As per last year, my notes of the meeting and discussions with Board:
ID: Prem/ RKH deal was a good one. This is not the North Sea. However, still expects a premium to RKH barrel price, intimating $6 per barrel? (my take).
Would not be drawn on farm-in discussions. Share price is cyclical and likely to rebound upon rig return.
FDP can only be delivered with all three parties' agreement. FIG would be reluctant to intervene. They could adjudicate, but this is very unlikely, and almost certainly will not be necessary.
KB: RKH appraisal of Sealion satelites will satisfy DES licence extension requirements.
Isobel stack is best prospect within NFB.
RL: Farm-in - most companies require circa 3/4 months to assess information.
Late 2014 is a reasonable timeframe to get a rig down to Falklands. Next six months will see a number of announcements, with Des farm-in, next step of Sealion development approval (I took this to mean FEED options?), and rig announcement. This time next year, any rig for late 2014 would require setting up. Therefore, expect announcement of contract within next six months.
Des cannot take a rig alone - requires circa $100m mobilisation, even before drilling. Leasing Co would want at least a year's contract. Ocean Guardian left as Diamond wanted 2 yr contract extension.
Des could take slots in southern rigs if absolutely necessary, at higher day rates, as this may offset high mobilisation costs of going alone.
relationship with RKH is excellent. Also with Prem. Had a good relationship with Prem even before RKH farm-out. Fully expect RKH to send a rig down for appraisal/ exploration before production drilling, and this would need down time between drills - therefore an opportunity for Des/ ARG.
SP: Not giving anything away as to farm-in, although probably be complete in July/ August. Outside of farm-in, market has obvious very little interest in small oil i.e. as to why share price is so depressed, but this wasn't said in relation to farm-in. RKH is very good value at present given reserves.
RKH are literally snowed under with work, therefore not surprised no unitisation discussion as taken place to date. This ought to be commenced in July/ August. This is good timing for Des, co-inciding with farm-in.
I get the impression all directors are very excited about the prospects. Presentation was corporate, but in private much more up-beat. They want a crack at Isobel.
I have a pp @ below £1.20 still on my chart , it would be nice if we can break above £1.43, but then i'd say we need to break £1.54 but the charts still look to me that it isn't likely we will get to break the downward trend yet in sp ,
The pain is going to subside. Not in yet myself due to other positions but keep the faith.
I did have quite a position in RKH with 44p average stock but the last time i posted on here was 5 days before the PMO RNS when i posted i had sold in entirety my 3 year long held stock saying that the market would not like the deal that had been done.
Times move on and opportunities for RKH lie further afield than the Falklands
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