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.
"Of course TLW produces but it isn't a pure production company"
So just who are these pure production companies?
Shell, BP, Mobil, Exon,Total, ENI perhaps?
To produce oil, someone has to find it first. There is less profit to be made from buying into another company's discovery. If you can find and exploit the oil yourself then you do not have to share the profit with anyone else. That's why all the majors are explorers and producers. As are Tulow!
I never said that TLW was a pure production company. In case you have forgotten you said that TLW were not a producer, which is cobblers. End of!
Of course TLW produces but it isn't a pure production company and doesn't have a strategy of generating its profit from production. The proceeds of production are to fund exploration by paying down debt and generating cash flow. Some people wrongly persist in valuing TLW solely as a producer and ignore the exploration part. The exploration is steaming ahead, it's not all about drilling. Dyor and you'll see the prospects that are in train.
All that means is that the value won't be appreciated by the crowd until the fruits of exploration materialise and TLW starts selling acreage into that shortage of oil that will squeeze the majors after exploration has been cut across the board. That's the gap that TLW will sell into.
"Tullow Oil is a leading independent oil and gas exploration and production company."
I really do not understand your argument, Brummell.
The quote above is on the home page of Tullow's website. If Tullow describe themselves as an exploration AND production company, why are you contradicting them?
Exploration companies are those who are yet to find oil, or who have not yet started producing it, such as Chariot Oil. This is their home page description:
"Chariot Oil & Gas Limited is an independent oil and gas exploration company"
I will be interested in seeing the long ago stated strategy that you claim says otherwise. The high level of debt, that you mentioned, is because they have drilled too many dusters lately. They also wasted a lot of money and time trying to be a producer in Uganda, before all but selling out to Total.
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. The high level of debt was taken on in order to kick start that and get it ahead of the game, not as a permanent commitment. It doesn't need to operate fields permanently in order to maintain that strategy, it can move on. Selling producing fields while retaining a non-operating interest is a lot more lucrative than selling on non-producing fields but requires good management and TLW has that. Ghana started that by providing the cash flow needed to service the initial debt.
The majors have exploited explorers for a long time, mainly because finding and selling is a survival game under the pressure of cash flow. Imho TLW will not remain an operator in any field on a permanent basis and we will see it selling and moving on while retaining an interest when the time is ripe. I suspect that will be as oil reaches $80, maybe sooner. It will continue to explore and to develop some fields to production before selling in the longer term but the time will come when the right thing to do is accept a bid from a major.
"The fact is that TLW is not a producer, it is an explorer that is developing and retaining production income to help fund exploration. "
How can you say that Tullow is not a producer, Brummell?
The company's business may be biased towards exploration, but Tullow have 35 producing fields, and expect to produce over 85,000 barrels of oil per day in West Africa. It may not be up there with Shell or BP, but just how many barrels per day do you have to pump up, to be a producer?
Note the word PRODUCTION in Tullow's own words.
"Tullow Oil is a leading independent oil and gas exploration and production company."
"In 2017, West Africa working interest oil production, including production-equivalent insurance payments, is expected to average between 85,000 and 89,000 bopd. Europe working interest gas production is expected to average between 5,500 and 6,000 boepd."
Cashman, many TLW holders will have a portfolio. Other holdings aren't really relevant to this bb. We know that there are many investment choices, but TLW fully deserves a place in the portfolio of anyone interested in oil exploration. Diversification is good, explorers provide a different type of opportunity
The fact is that TLW is not a producer, it is an explorer that is developing and retaining production income to help fund exploration. TLW has many prospects in train, it is developing its proven interests in Kenya and has retained interests in Uganda while cutting its ongoing liabilities there, it has developed TEN and increased production in Ghana. It is diversifying and emerging from a period of perceived risk due to its reliance on Ghana; Ghana has however been TLW's springboard. Many other irons in the fire that I won't bother listing but you can discover for yourself by referencing the TLW website.
If you don't understand how explorers work then you shouldn't really have been investing in TLW in the first place. Why waste time posting here if you have no interest in TLW? Or were you looking forward to the IEA numbers that are due out shortly?
My point was there are better choices of investment. I'm looking at JD Sports and Next at the moment. They have a good return on equity. Next is on a PE of 10. Good value is difficult to find at the moment. What is Tullow's expected earnings or prospective P/E?
Cashman, as you should know I don't "tell" anyone to do anything. Like other honest posters I express my opinions and others are free to agree or disagree with them. I don't see much value in claiming past gains which might or might not be hot air. Those who bought at higher prices did well if, like commercial, they stuck to their judgement and averaged down rather than realising a temporary loss. No-one makes a loss until they sell. Presumably you sold before the rights issue so lost the opportunity to average down by a significant amount then.
Some were telling people to sell at £1.16 (about £1 corrected for the rights issue).
What was your original point? Were you boasting about making a profit when you sold? Were you complaining about having realised a loss? Were you boasting about having profited from other investments?
As you are still posting here are you contemplating using the proceeds from your previous sale to buy at the current price? (That would be a good move). Or did you go short and are now suffering?
Congratulations to anyone who has profited by making wise decisions but, as I said, it is always easy to be wise in hindsight and to claim wins historically while forgetting realised losses. Today illustrates the issues. The news is full of bullish sentiment with talk of ISIS plans to attack Libyan oilfields, the meltdown of the Venezuelan oil industry, bigger than expected drawdown reports from the API, record long positions in oil by hedge funds, problems in Iran, record lows in exploration etc. etc. That bullishness is well reported but it also provides room for contrarianism in the short term, as always, if the market overshoots. I still think that the short term trading is closer to gambling though. The market may overshoot or it may not, the bullish factors may fade or they may actually occur.
Imho the bullishness is well founded in the longer term and I won't jeopardise future gains by gambling in the short term (much). Gambling is fun but investment is a different, cooler game.
As for TLW's debt, they played it very well. They borrowed a lot of money and were bound to pay a bit of a premium for that, but they borrowed at a time of low interest rates and low competition from other explorers, their timing and their decision to retain production income were impeccable. Borrowing big has it advantages, you know the saying "if you can't repay a £1,000 loan it's your problem, if you can't repay £1bn it's the bank's problem"; TLW bought a lot of support from its lenders. That has allowed them to take a big leap forward in terms of prospects, reserves and production during the lull. They are now in a great position to take advantage of even a minor recovery in oil while making substantial reductions in their debt. Imho that is going to result in a rebound in TLW's fortunes that will be worth the wait. If the recovery in oil is a major one then all the better, that rights issue will turn out to be a major windfall for those shareholders who took it up. Those who accumulated more at the lows will do even better (and we are still in those lows imho).
I sold this stock about 2 and a half years ago. No one predicted the crash in commodity prices, but Tullow borrowed too much and paid too much in investment. The share price is still under that I sold for. I hold gold, silver and platinum at the moment along with sterling, dollars and euros. There are far better cash generating companies around and they are able to return cash to investors as opposed to banks and other debt providers. However, stocks I paid 3 times and 6 times earnings for in 2009 are trading for over 8 times earnings....
commercia, sounds like you've played it about right. £7.50 wasn't a blunder at the time, No-one has a crystal ball and what goes down must come up again if it has buoyancy. The value has always been there with TLW, you only have to look at the way they have managed debt and overcome all of the difficulties that they have been presented with to see that. It's always easy to look back and see how you could have made more money but there's no risk in hindsight. The true value is even higher now and hasn't been anywhere near recognised yet. Imho the long term holders who have taken advantage of the short sightedness of the herd will be proved right. The trading of some of those who dug themselves into short positions at the lows of two years ago influenced the market but must be suffering now. They will be glad to cut their losses by milking those who feel happy to break even at the resistance points on the way back up.
I think that 2018 is the turning point for oil and TLW but volatility will continue and the real gains will come in 2020 - 2021. Still worth buying at the lows imho and continuing to trade on the long side. For most break even is only a stage in the recovery..
I have worked this so hard to recover from my blundering purchases a few years ago at 750p odd. My average today is 222p. I have a sizable holding now and hope to continue the good trading opportunities here. good luck to all those long termers out there
I would not put too much into the rise of AOI today. The stock is only responding to the end of "end of year tax selling ( for losses )" and hence buyers are now stepping in. That said it has broken out of it's downtrend ($1.50 ) and looks very attractive here. I guess for this to go higher will depend on the price of oil holding up and more importantly if there is going to be an increase in the 2C reserves after last years discoveries i.e Erut stc..
Shorts down again to 5.63% on yesterday's list. Brent and TLW looking healthy. At the very least the current oil price provides good hedging opportunities for TLW and if sustained it will assure higher than predicted profits in the next report. Still a lot of shorted shares to be bought back though (if the disclosures are to be believed).
With the FTSE at an all time high things are looking bullish for the New Year but the contrarians will have plenty to convince them it is a bubble. If so TLW will be in for the same rough ride as the rest of the market but the short interests have ensured that TLW has not yet fully responded to the lift in commodities or the improvements in its own situation. The majors are also showing signs of playing catch up in exploration to recover their reserves. That will imho lead to acquisitions and a more realistic view of the value of the independent explorers.
Imho the tail end short positions are set to suffer even more. Next week should be interesting.
Another reason for watching things like short selling declarations is spotting things like this.
Today's list shows an increase in the short positions of 0.07%. That is down to just one declaration, by Key Group Holdings (Cayman). Their previous declaration was for the day before, 19th December. Following the norm both declarations were made a day late. Their declared short position changed from 1.24% on 19th to 1.31% on 20th. That means that they sold around 9.7million shares on a day when, according to my feed the total volume was 13.6 million and the breakdown was 4.36m buys, 6.54m sells and 2.66m "unknowns" and TLW's SP rose by 5.70%. Really?
I guess that's just how they do things in the Caymans.
Always good to see well stated contrary views, that's what debate is all about. Imho the shorts are very relevant at the moment because they stimulate trading in one direction and order book "working" in the other. TLW is affected by short positions in its own stock and in the crude oil market. The volatility of crude is particularly important to TLW because of the hedging opportunities, which it takes advantage of very effectively.
The "best " way to make money is, of course, trading on a timescale that you feel comfortable with; in that respect we all trade even if over a period of years. The longer term outlook provides a level of security against short term volatility (especially that manufactured volatility). I don't discuss short term trading tactics because that is suitable only for those with the right aptitude and that can't be judged on a bb. Too often we see inexperienced investors encouraged into the wrong trades for the profit of others. Remember the negativity we were seeing when TLW was down at £1.16 in early 2016 (now about £1.00 corrected for the rights issue). Anyone who had the good sense to buy at those prices is now sitting on a handsome profit that provides a good level of security for the longer term ride.
If sentiment genuinely changes we will se a big spike in the short positions early on. That may be regarded as a warning or as a buying opportunity. Investors should do their own diligent research into that and make their own decisions about how to play it in the light of all relevant circumstances. Good arguments can be made in either direction, only the well researched long view gives true perspective. Risk is always present though, that's why we get reward.
In "short" I think that when institutional short sellers are present in numbers they are the major influence on the short-term price, regardless of fundamentals. Imho the really important factor is long term prospects, not short term churn. The short sellers don't always get it right, as we can see with TLW in at least one big institutional position that was built at those extreme lows at a couple of years ago. The period when they are trying to extricate themselves from their positions can be a very good time to buy.
For me the short positions are an indicator worth watching. The important factors for the PI in TLW are the longer term fundamentals, especially faster pace debt reduction and the eventual return to dividends that is rumbling. My own view is that TLW is in a better position now than it has been for years and that is due to well considered business judgements made long ago. Good luck to PIs either long or short. In the short term PIs will never beat those trading with the benefit of lots of other people's money though. Just as TLW dropped unjustifiably far in the bad times so will it rise as the institutional tide changes from short to long. Day to day it will continue to be volatile. I genuinely wish you luck in trading that because luck plays a big part when you are subject to the motivation of other players. Personally I see trading as a way of protecting and enhancing a long holding and I am comfortable with my own position with a much bigger stake and a much lower average price than I would have had without the volatility. As you say, with Brent again knocking on the door of $65 the oil company hedges continue to provide security for companies like TLW. We may, or may not, see TLW back down at £1.59 but I won't be selling in the hope of seeing that. I'm bullish enough to hang on to the value I have in the prospect of more to come but, all things being equal, I too would probably be a greedy buyer if we were to see that price again.
Interesting that you mention shale oil hedging. Those producers are on a much thinner profit margin at current prices, lots of drilling means lots of cost. For them a hedge can be a risk in that it could eat into profits if the oil price rises. TLW is making a good profit
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.