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As we have seen over the past 10 years, Oil in the ground is worthless. The extra 200 mio barrels will be hugely significant, but not until the market feels reassured of the plan to extract it. The re-rating of this beaten down share will be a sight to behold when that happens
Did anyone notice the rerating of 2C from 500M barrels to 700M? I mean that’s massive news. Ok we still have to extract but costs reduced by 30% ($500M) and we just added 200M barrels as upside. The words “no brainer” come to mind.
GLA
Here comes the sun
Dancing girls and blue bottles
CitizenTS, the amount Rock have to find, to get to first oil is not actually fixed yet.
At a capex of $1.3B, it can range from $nothing, to $151M
I vaguely have an expectation figure that Navitas are looking at achieving around $1billion in project finance, I have no idea where this idea came from now, plus the remainder from Navitas and Rockhopper funding.
If $300m is left after $1,000m of project finance, and Navita will fund 2/3rds of our share, then Rock need to find $35m.
Other $figurers are available.
Small piece on the Navitas visit in Penguin News, looks word for word lifted from the press release.
@ JEBR
FYI Rkh only has to fi d circa £50m on those numbers, not £150m. Been sorted and confirmed at length on here some time ago but the split of who finances what for the project is all calculated POST the borrowings for the project (completely distinct from Navitas'interest free loan to Rkh). Inevitably, couldn't work any other way.
So what rkh have to find depends on what proportion of the project itself is financed by debt. We don't know what that is but fwiw I'm going to suggest 2/3rds will be the debt proportion. So 50m.
Tremendous Rns, just stupendous, those break even and opex costs will interest all sorts of people eventyally!!
Don’t tempt fate SH!
With Rock valued at $75m, amusingly it would be way cheaper for Italy to buy Rockhopper,
cancel the ICSID claim, pay off our lawyers, and then sell Rockhopper back to Harbour :)
Good question - I doubt it but don’t know the answer.
It would sort of make sense for ICSID to ask any party requesting annulment to lodge the full amount of the award plus interest into a neutral account, ready to be paid out if the annulment effort is unsuccessful or refunded if successful.
Weirdly with an interest rate of 7.4% (currently), it might be better financially for the stay to be extended! But I suspect Rockhopper will want to get payment quicker rather than wait for more.
If they don’t extend the stay of enforcement and Rockhopper takes steps to enforce payment, does any money obtained get ringfenced until the annulment decision is made? I'm thought I read this somewhere but can't find it again at present, so could have imagined it!
The decision expected over the next couple of weeks on Ombrina Mare is whether or not the committee extend the stay of enforcement or not.
If they do then there may be some conditionality or there may not.
If they don’t extend the stay of enforcement then Rockhopper can take steps immediately to enforce payment. Italy would still have the right to continue with the annulment proceedings, but Rockhopper have the right to enforce payment immediately.
Italy might argue that Rockhopper don’t have the funds to continue as a going concern and they would then be at risk of not getting the money back if they are successful in their annulment effort should enforcement take place now. The placing last year probably helps Rockhopper with that particular argument but this really could go either way.
Somebody mentioned 50/50 yesterday and that just about sums it up imo.
Either way Q1/Q2 2024 should be interesting. Rockhopper shareholders have had to be very patient for a long time, but finally there are signs of progress.
When Navitas visited the Falklands ,I am sure there were lots of warm handshakes and smiles from current investors, the local businesses who quite rightly see business opportunity for themselves.
There would also be those who understand that the only realistic long term security of the Falkland Islands and it's people is to ensure financial stability, and one way to achieve this is through the development of commercial activities of it's natural resources, under the strictest management and controls, of course. Just as the Falklands Fisheries has grown.
Yes I know, there are those how don't want anything to do with oil and it's potential revenue's.
One thing that has been lacking is a plan, and during there visit to the Falklands Navitas would have been told this many times by the movers and shakers.
I believe this RNS sets out a plan. It will be interesting to see what happens next.
I have not seen this before, although it might have been posted.
Navitas can utilize 'accumulated losses for tax purposes amounting to 700 million dollars'.
A bit dated at 28 Sept last year.
Navitas will formulate an up-to-date and efficient development plan for the reservoir, and will be able to utilize accumulated losses for tax purposes amounting to 700 million dollars.
Navits chairman Gideon Tadmor : "The global energy crisis and the geopolitical reality make the project particularly attractive."
The Navits Petroleum Partnership reports the completion of the Sea Lion transaction, and the acquisition of 65% of the rights in the oil licenses of the giant reservoir that contains approximately 712 million barrels of oil, with Navits' share of approximately 463 million barrels. Now, with the completion of the deal, Navits has been appointed the project operator, and will work to formulate an up-to-date and efficient development plan for the reservoir.
The Sea Lion project arouses great interest in England, and this is in light of the need of England and other European countries for energy security and the guarantee of alternative energy sources to the gas and oil imported from Russia. As part of the completion of the transaction, the required regulatory approvals were received from England and the Falklands, including the extension of the validity of the licenses by two years.
As part of the transaction, Navits acquired 100% of the shares of Premier, a subsidiary of Harbor Energy, and holds 65% of the rights in the Sea Lion oil reservoir as well as other discoveries and exploration licenses in the area. The purchase was made free of charge, and Navits even received $6 million to finance future expenses. The acquired company has accumulated carryforward losses in the total amount of approximately 700 million dollars, which can be used for tax purposes when production begins.
As part of the transaction, Navits has the option of reaching the final investment decision in the reservoir within a period of 5 years from the date of completion of the transaction and the possibility of an extension of up to 18 additional months. This period will allow Navits to promote an up-to-date and efficient development plan for the project, as well as work to formulate a financing package and examine the addition of an additional partner and operator to the project.
The Sea Lion proven oil discovery is located about 220 km north of the coast of the Falkland Islands in the southwest Atlantic Ocean, and includes proven oil resources in the amount of about 712 million barrels of oil (C2). Navits' share (65%) is 463 million barrels.
https://www.funder.co.il/article/139676
Is the OM award earliest q1 2024 or can it be thrown out at any time between now and then ...eg. is the update re om award that is expected in the coming weeks relevant?
Also worth keeping on the very long radar, that whilst SL phase one and two are targeting 269mmbbls 2C,
we also have ''443 MMbbls 2C additional resources contained on the North Falkland Basin including Sea Lion and Isobel/Elaine''
Auson, I really can’t follow what you are saying. Are you suggesting that Navitas would somehow know the arbitration result before it is out??
I think we can all agree that it would be ideal if the case is closed and we have been payed by Italy prior to FID, but in my opinion it is a completely separate issue from the sealion development. It’s a sideshow and no decision in relation to sealion will be/should be made based on neither the outcome nor timing of the arbitration case. That’s how I see it anyway…
D
**@Market-Dealer: This was exactly why I wrote it like this! Thank you for your contribution and I'm grateful that you shared the news with us.**
JEBR, You are most welcome....ATB
I wonder if Harbour have got sellers remorse ?
Fair play M/T you wasn’t far of with everything you said PERHAPS big red 7 will issue you an apology lol
To be fair to Market Dealer, calling first oil in 2026 was viewed with plenty of scepticism,
and it is not a certainty yet either if FID is H2 2024,
however it can certainly happen if FID is H1 2024 !
Good call, things are getting interesting :)
@Market-Dealer: This was exactly why I wrote it like this! Thank you for your contribution and I'm grateful that you shared the news with us.
**FID during 2024 and first oil is expected 30 months after that! If it's in the first half of 2024, first oil will be in 2026!***
LOL....No comment
***Having successfully re-defined the project, work will now focus on refining the financing plan with a view to reaching FID during 2024. In the meantime, technical work streams continue to further refine the project, with Navitas focused on driving further project optimisations. Based on a redeployed FPSO, a timeline of 30 months is envisaged from FID to first oil, with drilling anticipated to commence approximately 12 months post FID.***
Told you.....
It's been a while since I calculated some scenarios and right now would be a good time for an update again. Assuming Sealion will be produced, the updated assumptions & facts are:
Total costs Sealion phase 1 and 2 = $2.2 billion (RKH share = $770 Millon)
Pre first oil capex = 1.3 billion (RKH share = $455 million)
Non-funded part pre first oil capex = 1/3 * 455 = $151.7 million (2/3 = interest free loan = $303.3 million)
Years to first oil = 3.5-4
Nett OM award = around €200 million (share RKH including interest, excluding taxation)
Shares in issue 587 million + warrants = 641,234,290
Mean daily production = 40.000 at the beginning and around 80.000 barrels per day in the end (RKH share = 14-28.000)
Costs per barrel = $27.60 + royalties (guess of $7.40, but I really don't know)
Oil price = $60-100
Profit per barrel = $25-65
Pre tax profit per year = $255.5-664.3 million (assuming full production)
Profit to company ratio = 1:10 (assumption, which is partly based on the upside potential)
Low case scenario ($60 oil, no OM award)
RKH would have a pre tax yearly profit of $255.5 million per year, 640 million shares and capex of 770 million. RKH would be worth (225.5*10-770)/640=1485/640=$2.32 per share or £1.88 per share.
Medium scenario ($75 oil, with OM award)
RKH would have a pre tax yearly profit of $408.8 million per year, 640 million shares and capex of 770 million and €200/$217 million OM award. RKH would be worth (408.8*10-770+217)/640=3535/640=$5.52 per share or £4.47 per share.
High scenario ($100 oil, with OM award)
RKH would have a pre tax yearly profit of $664.3 million per year, 640 million shares and capex of 770 million and €200/$217 million OM award. RKH would be worth (664.3*10-770+217)/640=6090/640=$9.52 per share or £7.71 per share.
Higher taxations and a lower profit to company value ratio could make the estimations an overestimate. Other growth potential like Isobel and the southern Falklands could make the estimations an underestimate.
First oil is a long way of still, however calculations are stunning for the patient.
269m bbls, POO $77, per barrel costs $27, 35% to Rock
40 x 269m x 35% --------> $3,766 Billion gross profit
We have a market cap of $74m !
Daikihaku1,
Navitas would have to know the arbitration result before its out, or gamble on the result. Surely much better to use other peoples money and our UK listing for funding ? In the mean time they can saddle us with some of their debt at 8% compound !