Tullow Oil AGM Report: Another Perspective

13th May '10 by doverbeach

7 comments 4234 reads

There was an AGM writeup regarding Tullow Oil Plc (LON:TLW) on iii this morning. A lot of the details seem the same, so I guess we were both at the same meeting. However the reporting seemed bizarre, to me at least, so I thought I'd reply. Let's have a closer look at what Fiona Bond wrote:

Oil explorer Tullow Oil (TLW) had a lot of explaining to do to disgruntled shareholders at its annual general meeting today.

Every shareholder I spoke to afterwards was far from disgruntled - enthusiastic or happy would be more appropriate words. It seems odd that Fiona Bond didn't seem to speak to any of these shareholders.

At London's Haberdashers Hall, chief executive Adrian Heavey went on the charm offensive as he tried to convince investors that the recent downturn in share price was merely a "blip" and that great things lie ahead.

He gave a presentation about the company as is usual at AGMs. With such a good story to tell (see below for details), Tullow has absolutely no need to mount a 'charm offensive'.

The FTSE 100 (UKX) listed oil explorer's profits plummeted by 92% in 2009 as a slump in oil and gas prices wreaked havoc - and by Heavy's own admission, the financial results "don't look good."

Oh dear. Heavey joked about the number of minus signs - and anyone with any knowledge of oil companies (which doesn't include Fiona Bond apparently) would have understood the need for massive capital investments in Ghana and Uganda which are totally transforming the company.

But the more successful you are, Heavey says, the more money you have to spend - a fact that did little to win over investors at today's meeting. One enraged shareholder, Richard Bates, blasted the company for launching two share placements in the past two years for fear of dilution. The most recent in January 2010, raised £925 million but saw the company's share capital enlarged by 9.9%.

Various directors pointed out that the company needed to raise capital, that the placings were done very close to market price, that PIs could have bought in the market at roughly the same price as people taking part in the placing etc. They were reasonable and patient when faced with an irrational shareholder with a…

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emptyend

13th May '10

If you look at Fiona Bond's groups here on Linked-In I think you might fairly conclude that she has an "agenda" of her own.

Perhaps one might surmise that, when it comes to reporting on the activities of oil companies, accuracy and fairness may not be top of her "to do" list?

I might also say that I join you in puzzling at the motivation of people such as this:

The 'protestations' came from exactly 2 members of the audience, both of whom had made the same points at considerable length the previous year. The obvious question to me is why, if you don't trust the board to make good decisions about rights issues vs placings, do you continue to be a shareholder?

snaj

Surely you're being a bit harsh ee - folk like Fiona love the planet, children and animals far more than the rest of us heartless sinners. Therefore they must be right about everything, as well as having tolerance & open minds to opposing views from those more feeble-minded like me.

I'm sure she has plenty of good things to say about BP in the present moment ;o)

14th May '10

I'm sure she has plenty of good things to say about BP in the present moment ;o)

Wrong thread for this really, but since you mention it ....... I think it is extremely bizarre that BP seems to be getting all the bad press on the Gulf incident. IIRC from reports yesterday there were a list of faults with the BOP and Transocean are seeking to use an 1851 law to limit their liability to the $27mn scrap value of their rig. There seems to be a prejudice by politicians that those with the deepest pockets should pay......

...and, turning back to topic, I'd guess that similar motivations are driving the CGT wrangle over the Heritage Ugandan sale.

All a bit depressing really....

Fangorn

I'd wager that people like Fiona are also the first to turn up the temperature come winter time, or jump in the car to go 5 minutes down the road when they could clearly walk.

Most "environmentalists" are rampant hypocrites. If they're that worried about the health of this planet then they'd set an example by forgoing most of the things that lead directly to polution (but no, that would impinge on their lifestyle too much - far better to tell the rest of us what to do in their high and mighty self righteous tones!)

For what it's worth I do my bit to recycle, and try to reduce my carbon foot print(eg by cycling down the road for as much as possible rather than use the car) but I damn well won't be told what I should do by such self righteous twits as Fiona. I'm also shocked that everyone seems to be gunning for BP when clearly the company most at fault seems to be Transocean.

But back to Tullow - this one has been on the radar for a while, have kind of missed the boat I feel in the three main oil E&P's I've been following: SIA, TLW and Dana.

Looking to invest some funds but, given the market wobbles, am loathe to do so at current levels despite both Goldman and MS ranking them as Buys with significantly higher price targets than current market levels.

Decisions decisions.
For a new investor anyone hasve any suggestions on new entry levels they'd be comfortable with?
SIA 1450-1500? Tlw 1000-1050, Dnx 1050?

ta

JPGH

Drifting off topic here a bit but ......your level of entry look fine if you are expecting another fairly substantial pullback. I'd say if you are keen on all 3 above then why not commit some small amount of funds now so you dont miss out on any major rises, and this still leaves you with room to add if they drop or rise to a next top up level.

BTW I'd add Bankers Petroleum to your list (they haev no debt, CAPEX/Drillex comes from revenues, produce heavy oil is a fiscally stable envoironment in Algeria, have many millions bbls of resources and reserves and will add substantially to both categories once they commence a steam injection programme). The Directors are also said to favour selling up soon. see http://www.stockopedia.com/content/bankers-petroleum-bnk-oil-manufacturing/32158

fuiseog

Davy comment in the light of the AGM, hasn't changed really except to emphasise the opportunity, as they usually do.

"When the Uganda deal is delivered and high-impact drilling
is underway, Tullow will be a very different proposition; this
bodes well for a strong second-half price performance.
We rate the stock 'outperform' with a NAV and price target
of 1467p per share."

https://www.davydirect.ie/content/articles/tullcr20100512.pdf

Tullow Oil AGM report: Another Perspective

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Doverbeach

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