Here's the situation:
-Tullow had 5b in net debt, and about to start generating 500m FCF p.a. It was in a hairy situation a few months back with oil low and more outgoings looming. Post their sell down and the oil of ride, they can breathe easier
-They have a lot on their plate in Kenya. Needing to develop and build a pipeline.
-Namibia is the right asset, wrong time. Will be easier to sell extra exploration to investors when net debt has started to reduce in 2018 or 1H19.
-Tullow needs to talk Namibia into a one year delay. Namibia should agree. As alternative is to start from scratch on funding someone to do 3D
This scenario would explain Lundin signing up with a heavily milestone laden deal.
Given the rise in oil, we can always open a data room, show the 3D to all, and cross our finger, but the Lundin deal sucked, indicating the door is not being bashed down at this point.
Subject:
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PCL Price at posting:
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