This thread is intended to record research, comments and recommendations by analysts and media which is specific to TLW.
For a similar thread at the level of the O&G sector see http://www.stockopedia.com/forum/view/30908/og-sector-level-brokeranalystmedia-coverage
| date | source |
target price |
rec |
| 8/7 | Numis | 871p | hold |
Interesting (and very extensive, especially re Africa) interview with Heavey can be found here:
http://www.tradingmarkets.com/.site/news/Stock%20News/2549487/
....I'll leave it to you to guess which bits I found the most interesting ;-)
ee
CNOOC joining ENi in the queue to farm-in to Tullow's Uganda project:
http://www.upstreamonline.com/live/article194216.ece
ee
I see that Exxon are booked in to see the data on Uganda:
http://english.capital.gr/news.asp?id=840139
Exxon Mobil Corp. (XOM) is studying a possible entry in Tullow Oil PLC's (TLW.LN) Ugandan project, people familiar with the matter said Monday, as oil majors seek to expand into new African territories.The U.S. oil giant is joining France's Total SA (TOT), Eni SpA (E) of Italy and China state-owned CNOOC Ltd. (CEO) as a potential partner pre-selected to enter the data-room of the Ugandan oil project.
Tullow confirmed Friday it had opened the data room to potential buyers of a stake in its Ugandan oil blocks after agreeing with the government on a shortlist of possible partners.
A spokesperson for ExxonMobil said it "routinely evaluates potential development opportunities around the world" but declined to comment further.
Given that Exxon are also bidding for the Kosmos stake in the Ghana project, one begins to wonder if they might find a whole-company deal for Tullow to be a more attractive bet? If one compares the map of Tullow's major interests with those of Exxon, then it isn't a bad fit at all......
http://www.tullowoil.com/tlw/operations/
http://media.corporate-ir.net/media_files/irol/11/115024/presentations/ExxonMobil_2009_Analyst_Meeting.pdf [slides 20-48]
....especially if they are looking to raise their profile in Africa [and bearing in mind they may well have a view on East Africa (as well as West), given their Madagascar position].
ee
In reply to emptyend (post #13)
Given that Exxon are also bidding for the Kosmos stake in the Ghana project, one begins to wonder if they might find a whole-company deal for Tullow to be a more attractive bet?
....especially in the light of the latest thoughts out there re the Kosmos stake in Jubilee:
State oil company Ghana National Petroleum Corporation (GNPC) intends to buy Kosmos Energy's stake in the giant Jubilee oilfield offshore of the West African country on its own, a source within the GNPC said today.
"We are not going for a joint bid with any rival company. GNPC has the money to acquire all the stake," the source told Reuters
The "resource nationalism" point that I flagged in the M&A thread yesterday suddenly has more resonance! ;-)
Where will that leave the Americans, Chinese and others who are keen to secure fresh reserves??
ee
Davy valuation comment in the light of Heritage sale.
Heritage has sold its interest in Uganda to ENI for a total consideration of up to $1.5bn. It looks as if ENI is buying 300m barrels, implying a metric of up to $5 per undeveloped barrel.
Our current valuation of Uganda is just over 215p per share, which compares to a group valuation of 1450p per share. On first pass, the Heritage numbers and the assumption of Tullow's right to operatorship give us comfort that our valuation of the reserves is also in line. However, we also expect reserve and resource numbers in the lake area to expand.
fuiseog
In Goodbody comment just over a week ago they took the view that TLW would be better selling up in Uganda:-
we wonder whether Tullow may be better served to sell out of Uganda in its entirety given:
i. a clear focus elsewhere (Ghana, WATM, etc);
ii. the capital commitments associated with the necessary infrastructure (up to $5bn - $6bn depending on the Ugandan stipulation regarding an in-country refinery); and
iii. the time required to achieve discoveries in Uganda into full production (2014 in our model, but potentially later).
The potential for further upside in Uganda, as well as political constraints, may well deter full divestment. That said, the stranded nature of the discoveries would suggest to us that Tullow would be better served in concentrating its resources elsewhere, particularly as it may well have less control over the direction and pace of development in the future.
This morning they change their tune:-
Press speculation this morning (Wall Street Journal) is suggesting that Tullow may pre-empt the Eni bid for Heritage interests in Uganda.
Given that Tullow is currently in the process of farming-out up to 50% of its own interests in the region, such a move would, in our view, likely be temporary and defensive in order to control the partner selection process and thus maximise the value that Tullow could abstract from any subsequent divestment.
Their valuation estimate for TLW Uganda is interesting compared to HOIL's price for disposal of its assets:-
Tullow's interests in Uganda account for 29% of our Total risked NAV amounting to £2.4bn ($4.0bn).
They also remind us of TLW's most recent financial position:-
Tullow re-structured its debt facility earlier in the year putting in place a new facility of $2bn. Debt outstanding at the end of October was given in the IMS at £664m ($1.1bn).
Makes me nervous, but Mr Heavey has been so consistent with his succsses that I have to give him the benefit of the doubt.
Could he sell the lot on?
Would that be politically acceptable to the Ugandans?
Wonder where the money could come from?
fuiseog
I'd hope TLW would have would have a pretty good idea of who was going to buy in, whether it was acceptable to the Ghanians etc before any preemption - that doesn't cut out all risk, nothing's definite till it's definite, but it would hopefullly keep it manageable. What is certain is that Tullow really doesn't want to find itself holding the whole 100% for long (at least this shareholder doesn't want them to, and I'd doubt I was alone)
I see that RBC have commented on TLW following the placing.
Theyve moved down to a sector perform rating and cut their target to 1300p from 1500p.
Citing the capex programme fo £990m being well ahead of expectations with no new guidance on delivery for new developments.
Also notes that they trade at a 15% premium to NAV well ahead of international mid cap peers.
Have to say that's not a million miles away from my own view, summed up as "Nice company but better value elsewhere". Of course, I coudl change that depending on the temrs of a sale/farm out to CNOOC/Total.
http://www.ft.com/cms/s/0/70b1773c-25d8-11df-b2fc-00144feabdc0.html
gives an alternative reason for the rise:
Analysts instead pinned Tullow’s move on a bullish post-results presentation from Anadarko Petroleum, its partner in Ghana.
One key positive was Anadarko’s rough potential valuation of its West African prospects. Phil Corbett, analyst at Tullow’s house broker RBS, said the read-through suggested Tullow’s equivalent assets could be worth an additional £10.3bn “or, to put it in context, approximately the current market capitalisation”.
db
Goodbody comment on Andarko presentation:-
Of interest from a Tullow perspective were the timeline for Jubilee production and the schedule of exploration activity along the WATM. Detail with regard to the former was very much in line with current expectations - production to commence in Q4, with a target Phase 1 rate of 120 kbopd and the FPSO expected to commence its journey to Jubilee in Q2. On exploration activity, 2+ wells are anticipated in the current year offshore Sierre Leone and Liberia, up to 2 wells are to be drilled off the coast of Cote d'Ivoire, though activity there may extend into 2011.
xxnjr has posted a summary of Uganda and Ghana PSAs on TMF: http://boards.fool.co.uk/Message.asp?mid=11859715&recscode=2
db
Macquarie - 1st March 2010 : Target Price 1600p (up from 1400p) : Outperform
Comments made when price was 1195p.
Reasons for Outperform: Large exposure to very prospective Equatorial Atlantic deepwater offshore exploration acreage in Ghana, Liberia, Sierra Leone, Cote d’Ivoire and South America. Tullow plans to drill over 35 wells in 2010, targeting several promising “Jubilee type” structures between the Venus discovery in Sierra Leone and Jubilee in Ghana. Production could increase to >200kboe/d by 2016 due to several high-impact developments in Ghana and Uganda.
Risks: Exploration risk as the company operates in frontier areas, and project delays as the company has a number of large development projects in its portfolio that it will try to commercialize in a short time frame.
Catalysts: Near-term drilling catalysts include Dahoma, Mahogany-5 appraisal and Tweneboa appraisal.
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Bet you've never seen a valuation like this .
Strictly curiosity value only (notice the way he's omitted the debt until he's reminded)
http://seekingalpha.com/article/199034-the-valuation-of-tullow-oil#comments
In particular if you want a contrarian view of the value of the Ugandan assets its here - mind you I wouldn't be overly dismissive of that view in the absence of Musaveni.
Tullow's 2009 results show that South America is dead (spun off in a deal with Shell and Total (TOT)
wow - what a weird idea, that getting Total and Shell to farm in to your South American assets where you retain 40% and operatorship means that they are worthless!
db
Five years to lift and ship 600 million barrels. Development plan calls for 17 wells in total. There is a possibility of Odum tie-in, but I don't see it as a net gain. Upside of “reserves growth” not considered proved.
Jesus wept!!!! There's more too when he uses his assumption above (thats an average of at least >300 kbopd every day for 6 years!!) and then forgets to apply any discount factor to estimate the present value of these future oil revenues.
This tagnut shouldn't be allowed to blog this stuff to unfortunate PI'sout there who think he knows how to value Oil Companies!!
JPGH
Von A comes across as a know-it all who actually doesn't know very much.
Surely the biggest deficiency in this bizarre "valuation" methodology is that it completely excludes most of Tullow's assets?
1) the exploration upside in Ghana - there is a raft of exploration prospects remaining to be explored - based on past experience I'd expect ultimate reserves to end up as a multiple of current reserves
2) Uganda - if the NPV of these assets were zero as von Altendorf asserts, then why exactly have successful, well managed oil companies been competing to buy into them at prices which translate to multi-billion valuations?
3) South America - von A appears to disregard these very substantial prospects simply because Tullow has farmed out a partial interest. Doesn't he know/understand that farming out is the industry standard method of managing risk? And if the assets are worth nothing, why exactly have successful and well managed oil cos farmed in?
4) N Sea assets - why does von A say they are loss making? what supporting evidence does he provide for this very surprising statement?
5) What about the rest of Tullow's asset portfolio? Does von A think that exploration assets at an early stage of their lide cycle are worth nothing?
And what exactly does von A mean when he says that Tullow "pushed Heritage aside". That is a description of events that bears absolutely no relationship to what happened. H decided to sell out of its licences. T was miffed because the timing clashed with T's farm-out programme. T exercised its rights to pre-empt the H farm-out. Where on earth is the "manipulation" or the "push aside"? von A is talking absolute rubbish.
And what is the man on about when he describes Ghana? Ghana is not a failed state that has been nudged towards democracy by the US and the UK. It is one of the most civilised countries in Africa and has been for a very long time. There simply is no comparison between the likes of Nigeria or Guinea on the one hand and Ghana on the other. I wonder if von A has ever travelled in West Africa? Perhaps his prejudice is simply the result of being a stay at home without a passport who thinks that Africa is a single homogeneous country.
Arrant nonsense.
Von A bills himself as
president and managing director of CWSX, L.L.C., an oil & gas exploration consulting firm based in Houston. Their geology and geophysics ("G&G") team have a 20-year track record of picking successful drilling locations for major international oil companies.
According to Rigzone, von A's company employs a total of 3 people. Basically he is a freelance technician.
Sorry, I submitted the previous comment before it was quite finished....
I meant to say that Mr von A appears to be a seasoned professional in his chosen field of using technology to help E&P's select drilling locations.
But that activity has got nothing at all to do with the valuation of individual assets, asset portfolios or entire companies. It would appear that he is going far beyond his sphere of competence/expertise.
Frankly I'd be more interested in hearing his thoughts about companies he knows well which are operating in regions he knows well.
I should add that I have no position in Tullow, so have no axe to grind here.
