know that TLW produces oil in Ghana and elsewhere. If you had any clue about TLW's strategy you would know that its primary strategy is to make its money by exploration."
It is you that stated that Tullow was not an producer Brummell, not me.
"Our long-term strategy is to find oil through exploration which we then seek to monetise through production or the sale of assets." - Company Quote
Their primary aim Brummell, is to make money. Explore, find oil, then either sell it, or produce it. This is why Tullow refer to themselves as an Exploration and Production company, and not an Exploration company.
"The fact that you also attempt to discredit by reference to consensus votes is another a clue. I have never "told" anyone to buy or to sell. "
Oh dear, oh dear Brummell, you are really losing it. That argument was between you and Cashman, not me. Do try to keep up!
Kenj, you seem to be suggesting that I don't know that TLW produces oil in Ghana and elsewhere. If you had any clue about TLW's strategy you would know that its primary strategy is to make its money by exploration. The retained earnings from production interests are used to provide the cash flow to service debt incurred for exploration and production will no doubt increase in future to reduce the need for borrowing. I'm not going to do your research for you but I will make you a free gift of three references to start you off:
"Our long-term strategy is to find oil through exploration which we then seek to monetise through production or the sale of assets. We have demonstrated this both in Ghana through the development of the Jubilee and TEN fields and in Uganda with our farm-down to CNOOC and Total in 2012. Exploration success gives us options to monetise assets and maximise value at various points in the cycle. We selectively develop the oil we find, focusing on world-class development projects that are economically viable and will return sustainable future cash flows."
It goes on to explain the reasons for reduced exploration during the downturn. Imho that is a very wise strategy in current times, I'll leave you to work out why, but TLW is still maintaining a healthy level of exploration, despite having reduced. I doubt that we will see TLW as the operator of many fields in the longer term. Note, re-investing the proceeds of production is simply one way to support the primary activity of exploration.
Many have misled investors by encouraging them to value TLW solely as a producer in order to downplay its real value during the crude crunch. I can only assume that you are either one of those who were misled or you are one who is trying to stay afloat by grasping at both straws and other investors. Your deliberately pedantic misinterpretation of my meaning gives a clue as to your intent.
The fact that you also attempt to discredit by reference to consensus votes is another a clue. I have never "told" anyone to buy or to sell. Read up on the purpose of iii's consensus votes as part of your research. You might also read up on their advice at the bottom of this page and elsewhere on the site as to the status of posts on the bulletin boards.
And yes. in the past investors did pay £10 and more for TLW and it was worth every penny at the time. Times change though and the whole oil industry has suffered. The effect is invariably for the market to overshoot though and that's when bargains are found so what exactly is your point? TLW's share price is subject to the effect of being a "leveraged play" on oil. Perhaps you're at the wrong end of the lever? TLW is in a good recovery position, has cut costs and has made significant progress despite the downturn. A great position to be in as oil recovers and the effects of exploration cuts across the industry start to bite.
Now, that is most definitely the "end of". I'm not going to take any more notice of your desperate ramblings, you will no doubt continue to project water into the wind but that will further reveal your motivation.
I posted the Tullow History post especially for you Brummell, as you appear to have forgotten the company's roots. You will see that Tullow started life as a production company, not as an explorer. So your term "pure production company" might seem to apply to them more than most other Oil companies.
Most small oilers start as explorers, they find oil or gas, and then either sell the field to a larger company and continue as an explorer, or they borrow money / find a farm in partner and begin production, whereupon they then become an exploration and production company.
Tullow did it the other way around, they became a producer, and then started exploring for more oil fields. And they have been producing ever since, which makes a complete nonsense of your earlier statement:
"The fact is that TLW is not a producer, it is an explorer that is developing and retaining production income to help fund exploration."
FACT: Tullow is and always has been a producer.
Lastly I have read through TLW's history and their strategy statements on their website. So I have done the DYOR that you suggested, but I still cannot find any confirmation of your statement below.
"TLW stated its strategy a long while ago, dyor. It's main focus is exploration but it retains some production interests in order to fund exploration and reduce borrowing."
"It started in a small town called Tullow, about 35 miles south of Dublin, Ireland. I was talking to a friend of mine and he was talking about small oil fields in Africa, which had been left behind by the majors and had no-one to work them. That is where the idea came from. I contacted another friend of mine in the World Bank who told me about a project in Senegal. They had some small gas fields that they were trying to get people to develop, so I set up Tullow Oil to rework those old fields. I knew nothing about the oil and gas industry at the time, which made it more challenging. No one thought Tullow would succeed because of my lack of knowledge of the industry, no major backers and I was starting a company in a country with no oil industry."
Founder and Chairman
Just like when you never told people to buy Tullow shares @ over £10 even though you clicked on "buy".
It's all down in black and white. However it's not important to me that someone who only holds shares in one company and recommends a share at any price. I just hope new investors have a balanced approach
Kenj, as usual you becoming more pedantic the more you lose the argument. My point was that TLW's value should not be assessed as if it is solely a producer, the production is carried out in order to fund its main business, exploration, and to repay debt that was incurred mainly for the purpose of exploration. TLW's value is in the assets that it will sell when the price is right and when it has developed production to achieve the best profit point. Got it yet?
The exploration record of the companies you mention is pretty dismal. Think of Shell's Alaska fiasco:
And Shell had to "shell" out $74bn for BG to pick up some exploration assets in 2016. In 2010 it spent $4.7bn on East Resources. Just a couple of examples.
The majors buy into most of their producing fields and rely on smaller E&P's to keep them fed..
Now calm down and do some research. You'll only get indigestion in your excited state. Look on the bright side, TLW was up again today and the shorts are down to 5.26%. Odey says that he reduced his TLW short to 0.82% on 04/12/2018. His previous declaration was on 19/12/2017 when he was at 1.19% so it looks as though he has made a New Year's resolution to get out of his TLW short as quickly as possible before he loses even more! He clearly doesn't think that TLW is going downhill now does he? Back on 4th August 2016 (when TLW closed at £1.67) his short position was 4.80%. He will go on record as a major benefactor of long TLW shareholders.
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