Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Let me explain Citizen what I was trying to convey about SL development size.
Lets recall a little history and what might be the size of development worth considering.
PMO had been cost cutting the planned SL development over time. They had a plan costing $1.5 billion with a breakeven of $45 USD. PMO's minimum 'go' price was $55 to give them their desired profit margin.
The project was enlarged after discussions where it was advised to improve the developments economics. Someone required improved field economics. I can only speculate they were receiving specific advice MAYBE from UKEF who were still available to support at that time.
A new plan was proposed that upped the recoverable from 220 million barrels to 250 by the addition of 4 more producer wells.
The new development plan would have29 wells (20 producers, eight water injectors and one gas injector. Its cost would be $1.8 billion. Per barrel breakeven would drop to as low as circa $40.
What is clear; the smaller development ; the higher the breakeven costs per barrel
When I refer to a Micro development , I am referring to a handful of wells.
The partners are considering a development smaller than the 29 well plan .
I think anything from 12-16 wells targeting 160 million barrels producing up to 60,000 barrels a day would be very attractive if the cost can be kept to no more than a billion. A smaller development would shorten the time to first oil too.
Financing is the key issue and I think another partner will be required as its a big burden on Navitas practically alone. We have to recall that RKH , according to the HOT , will have to raise a third of their share of development costs. Our share being 35%, two thirds of which Navitas proposes to fund by an interest free loan.
Extract from the RNS.
"In the event of a positive FID, Navitas will provide an interest free loan to Rockhopper to fund two-thirds of Rockhopper's share of development costs ( for any costs not met by third party debt financing)
o Funds drawn under the loans will be repaid from 85% of Rockhopper's working interest share of free cash flow"
So; if a smaller project costs $1 billion ; RKH %35 share of costs would be $350m; two thirds of which Navitas will fund by a loan. That would leave RKh having to contribute circa $117 m if not met by third party funding.
Its all up in the air at the moment as to what size development will be chosen.
Thank you for your reply Charlesw5267.
I have seen too many people get hurt 'investing' in AIM shares. These BB's can become echo chambers for those ramping their positions and anyone highlighting 'issues' can end up being abused and shouted down .
I just think anyone investing needs to know all sides of the investment question; the risks many do not want considered.
I still hold too many of these shares which I once thought was certain to reach FID , the last time being in 2018.
Without going into detailed history; just about everything that could go wrong , did, and our cash resources crashed.
I am sure I have posted on BB's that all scenarios remain possible ; 0p to 50p .
There is no accounting for investors behaviour so , sometimes really silly valuations can be achieved; look at UKOG.
At the top end ,50p a share (WITHOUT further dilution) is possible.
The downside here is RKH collapses after circumstances such as Navitas walking, failure to win OM award, POO collapse and/or and inability to raise finance.
Navitas are pretty new and I had initial concerns about their ability to raise finance . To a large extent I have been reassured by their fund raising for SHENANDOAH.
Looking at the numbers and possible size of a new , smaller, SL development; I do think it more likely than not that a third partner will have to be sought. A micro projects economics may not be very attractive.
Next 3 months will be interesting.
Good afternoon Charlesw5267
If you are going to criticize my posts ; please do me the courtesy of reading them all first before you make personal inaccurate statements like this;
"1859 posts over years focusing on anything negative about this share performance only make sense if you are following an agender.."
I have had plenty to say about shares other than Rkh over the years and not all I have written has been negative.
Rather than address the reasoned points I have made you resort to personal attacks and imaginary motives.
I am a long term investor in RKh but I can not sugar coat our accounts.
I have never shorted in my life.
Good afternoon Much
Without an OM payout RKH is in a dire financial situation. In my posts which some want to characterize as entirely negative ; I have expressed my opinions based on an assumption that we have won. Its really a matter of time to pay day. Time is not something RKH has too much of as we burn through our remaining cash. What we all want to avoid is an equity based fund raise.
If RKh can arrange bridging finance to tide us over; like from Navitas as I had suggested previously it may solve our cash issues.
We are one big cash call from being embarrassed financially. I just hope the award arrives soon and the Italians behave honourably.
Good afternoon buzz
"Cyan would you agree that if RKH sign up with Navitas and win their OM appeal the current share price would be way, way undervalued ?"
Those are two events, I think, that should lift the share price significantly .
How much , Its impossible to say. Really depends on how much we hopefully 'win' .
Falky ;Please stop personally attacking me and mischaracterising my posting history .
An extract of your prose; long on bile , short on facts.
" ..I have no time for those Tad bitter
Twisted posters here or On any other forum.
Cyan spent 3 years of his sad life telling us that the FIG won't extend the
License then the tune had changed to, once PMO has left then it would be the
End of sea lion.....Now, it has changed to Bankruptcy.....etc"
Your reporting of my posting history is false. The truth is there to be read; stick to truthful facts.
Losing the license is, imo, the least of our risks. I have NOT stated for 3 years we will lose our license. The FIG have been generous renewing ALL FIG oil companies licenses. Its , imo , rather low on the risk list; a risk , but low.
Losing a development partner would be very serious for SL's prospects, however with Navitas keen , SL has a chance of development.
I have highlighted some risks evidenced by the company's accounts.
Why not address the financial state of our company and explain how the company is going to pay its way without a cash injection in the near future.
I would like to know how much RKH expects to additionally pay the FIG as per this from RKH;
" During H1 2021, the Group received and subsequently paid a significantly larger than expected tax liability of US$1.4 million associated with the 2015/16 Falklands drilling campaign. Limited further costs related to the period prior to 1 January 2020 are expected."
I highlighted various issues in my Saturday post. The full content is there to read but I will repost my final lines;
"I am sure costs will be kept to a minimum now but $5m will not last long. Remember this too; RKH will want to prepare accounts and state the company IS a going concern and has capital for anticipated costs for the next 12 months.
A cash injection is needed soon.
We have to hope that the OM award is in our favour, in a reasonable sum and not too far away. Prompt settlement is really a must.
The investment case has improved from what it was with POO's strength , the HOT with Navitas and the dismissal of the Italians last throw of the dice jurisdiction argument .
We are not out of the woods yet; lets hope for a favourable OM award very soon."
The funders of the litigation on a no win no fee basis have risk assessed the case and obviously formed an opinion the chances of winning are very good.
I have assumed we will win . I have asked the logical 5 questions follow such a (presumptuous ?) assumption.
The critical points are how much and how long will it take to receive cash in our accounts?.
Of course we will see our funders take a rather large cut. That's all right and good because they could easily have spent $10m USD here already.
I may appear overly pessimistic Charlesw5267 but that comes from living through the years of 'bad luck' , missed targets to FID and questionable decisions made on behalf of us shareholders.
Its about time everything started falling into place for a change.
You raise an interesting possibility your point 4 ; "Once the award has been made with no avenues left to riggle out of it there are cash-rich companies that will RKH a reduced award immediately and wait for the payment to come through."
I would be interested to see any example in a multimillion dollar arbitration case where that has taken place.
I think most agree that receiving the cash from an OM award is now critical. At one time it could be considered a likely nice bonus.
Most , myself included at times , are guilty of writing like an OM win is all but certain. I have to constantly remind myself ; not to count ones chickens.
I will continue with the optimistic scenario; we have won the case. The questions that follow are straight forward;
1.how long will it take the arbitrators to announce?
2. Will they announce the compensation number at the same time as they announce the win?
(The much bigger, more complex Tethyan case had the win announced buy they then took MANY months to announce the number.)
3. Will the award be as big as some suggested?
4. Will the Italians pay up really quickly or, use delaying tactics?
5. Are we going to have to chase payment with enforcement through the courts and how long might that take?
I would welcome any case examples that other posters have found where settlement was quick.
MOGGER recently posted a very useful link on awards state compliance ;
hTTps://academic.oup.com/icsidreview/article/35/3/540/6135471#307539021
This is the relevant paragraph on Italy ( a lot of scrolling down to find this)
"Italy has thus far been unsuccessful in two of the 11 arbitrations against it. The two arbitrations CEF Energia v Italy and Greentech Energy Systems and Novenergia v Italy are both based on intra-EU BITs/ECT.258 It is not yet known whether Italy has honored the awards."
This line from the article suggests forcing compliance may take "an abundance of time." time we do not have.;
"The result is that enforcing against a State can be very difficult. It requires exceptional financial resources, specific expertise and an abundance of time."
Hence there really needs to be an agreement with the Italians which, imo, may require us to take a 'haircut' on the headline award to ensure fast payment. Lets hope the Italians will play ball.
Good evening Muchaboutmoney.
Your writing style and encouragement to others to ignore reasoned analysis is much in the style of Nigoil who trashed the ADVFN BB .
If anyone wants to argue what others write is 'nonsense' at least make an effort to argue why its 'nonsense'.
I hold a significant number of RKH shares and want the best. However, its important to analyse all information's and not bury ones head in the sand.
The CFO leaving giving up so many millions of cheap options;, including at 1p !!! does make ME suspect, at the very least, HE may not see a very high RKH sp anytime soon. It makes ME suspect that he may have a good idea that a significant fund raise may be required much sooner than many think.
If you have a really good read of the company's results you will note we have circa $15m of decommissioning liabilities. We have two Italian gas assets in serious decline. Worse than that; the half year results shows we have been losing money;
In the half years results RKH reported the 6 months income from gas sales was $347,000 USD.
Unfortunately , the COST of those sales was $571,000 USD.
The situation with CIVITA is approaching, if not at, terminal production. We tried to offload the CIVITA junk to Northern Petroleum in 2017 by offering to PAY THEM $1.7 m USD because there was decommissioning liability. I believe NOP had dreams of exploiting the acreage but the deal fell through. Its important to note that NOP CEO stated at the time CIVITA had FIVE or so years production left.
Well here we are; 5 years on and the accounts shows us losing money. It will cost several million to decommission. Note that RKH have very recently stated they are looking at ways of disposing of the Italian gas 'assets'. I do not see a nil cost way of doing that.
The other gas asset is in serious decline too. If the majority operator asks for cash for works to up production and/or manage decline , or even worse, decommission; then RKH is in a right pickle.
The other question is ; now HBR are going out the door , just how much are we going to have to pay to keep SL project alive until Navitas HOPEFULLY takes on costs? The historic costs were stupidly expensive. Remember how we had to pay $19.3m for one year , 40% interest, to cover pre-development costs.
I am sure costs will be kept to a minimum now but $5m will not last long. Remember this too; RKH will want to prepare accounts and state the company IS a going concern and has capital for anticipated costs for the next 12 months.
A cash injection is needed soon.
We have to hope that the OM award is in our favour, in a reasonable sum and not too far away. Prompt settlement is really a must.
The investment case has improved from what it was with POO's strength , the HOT with Navitas and the dismissal of the Italians last throw of the dice jurisdiction argument .
We are not out of the woods yet; lets hope for a favourable OM award very soon.
Drilling in 2023 with luck. Its a bit of a no-brainer as the Taiwanese are farming in giving us an effective free carry.
They are keen and I can see why. Have a read of this presentation and note the oil seeps.
hTTps://genelenergy.com/wp-content/uploads/2020/08/genel-somaliland-aow-presentation.pdf
Good afternoon pauldrayton
Over 10 years ago , Dr. Pierre Jungels ,when questioned about RKH's Johnson gas discovery said;
"We will need 5 TCF before it is commercial and it would require either a FLNG/LNG plant on the island – neither of which are considered at the moment. "
The costs are astronomical; BILLIONs. Not going to happen now, imo
2012 CPR here has quite a bit on Johnson
hTTps://rockhopperexploration.co.uk/wp-content/uploads/2017/11/2012-CPR.pdf
p 88 and 89 give some possible volume numbers and just how much may be in Rkh block.
Does not appear enough to justify the eye watering costs. Our management do not now talk about Johnson for good reason.
Raising the finance for a far cheaper SeaLion development is going to be enough of a challenge, imo.
Good morning Mirasol and a happy Christmas to you and everyone else.
You wrote "The oil price had been on its knees since 2014"
I respectfully disagree. 2018 POO averaged $71 and PMO's Robin Rose indicated at the start of that year that Sealion sanction was targeted for that years end. Rkh share price went to circa 40p.
We were let down, AGAIN, by poor PMO management who dumped even larger pre-development bills on us. They jumped to a ridiculous $19.3 m dollars; and we had only 40% of the costs.
It appears financial controls were very lax. How could we have been ready to sanction in 2018 but costs then ballooned and we get a one year bill for $19.3m.
It was those crazy bills that forced us to sell our useful Egyptian assets and trash our balance sheet. It took our management too long to fess up;
hTTps://secure.emincote.com/client/rockhopper/retail-investor-presentation/index.html
about 23 minutes in MOODY says "..if we'd not sold Egypt when we did we might well have run out of money..."
On the bright side ; things are looking better than they were for SL's development. We must get a decent OM award to stand a chance of making it to first oil without a fund raise because our cash position is very weak.
Good afternoon Muchaboutmoney
You wrote;
"They'll pay and fast .."
I hope they pay fast, BUT , look at CNE who won their arbitration exactly one year ago; still awaiting settlement. They initiated action against Air India in their pursuit of enforcement. Hopefully they will get their cash soon.
This article allegedly quotes Sam MOODY. Not sure I have heard him elsewhere quoting numbers;
hTTps://10isdsstories.org/wp-content/uploads/2019/06/Rockhopper-vs-Italy.pdf
"We’ve initiated arbitration proceedings
to claim... at least all of the costs spent...
which is in the region of 40 to 50 million
dollars, but ideally (also) the profits, that
we would have made had we been able to
develop the field.... The lost profits might
easily add up to 200 or 300 million dollars."
SAM MOODY
Good afternoon simonpartridge1
You ask?
"How much is the total claim?"
Most commonly reported as 275 million EUROS PLUS interest (Edison research)
Elsewhere I have seen $325 m USD.
Recall "up to $350m USD" being quoted too.
Good afternoon lampedusa.
Thanks for the post;
Not sure what the KRG's spokesman is on about ;
"The Government will vigorously defend any claim that is brought by Genel, and intends to pursue its own counterclaims for damages resulting from Genel's renunciation of the PSCs," an official statement said.
It was the KRG who terminated the PSC's
KRG spokesman is making no sense at all.
"Please don't be facetious about this."
Was that addressed at me Ovets?
I have been perfectly respectful and applied cold logic to our position. We have only one interested party and that does not make for a great hand to negotiate with.
If any long term holder was so unhappy with the current boards negotiating skills they should have moved against the board years ago.
I have nothing further to add and will now await the OM decision.
Bring in a new negotiator ?
At what cost?
£100k £200K?
In my opinion that would be a waste of money. What would they be able to do?
We have only one possible partner at the moment and all the evidence suggests no-one else is interested in knocking on our door.
Our immediate future depends on an OM award and no negotiator can alter the outcome.
Good morning Ovets
you wrote ; "So who to bring in to make the difference?"
We might have about $6m left at this moment in time. I have tried to assess dispassionately IF a change of management now will significantly effect the 'end' result.
If you want a new top management it will take time and money to sort; we are in very short supply of both. Its too LATE.
By the time you've interviewed and attracted with a stunning remuneration package ( you get what you pay for), our fate will have been sealed by decisions entirely out of our hands.
Rkh has a weak hand now. To negotiate something great requires you to have an asset that people are queuing up to buy into.
Matters not who you have leading if what your trying to sell is not wanted.
We are left with just Navitas who MOODY stated remains ' very interested'. Without others interest to play off we are in a tricky position.
I agree with Surfit who wrote "I am against pulling any trigger until we see what the OM pay out and HBR exit strategy is."
If we do not win an OM award I think the game is up.
Good morning Glenrothes1969
You write about "... Resolutions to arrest cash bleed, preserve all assets, current and contingent..."
Generally laudable intent; BUT its far too late now.
There is minimal cash left and we need a focussed knowledgeable management on the crisis at hand. There is plenty to criticize but we have not the time or resources (cash) to attract a new COMPETANT team to replace.
If you want to install a new NED, please present a candidate and his qualifications. I do not want to see an unknown disruptive clown installed.
I agree ; we need to manage what little cash is left carefully BUT the activism will cost our company cash in legal fees and the circulation of documents as well as the new NED's expenses; if the resolutions pass.
Its not the time NOW.
The time MIGHT be right after we actually receive a large amount of cash from an award.
I am sure you are worried that management will look to spend elsewhere. I think we will be lucky to receive enough to see us to first oil. There will not be sufficient to 'splash out', imo, IF we win and get paid in good time.
As for keeping all assets. Is there any value any more paying licence fees to keep the legacy SFB blocks we acquired from FOGL?
I note that MOODY spoke about divesting the Italian gas assets. Fine, because they are toxic junk with large decommissioning liabilities. BUT; I do not see a nil cost way to do it.
Is there really a value in our 20% of declining Guendalina? CIVITA has a large negative value which became evident in the 2017 failed NOP deal ( RKH were going to PAY them to take it off our hands!)
I would be overjoyed if there was a NIL cost. I would like to know how MOODY thinks it can be done.
In my opinion there is absolutely nothing shareholders can do to turn this around. Our fate rests mostly on the decision made in the arbitration. Other critical decisions are to be made by HBR ( exit strategy) and Navitas ( will they stay; what terms)
I respectfully suggest you defer your activity for 6 months. There is no way for shareholders to change our outcome for the better now.
Who spotted the typo from RKH?
"At the fist hearing in February 2019, Italy sought to have the arbitration suspended on the grounds that intra EU disputes
should not be settled in international arbitration"
If it was only a 'fist' hearing it would have been over a lot quicker especially if we had Tyson Fury fighting our case.
Oh dear , you have to laugh or you would cry. Proof read before you publish in future guys; we've all been there!
We may hope against hope for the award to come before Xmas, BUT, our 30.9.21 contains a clue as to how long the panel takes;
"Italy has requested the Panel re-assess its view on jurisdiction
? At the fist hearing in February 2019, Italy sought to have the arbitration suspended on the grounds that intra EU disputes
should not be settled in international arbitration
? The Panel rejected this request in June 2019 as announced by the Company on 27 June 2019
? In late September 2021 the Italian Republic requested the Panel re-assess their previously delivered ruling on jurisdiction
based on c-741/19, Moldavia v. Komstroy LLC, a claim under the ECT relating to the provision of electricity from Ukraine to
Moldova. Neither the claimant nor respondent are EU members. The ruling included an indication that using things like
ICSID to settle intra EU disputes was in contravention of EU law
? The Panel asked for both sides to comment on this new material – Rockhopper legal advisers to make submission by 6
October 2021"
Look at how many months they took to throw out the initial 2019 request to dismiss on grounds of jurisdiction .
Surely this reassessment should not take that long again? Time is precious.