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Yes TNM, I did indeed (unintentionally) press the 0 button twice on my mobile whilst typing that message. It's easy done on a mobile,although I did correct it for the next post when mentioning Ithaca.
I hope it didn't cause you too much distress and trust you will accept my apologies for pressing the 0 button twice 👍
ChessM
«Ithaca Energy = Production 700,000
Market Cap 1.25B «
I think Itachas production for 2023 avreager 71000 barrrls per day so I think you got a zero extra :)
Best regards
N
SH ,No one's figures are right or wrong at this stage so all opinions are valid and welcome 👍.
I would much prefer yours than mine as I tend to er on the side of caution having been in this aim game for 25 years.
Naturally, if production ramps up to 200/000 as hoped,or even 100k,then you will get your multiples of £249mln and there's no reason to suggest, that in time, it won't. I was only referring to 15/17000bopd.
60/70k net to rkh would be a totally different ball game & a mkt cp of £1Billion+ is certainly possible then as we see with Ithaca, who produce 70,000.
A well presented post overall 👌 and I gave it a tick.
Thanks as always Mogger. Of interest
'‘....on the financial plan that Navitas put together to deliver Sea Lion’ 5.10 minutes
Begs the question, have Navitas already sorted out the financial aspect??
Chess,
1. I stand by my figures as they are based on current POO and Navitas data.
2. 50,000 bbl/d 17,500bbl/d net to Rock is the initial phase. Navitas stated the long term potential for the Basin could utilise up to 3 FPSOs with a total production of approximately 200,000 bbls/d, 70,000bbl/day net to Rock.
3. Your examples are for UK listed companies, who are subjected to approx 75% 'daylight robbery tax' until 2028 I believe. A socialist Gov will likely increase and extend that tax'
4. Your example Enquest Production 43,000 Market Cap. £325mln. ENQ's SP has halved in the last 2 years btw.
Results for the YE 31 December 2023
'Statutory reported LOSS after tax $30.8 million'.
5. FIG are taking just 35% tax and royalties.
6. Rocks estimated debt of $455m to get to first oil will probably be paid off in 2 years of production
7. Navitas/Rock have $700m of tax to set against taxable income, so presumably just 9% royalty to pay for the first 12.5m bbls produced.
I'm in two minds whether you are a subtle deramper, or just trying to trying to lower expectations.
It's always good to disagree AA but I don't know what your disagreeing with because I never said or thought the share price is solely made up from production, that's why I stated each case was 'unique' !
If you read my post I was actually saying to SpaceHoppa that the shareprice is more complex than the bopd X oilprice and I gave numerous examples of mid-sized UK oil producers to back that point up.
My other main point is that, contrary to Spacehoppa's statement, you will not have a market cap multiples of £249mln on 15/17kbopd, regardless of anything.
I totally agree that tax royalties/reserves, location,production costs ect all play their part alongside production to determine the shareprice.
Agree Paul, disagree TCM.
Valuation doesn't just depend on the production levels and as Paul mentioned, reserves and tax rates play a big role.
North Sea oil is not the same as Falklands oil - each barrel of oil from the Falklands basin is equal to 3 barrels of NS oil - this is based just on the tax differential.
Then comes reserves - North Sea is not full of oil anymore. Reserves are scant. Companies like Enquest barely have 2yrs of reserves not matter what they say in their annual reports. When oil was $110 average during 2010-14, reserves were valued at $10 per bbl. When oil prices goes above that level you can expect the reserves to be taken into account in valuation.
Thanks Mogger. Good to hear the EIS has now been submitted - a lot still to do on the FIG end by the sound of things but all being well things should be in place for project sanction by the end of the year.
Thechessmaster
Valid points, however the variables such as taxation and risk premium would wary wildly across the companies you have listed I imagine. And in those two categories I think we should be placed better than your average Oand G company
Thanks to Mogger; .
An interesting insight and one gets the impression Navitas are serious & very keen to get things moving. Roll on Funding & FID.
All,
Some interesting information for your delectation
https://youtu.be/U1tC0RRZqik
Mogger
If we get FID & OM in 24,then a £200mln mkt cap is certainly not unreasonable ,that's around 32p, which, all things considered, would be a good result !
Totally agree Paul 👍, that's why I said each company is 'unique' but Rkh is not going to be valued at many multiples of the £249mln SpaceHoppa suggests on 15/17000bopd.It simply doesn't work like that in real life as you can see by the above uk mid-sized producers.
These comparisons are a bit pointless given the difference tax regimes, 2P reserves and decline rates.
Lots of different factors will come into play, not just production levels.
Ithaca Energy = Production 700,000
Market Cap 1.25B
Tullow Oil = Production 62000
Market Cap £549
Enq = Production 43,000
Market Cap. £325mln
Gulf Keystone
22,891 Bopd
Mkt Cp £261
Capricorn Energy = Production 30000
Market Cap £157mln
On the above basis, Rkh can be reasonably expected to be valued around £175/200 mln on production of around 15000/17500 bopd.
This is the reality & is very different from doing Daily Production X Oil Price !
Spacehoppa, That's all well and good posting figures like that and whilst I agree the shares will increase in line with profits- figures like that are a gross oversimplification because in reality it doesn't work like that because they will also be continually investing for the future (after debts paid) so it will never be total earnings @ high price = total profit like you portrayed.
For example ; let's look at Harbour last year, operating costs $16, $3.7Billion revenue @Oil price of $82.50, so massive profits expected yeah ? ..No, Profit after tax was $32 million.
Harbour is just an example, you can X bopd by oil price on any producer and the profits are rarely simply the figure of the two.
Of course, each company is unique and rkh will be vastly different to Harbour but the point is you can't simply pick a high oil price X it by bopd and expect that to be the profit, it rarely, if ever works like that as new capital is always required for growth & the future .
Also, the project won't start @ 50kbopd and they must pay the debts off first , so it could be 5/6 years ( depending ) before profits start rolling in and many investors want to see returns sooner and that's why a T/O may appeal to some holders.
As a guess, I think a more realistic profit figure for rkh would be around £100 to £150 mln a year as I take a more conservative $70 and production will not start a 50,000 and no one knows when this will be attained. I also expect new wells to be drilled as the basin opens up and more development costs once the debts been paid off so it's a gross oversimplification to simply times daily production by a high oilprice.
Personally, I will bank some profits along the way to production but may also keep some for production & beyond as once rkh get FID this becomes a compelling medium term investment and regardless of the lack of market participants - the shares will nevertheless increase in value, just not to the degree most of us would like or expect.
The maths with POO at perhaps .....$85
The maths with POO at perhaps $95 and life of field costs $25/bbl
50,000bbls x $60 = $3M revenue per day, $1,095M a year
Royalty 9%, Corp Tax 26% = $711M profit
Rock 35% = $249m profit net to Rock per year
Rocks current market cap is just $88m !!
I can't speak as to what interest there will be in Rocks shares, but I am mildly confident the Market Cap will be multiples of the yearly $249M profit, and so will the current share price, regardless of what exchange(s) it is listed on.
RKH would need an SP of around 50p to enter the FTSE 250. Quite possible after first oil.
Yes to a US listing, only after SL first oil, after Shell leaves Ldn, and after Sam retires as CEO hopefully to Chair Rockhopper.
Patience
Ok, so the share price may not reach the heights some have been hoping for, but lets not forget the potential for future dividends here once the oil starts to reach the markets and debts are paid off.
Yes I know it is some time away (years) but it could happen!
I did mention a while back that a T/O after OM & FID might be our best hope of realising some value as it's difficult to see how the few lse aim market participants can push rkh anywhere near where it should be after FID & OM.
The market system relies on participants buying good news & selling bad news but in the absence of participants and the ensuing exodus from both P.Is & IIs, good news now only gets a temporay mini-few days spike before selling off and no news gets sold regardless, just not as heavily as bad news so T/O might be the best option to realise capital gain.
The lack of liquidity & market value of many UK shares is of great concern to investors as the fleeing masses create lower shareprices,which only exacerbates the problem and makes even more investors leave and shareprices go even lower.
Even the very best UK shares ( Ftse100) have barely moved in a quarter of a century, valuations were similar in 1999.
Would FIG have a say in any buy out/take over?
Their licences
Their water
Their oil
It’s RKH that have put them on the map so to speak and they might like the relationship as it is…
Just a thought
GLA
Boboil
Nope not a chance things are changing nicely imho
They wouldnt need PIs aproval though and it wouldnt necessarily be a throw away price.
LTT, I can guarantee none of us who have any holding in good old Rocky will ever approve a hostile takeover at throwaway prices. I doubt management will. Neither will Aedos