Member Info for cyan2

Godders99 writes;

"I am now convinced we see a monstrous share dilution."
That is a risk BUT not certain.
At 31.12.2020 RKH had $11.7 million in cash. Current cash burn is , maybe $4m pa.
RKH may have $8m or $9 m cash now. A question for Sam on the 30th.
The date when decom bills become an issue is opaque. Gas income, although very small, will be a bit higher. Another subject for a series of questions for Sam.

We can avoid an equity fund raise if we RECEIVE the cash from a large OM award by autumn 2022 , imo.

The OM claim is reported as 275 million Euros PLUS interest. Elsewhere reported at $325 million USD.

Some think we can only realistically hope for half those figures.
However, any award will be much reduced by our lawyers cut; more questions for Sam.

Good afternoon Godders99

Reference decommissioning costs. This is a serious burden hanging over RKH. The decommissioning liability was reported to be $13 .561 m . The Italian assets decom liability is a big up coming issue ; maybe in the next year or two.

CIVITA is particularly toxic . RKH tried to offload it to NOP in 2017 in a deal where RKH would pay NOP to take off our hands because of the decom liability..
NOP stated they though CIVITA had 5 years commercial life left at that time. Unfortunately the deal did not complete and we have circa $6.5 m decom liability there that might be an issue next year if NOP's estimate was right.

Good afternoon Ovets
Perhaps i should have phrased it that I expected a result in July. It appears Rkh hoped for an 'outcome' in July.

My interpretation of 'complete its work' was maybe too simplistic. My view was influenced by the criminal justice system where after a jury completes their work; their deliberations ; there is no delay in announcing a verdict.
Sometimes , after a jury verdict, there is a delay in the sentencing by the judge.
That is something I fear in our case; a delay between an announcement that we have 'won' (hopefully!) and the actual compensation number.
The much larger Tethyan case is an example of a delay. From memory; Tethyan were informed they had 'won' in 2017 and then then there was a huge delay in working out the compensation figure which came in 2019.

Good afternoon Phil164

What to make of the award delay? Result was expected in July. If it was a clear cut 'no' ; a failure of our case; I think one would have seen it by now. My wild speculation is there are arguments about the size of any award ; the calculation of which must be pretty challenging.

IF Navitas remains very keen on SL's development, imo, it really would need another company to come in and share the burden. Trouble is, many big names are divesting oil assets and the pool of possible investors looks rather small. The most obvious POSSIBLE investor is Israeli Delek .

In a moment of a wild flight of imagination I even wondered if Genel (GENL) might be interested in investing in SEAL LION's development.
I hold Genel and am aware of previous involvement their board members with Falklands island oil companies.
Its interesting to note that the top pair at GENL have some previous dealings and positions with Falklands oil companies;

1. David McManus
Chairman
Appointed: 5 February 2020.
Previous relevant experience: David retired as a Non-Executive Director from the Board of Rockhopper in May 2019, where he served as Chairman from 2016 to 2019.

2.Bill Higgs
Chief Executive Officer._As an Executive Director and Chief Executive Officer on 7 April 2019_
Previous relevant experience: Between 2012 and 2014 Bill was CEO of Mediterranean Oil and Gas (MOG)and oversaw
the sale of the company in 2014 to Rockhopper .

Also , Tim Bushell is a Independent Non-Executive Director
Appointed on 11 September 2017 .Tim Bushell is a qualified geologist with over 35 years’ experience working in the oil and gas sector. He has worked at British Gas, Ultramar, LASMO, and Paladin Resources. Most recently Tim spent a decade as Chief Executive Officer at Falkland Oil and Gas Limited.
Was also a Non-Executive Director at Rockhopper .

GENL has a reasonable cash pile part of which I believe they hoped would be used towards gas developments in Kurdistan which now appear scuppered. GENL seem pretty cautious with their capital which is good but they have shown themselves prepared to exploratory drill off shore drill off Morocco and in the Mediterranean with Mediterranean Oil and Gas (MOG) where they drilled unsuccessfully.
On balance ;likely not so attractive to cautious GENL as they like the extremely low drilling costs in Kurdistan. On the other hand; The Falkland government will probably not be such a pain to deal with as the Kurdistan regional government have been at times.

We have two slim survival hopes now. Firstly ; we must receive a large cash injection before end of 2022, hopefully via an OM award. Secondly; Sea Lion's development really relies on Navitas being VERY keen on the project. I think they are the guys with the know how and connections to possibly secure development; certainly NOT our management.

If Navitas gives up on SL; the games is up, imo. Sam will want to raise funds by dilutions for ever in a hopeless exercise ; holding out hope like ARG and BOR managements have but with no chance of attracting partners with deep pockets . Uselessly paying directors for years; sitting around sending out promotional materials is not on, imo

If Navitas walks and IF RKH has received a LARGE OM award; I think there is a case to wind up the company and distribute the cash.

Good evening Ovets.

Hand on heart i think UKEF is off the table as per the content in the guidance document below. Just thought there was a remote chance that as we were in the door with the process we might be allowed help. Detailed questioning of Sam on finance would be helpful.

hTTps://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/975753/Guidance_-_Aligning_UK_international_support_for_the_clean_energy_transition_-_March_2021_.pdf

Should read $1.8 BILLION doh!

A lot of effort was made by PMO on securing the financing of Sea Lion.

RKH annual report RNS's 2.4 2019 had the line;

"Vendor financing - contractors have agreed to provide up to US$400 million of funding for the project"

What is the position now?
Has ALL chance of UKEF gone; because I believe we started an application process and we received input about improving the fields economics. I believe that must have come from UKEF and as a result 4 more producing wells were added to the plans upping costs by $300m to $1.8m .
As we started the process is there a remote chance we fall outside the prohibition on new fossil fuel projects applications?. I fear we have lost the chance. Has Sam an answer?

Good afternoon longtermthinker

Could Sam be asked about our gas "assets" please?

First; a miniscule piece of good news; Italian gas prices have shot up too and in Europe are second only to the percentage rise in the UK.

I only have out of date numbers but both our fields have been in serious decline. What is the current production and how much revenues do they produce.

I suspect we are looking at a total about 300 Barrels of oil equivalent .

These assets have circa $13.5 m decommissioning liabilities. When does Sam think they will become an 'issue'

RKH had a deal where we were going to PAY NOP to take CIVITA off our hands ( deal fell through). NOP stated in 2017 they thought production life left was about FIVE years. What is Sam's view?

Good afternoon r1234

you wrote; "Do we still have any interest in Monte Grosso (25% stake operated by ENI) and if so what is happening with it?"

Yes we do but its useless because there's little chance of drilling getting a go ahead and we can not afford the gamble anyway..

RKH have a 23 % interest there and , coincidentally, its COS is estimated at 23% which is not particularly great.

This is a very deep, challenging target; circa 6,800 metres; a previous attempt to reach target depth was abandoned by British Gas years ago. Its not a cheap drill and its estimated would take well over a year to reach the target; (I have seen an estimate of 415 days).

I reckon RKH has about $8m cash left. At end of 2020 it was $11.7m

I am unable to attend the meeting but; there are questions for Sam about where the cash has gone and who is responsible for OTT pre-development costs;

8.4.20 Results RNS

"Falkland Islands spend of US$19.3 million relates primarily to pre-development activities on Sea Lion. Following signature of a Heads of Terms in January 2020, Rockhopper's share of pre-sanction costs from 1 January 2020 (other than licence fees, taxes and project wind down costs) are funded by Premier and/or Navitas. During the first quarter of 2020, the Company paid US$3.9 million of Sea Lion costs related to the period prior to 1 January 2020. Whilst timing remains unclear, further such costs, estimated at up to US$10.0 million and included in the balance sheet under current liabilities, could become payable in the next 12 months."

"Falkland Islands spend of US$19.3 million relates primarily to pre-development activities on Sea Lion."

If we were simply being billed by PMO alone for our share of predevelopment costs; then our 40% which was $19.3m USD! suggests that 100% of costs for one year were in total $48.25 MILLION USD .

That's madness. We were not doing any drilling; where was the money spent?.

Someone needs to account for where that $19.3 m went and what about that kicker; another $10m bill that popped up; what was that cash used for?.

Good morning Neilus

you wrote;
"Dipping into the OM fiasco I still think they will give at least a payout of 29 m to cover the investment RKH made into OM. "

Just how much will be left after our legal team has taken a big cut? I recall reading somewhere that such cases cost about $8 m . We are on a no win no fee basis.

I think we really need a much larger win to leave RKH with a useful sum in hand. Of course there is the issue of getting the Italians to pay . I suspect there will have to be a negotiated settlement with the Italians to avoid protracted enforcement litigation IF we have won, of course.

Time is not on our side.

Good morning fuddstone.

You wrote; "This decision by Harbour was not arrived at overnight.."

Indeed. We have known that Linda COOK was less than keen on SL from the start BUT it now appears RKH management knew about this well in advance of todays HBR 'update'

I had the impression that Navitas , who have silent of late ,were going to walk away at the end of this month. Still looks likely to me ; but, what to make of this line from RKH;

'Rockhopper confirms that it is in discussions with Navitas..'

That's interesting wording. How long has Sam had knowledge of HBR's decision and how long have these 'discussions' with Navitas been going on...hours or days.?

Good afternoon AA2020

I agree. If HBR are really serious about SL's development it would make sense to take RKH out in a paper offer.

Good afternoon CroftOriginal

You wrote;

"US oil companies will be queuing round the block to sign up and fully fund."

I respectfully disagree. PMO struggled to farmout SL for years and had to agree VERY generous terms to a minow (Navitas) who were cash poor but assured they could raise capital . Navitas got fantastic terms. SL to date had cost $1.1 BILLION to get where it was and Navitas proposed farmin deal does not require a payment for funds already spent.

The market for such developments has not improved since Navitas emerged. I do not see anyone bidding for SL now.

I think Navitas will leave the project soon.

The HBR update will give us an indication as to SL's possible future.

The next few days are going to be crucial. IF HBR have made a decision to abandon the SL development they SHOULD immediately inform the market; we should have seen a RNS from RKH and HBR. Its still possible such a dismal RNS could drop before HBR's comprehensive updated.

It goes without saying; IF HBR had made a decision to proceed we ought to have seen an RNS.

We may be looking at another 'can kicking' like statement from HBR suggesting they are still weighing options and even may be wishing to engage with the FIG on taxation issues.

"Fossil Fuel firms suing governments for $18 billion due to climate action"
SEPTEMBER 17, 2021

Extract.

"Meanwhile Rockhopper is suing the Italian government for USD 325 million due to the banning of offshore oil drilling.."

hTTp://priceofoil.org/2021/09/17/fossil-fuel-firms-suing-governments-for-18-billion-due-to-climate-action/

IF we receive an award in our favour , will the Italians pay up in time to avoid RKH having to fund raise? I fear we are going end up having to chase them for payment.

Good afternoon HappyInvestor100

You wrote;

"However, a major gas development in the SFB that secures the UK gas supply potentially for decades and powers a green revolution might be an easier sell. SL could then piggy-back off such a major investment in a SFB gas hub."

The present gas supply issues are relatively temporary. Could be high prices for next three or four months. There is loads of cheaper to extract gas in the middle East . It would cost billions in infrastructure to extract gas and liquefy in the deeper water SFB.
I do not see any FI gas being commercially exploited.

We are in the last chance saloon with SL. Next 2 weeks with hopefully see a decision; one way or the other from HBR. Kicking the can down the road with POO so high is not a credible option.

The availability of development finance is the critical factor , imo.

Good morning Ibug

You wrote; "Loxley site and Loxley-1/1Z including testing of both (£7m total into production)"

To commercially supply will cost more than £7m if Sanderson is to be believed.

It appears £7m will only cover the appraisal drilling.

UKOG's own QC on day one of the Loxley enquiry gave an estimate of the appraisal drilling costs;

"The direct costs of the proposal are now about £7 million"

When giving evidence at the Loxley enquiry Sanderson explained what a full field development would cost IF the appraisal proved it up.

Sanderson said;

"Fifty Million is the investment necessary to drill all the wells and the surface facilities"