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Hey Cyan, I fully concur.
I think if you compare the Rock Rose BoD's and RKH's its day and night. I belive the markets have lost quite a bit of faith in "our" illustrious leaders and their business and decisionaking process.
We look to escape (after all is signed) but will not see the detail of what is signed just the bones.
I again ask when it comrs to the agm do not put your support for Moody retention.
Rgds Sft
Small clarification Surfit; Moody said this on 23rd July 2019; so the autumn he was referring to ; is 2019's; not this year
"We have a number of potentially transformational catalysts in the coming months including the hugely important submission of the Sea Lion project information memorandum to senior debt lenders, continued progress on Sea Lion financing discussions in the autumn and the outcome of our Ombrina Mare arbitration in Q1 2020."
Good evening Surfit;
Yes; I read what MOODY said and , imo, its covering up their embarrassment. Re-read this;
Aporil 2019
"Our Greater Mediterranean portfolio continues to provide the necessary operating cash flow to fund corporate costs while providing low-risk exploration upside opportunities. On a highly selective basis, the Company will seek to further expand the production base with the aim of generating additional free cash flow to invest in future exploration and value-accretive growth opportunities both in the Falklands and elsewhere."
"necessary operating cash flow to fund corporate costs"
"the Company will seek to further expand the production base with the aim of generating additional free cash flow to invest in future exploration"
In April they were looking to spend and ADD to their cash flows; come July and they are selling EGYPT because they needed the cash!
Smacks of incompetence; not having a real handle on the cash calls to come resulting in a very hurried sale of an important asset.
No bonuses earned this year!
Cyan, to add further AND balance with the quote from Moody for SELLING
"Sam Moody, CEO of Rockhopper said: "Abu Sennan has been an excellent asset for Rockhopper, but with activity ramping up during 2019 ahead of the formal loan application for the senior debt element of our core Sea Lion development, we have decided this is the moment to sell at a point where we can crystallise real value. Having acquired our interest in August 2016 for US$11.9 million and agreed to sell for US$16 million, plus benefitting from approximately US$4 million of free cash flow during our period of ownership to the effective date, we will have generated a material return on investment......"
SO THEY NEED A LUMP OF CASH....
When onto say:
We have a number of potentially transformational catalysts in the coming months including the hugely important submission of the Sea Lion project information memorandum to senior debt lenders, continued progress on Sea Lion financing DISCUSSIONS in the AUTUMN and the outcome of our Ombrina Mare arbitration in Q1 2020,"
https://www.pipelineoilandgasnews.com/regionalinternational-news/regional-news/2019/july/rockhopper-sells-egypt-s-abu-sennan-interest-to-united/
Question AUTUMN is Q3 2020?
Having given away more % of SL after realising the PMO contract (PREVIOUSLY written) that it was costing them a fortune to pay their % of the FEED and PMO could not continue...no penalty clause/ protection...what are the extra millions going on
1. Real OnG lawyers to sort out the new contract?2. To keep them in the manner they are accustomed? I mean they can not take a pay cut as this means they could not pay themselves bonus's
I also want to do a cross check on exactley how much cash they have burnt though since PMO came onboard.
If it all went on their % of FEED then also shows thier poor contract/business skill or savy. Wonder if the use the same law firm for these new contract with Navitas.
Rgds Sft
"I wouldn’t be at all surprised if all this was all provisionally agreed a year ago and everything since then has been to iron out the formalities and legalities."
If PMO and RKH had a provisional agreement a year ago; they should/ WOULD have informed the market. What we had announced on 7th January WAS a provisional agreement.
A year ago RKH were spouting how wonderful their greater med assets were (coded language for Egypt as the rest is unsaleable of next to no value)
2nd April statement; "Our Greater Mediterranean portfolio continues to provide the necessary operating cash flow to fund corporate costs while providing low-risk exploration upside opportunities. On a highly selective basis, the Company will seek to further expand the production base with the aim of generating additional free cash flow to invest in future exploration and value-accretive growth opportunities both in the Falklands and elsewhere."
If RKH COULD have held on to Egypt; they would have.
The evidence; the cash in hand numbers and burn rate; tells you that the Egyptian sale was , effectively; a desperate cash raising exercise they had not expected would me necessitated so soon; if at all.
RKHS' hands were forced by PMO ramping up spending in the lead up to the hoped for sanction; RKH had to pay 40% of the costs.
Can't fault you paul for guessing
My guess is the Navitas deal has been in the pipeline for a long time, as has UKEF funding and Abu Sennan sale. I wouldn’t be at all surprised if all this was all provisionally agreed a year ago and everything since then has been to iron out the formalities and legalities.
It seems like they are finally getting to the end of that process and it’s now time to rubber stamp it.
Did not rkh lose out on the deal? Italian gondolas?? So where is big chief swallowing off to? Contact fatimah, Cairo evening standard
The sale to UOG and the cash receipts were vital to RKH.
Read the 2nd April RNS (results to 31.12.18) for the clue;
2 April 19 RNS results to 31.12.18
Extracts;
"Our Greater Mediterranean portfolio continues to provide the necessary operating cash flow to fund corporate costs while providing low-risk exploration upside opportunities. On a highly selective basis, the Company will seek to further expand the production base with the aim of generating additional free cash flow to invest in future exploration and value-accretive growth opportunities both in the Falklands and elsewhere."
"Under the base case forecast and the downside scenarios run, the Group will have sufficient financial headroom to meet forecast cash requirements for the 12 months from the date of approval of the 2018 financial statements. However, beyond the 12 month going concern assessment depending on the timing of sanction for the Sea Lion development, in the absence of any mitigating actions, the Group may have insufficient funds to meet its forecast cash requirements.Potential mitigating actions could include non-core asset disposals, collection of arbitration award proceeds, deferral of expenditure or raising additional equity."
======================================================================
"Potential mitigating actions could include non-core asset disposals"
Since that time RKH found it necessary to sell the Egyptian assets despite them previously stating how important the revenues were for paying bills.
The reason is/was clear; there was a very large cash burn leading up to SEALION's development and RKH were getting dangerously low on ready cash and they needed extra cash to get them to the moment when the THEN PMO carry came into force; that WAS when the FDP is approved by the FIG which RKH hoped would come in HI 2020.
RKH were forced to sell Egypt because they could not pay the bills PMO were presenting.
The good news is ; PMO came to the rescue with the carry from 1.1.2020 to 1.3. 2020 seeing RKH were in dire straits and would not have enough cash to last 4 years to first oil.
There are excellent relations between Egypt and Israel these days. This terrorism excuse does not hold water; some random terrorist decides to attack an Egyptian oil field because one of the partners has an agreement with an Israeli company the other side of the world; just not credible.
"why should Rkh sale their Egyptian assets, it's doing well there "
RKH were running out of money FAST.
There is no way, last summer,that RKH could have formed an opinion NAVITAS would partner us.
It was all about our serious cash position.
See RNS 18th September 2019;
"Following completion of the announced disposal of Rockhopper Egypt Pty Limited, which is anticipated to close in Q4 2019, year end 2019 cash is estimated to be in the region of US$25-30 million, depending on the final mix of consideration received at closing of the disposal."
Its obvious there was very high cash burn .; about $5 m pa is GA ; most of the rest must be SEALION related.
RKH's cash positions from results RNS's;
End of 2017 $50.7m
End of 2018 $40.4m
End of 2019 figure is $27m (from Edison)
Without the UOG sale RKH were looking at a cash position of around $15m at ye19 with PMO dropping regular big bills on them.
RKH had to sell the Egyptian assets; they were struggling to pay the bills; actually in serious financial trouble.
Let hope so paul
This was at near 30p last april , to even get back up there would seem good .
Yes the next few weeks should see:
Abu Sennan sale completion
Ombrina Mare arbitration decision
Navitas Signing
PMO Results
PMO Refinancing
Zama Sale?
UKEF decision?
But this is AIM & the oil industry so no timescales ever go to plan!
This coming week COULD have two really significant pieces of news; NAVITAS signing (but still has escape clauses) and the arbitration.
Am hoping for a really large figure ., but, who knows? It could be something of a lifeboat for RKH if things get delayed. An interesting question for anyone attending the AGM to ask is; how much could wind down costs be IF in that "very unlikely" scenario; SEALION gets handed back to us?
One fears that even a large award could be completely swallowed up in costs.
Just have to stick the course and see if NAVITAS can deliver; otherwise............not good long term scenario, imo.
They would all be mad not to have backstops & release clauses - it’s pretty much standard practice regardless. Rockhopper should probably have insisted on a similar clause for Premier back in 2012 but they won’t make the same mistake again and Premier aren’t naive.
We should find out soon enough anyway.
I have to point you to the wording in RKH's RNS dated 7th January 2020 which clearly indicates a risk that NAVITAS might not be able to raise;
"In the event that Navitas' board has failed to take a positive Phase 1 FID by 1 April 2021, or otherwise fails to secure its share of funding, Premier may elect to remove Navitas.
In the event that either Navitas elects to withdraw or Premier elects to remove Navitas, Premier will have the option to step into the Navitas arrangements, or, in the very unlikely event, implement a wind down of the project which could ultimately result in relinquishment of the acreage. In either event, Rockhopper is liable for its share of project wind down costs with no funding support from Premier and/or Navitas and if Premier does opt to wind down the project then Rockhopper has the right to acquire Premier's interest and become 100% working interest licence holder and Operator of licences PL032, PL004a, b and c, subject to all necessary regulatory approvals."
Suspect there is a lot more activity and discussions behind the scenes than we are ever told about cyan. I’m not concerned about Navitas’ ability to fund their share. The deal would not have been agreed without assurances, and they won’t have been word of mouth or a handshake.
I can not see the reasonable, possible linkage between he sale of the Egyptian assets and NAVITAS signing on here.
All NAVITAS can do to show they can PROBABLY fund their share is to point to their record of fund raising; not sure they can 'prove' at this time.
The only reason I think they might extend is if they want to complete the Abu Sennan sale first - that might be a prerequisite. So it could be early March instead but I wouldn’t expect a long delay.
Navitas will have already had to prove they can fund their share.
Good morning pauldrayton.
One hopes NAVITAS is ready to sign next week as hoped for in their 7.1.2020 pdf I translated from Hebrew;
"2.1.3 Signature Deadline - The Parties will act to sign the Transaction Agreements by February 28, 2020, or Until a later date to be agreed by the parties."
It concerns me that PMO gave up so much to get THIS partner on board. I suspect they were the only ones interested in farming in. In dark moments I do wonder if PMO now have a scape goat for failure to reach FID ,IF NAVITAS can not raise their share.? We just have to trust PMO and DURRANT's commitment to get us over the finish line. It will be disastrous for PMO's accounts and DURRANTS's reputation if PMO were ever to write down SEALION .
It will be concerning if we do not hear about the signing next week; I can not see why there would be any need to extend.
Tony Durrant is no mug when it comes to finance. There will have been plenty of due diligence done regarding Navitas’ ability to fund their share, don’t worry about that. Suspect this deal has been ongoing behind the scenes for a long time now, and it’s now about how exactly they want to structure the financing & how that ties in with UKEF.
Navitas has no money
Thanks Nig. The deal was due to be signed by 28th Feb. Wonder if it will happen simultaneously with the sale of Abu Sennan on Friday or if they will wait for that to complete first and then proceed at the beginning of March.
pauldrayton,
Thanks for clearing that up, just wanted to gauge the level of paranoia. I think we are at level 4.
Talking of paranoia I think there is at least one chat bot operating on another LSE board.. we sure do live in interesting times.
I have a sneaking suspicion that BrightSpot is Borgo in a different guise. If you check out his posting history it has a very similar style and also includes tales from Aces Bar (alternative to Sharkeys!).
No...not at all, I found Borgo quite amusing, my comment was not meant to be a criticism my apologies to anyone offended :-)