Member Info for cyan2

They sold the Egyptian assets because the company was under serious financial pressures with ENORMOUS pre-development spending for SEALION. PMO were dropping big bills on RKH. I would actually like an audit of where exactly the money went last year . $19.3 m spent in the year. Since then $3.9 m more has had to be paid out and another up to $10m bill may arrive anytime; may have already. These numbers are ridiculously large.
Was all this money sent to PMO or were our hopeless management ,(We know they are not oilmen),being taken for a ride with gigantic consultants fees. ? .

8.4.20 results extract:
"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."

I will not support any fund raise UNLESS there was an absolute certainty that SEALION will be developed. Its been written many times before; RKH MUST receive a large arbitration award to avoid a fund raise within two years, imo.

Would not be surprised if RKH disappears completely within two years having been absorbed by one of our partners.

The sale of the UOG shares in order to 'strengthen the balance sheet' concerned me. I think RKH should have updated the market with an update on their current financial position.

There are so many red flags now; its alarming. We sold out our valuable UOG shares at a discount far earlier than my worst case guess because RKH said they needed to 'strengthen the balance sheet'. That is very concerning; why did they need to cash in the last of the family silver so soon? MacDonald was on another directors wage with UOG; do you think he would give that up unless he had to? . We have toxic Italian assets with large decom. liabilities expected to start to drop on us after 2022 but a predicted cash balance at ye 2021 that would be insufficient to cover the CIVITAS liabilities let alone keep the lights on until any possible first oil. POO has gone sub $40 again and PMO are clearly signalling their long term priorities are in the NS. They have just acquired 3 more licenses ;

"We are delighted to have been awarded the block next to our Catcher Area fields as well as the blocks adjacent to the Tolmount field, given our pre-investment in the extended 3D survey there. These awards provide significant opportunities to create value and to extend the life of these core assets."

That means they are set to use their NS tax losses efficiently and any free development capital is far more likely to be spent in NS developments; NOT the FI's
The FIG have to man up a now and force the pace with carrots and and a stick.

We have to recall how amazing the Navitas farmin terms were. PMO gave up 20% of SEALION for very little; basically a couple of hundred million dollars of development capital. It was a genuine but pretty desperate attempt to get the development in a 'go' state. It proved how desperately stretched PMO were, and are, for development capital.
I bet that DURRANT would bite anyone's arms off to sell out of the project IF he could. My dream scenario is that NAVITAS persuades another to come into the project , ousting PMO. Highly unlikely , imo.
Time is NOT on our side; that's the trouble. We are running out of cash and the oil age has limited life left.
Its all about the arbitration; it better come in really BIG.

The comments on the forward price of POO was the only positive as regards SEALION in that interview.
Listen again to DURRANT from 24 mins talking about the oil and gas in the ground and re-investment. He emphasized the priority was the debt and that PMO would be very cautious about any re-investment..
I think SEALION is in the very long grass now ; years before a possible sanction. Its not looking great. RKH desperately needs a huge arbitration award .

I wonder if the cash was required to pay 40% of the redundancy costs of a large number of the circa 60 staff who WERE employed on SEALION project? Would not be surprised at all.

'cheque' even .. Oh dear.

Imo; its nothing to do with BP and fossil fuel projects. Its actually concerning me they sold so soon.

Not impressed with this RNS. Not a great price. Stated reason tells us all we need to know; "The sale proceeds will be used to strengthen the Company's balance sheet." Translation ; 'RKH is in a weak financial state'.
Hope they are not going to surprise us with an overlooked SEALION 'pre-development' bill that needed paying.
The only good news is that Stewart MacDonald loses a pay check ; has to leave UOG board.

Good afternoon Neilus
I agree; the longer term debt solution for PMO looks good.

From all we have been told it appears Q4 2021 will be the time when we will be able to better judge our 'long' term fate.

If we have actually received say; £25m in arbitration proceedings by then; we will have the cash,imo, to survive to first oil in 2025; IF our partners had announced SEALION is going ahead in that quarter.

If we have't received any cash; we have a certain fund raise to look forward as I am expecting our cash position at YE 2021 to be circa $7m; not enough.

Without an award ,but with our partners announcing FID and we are set for SEALION 'Go' ;then I see our SP maybe jump to 25 to 30p ; maybe more; on that good news announcement. Off the back of that ,a fund raise to support us to first oil will be required, and if by an issue of equity, that need not be catastrophically dilutive .

Best case scenario is ; IF very lucky we will already have a huge award in our coffers , before FID announcement in Q4 2021; and in that case the share price should be much much better.

Other alternative scenarios might involve one of our partners 'taking us out' and likely , imo, for not a great deal.

I see POO is having a stronger day with bad weather over the pond impacting production; Brent forward looking about $45.51.

In May Durrant was reported as saying PMO saw long-term oil prices at $60-65 a barrel.
When you logically assess what DURRANT has said about where he sees long term POO ;one might reasonably argue that SEALION should be sanctioned as its at least 3.5 years to first oil.

With SEALION break-even of $40, and minimum go number (for acceptable profit margin) being $55 ; the case for development SEEMS clear; IF you are confident of $60-$65 POO in a few years.

But of course ; the biggest issue is PMO's finances which have held us back for years.
The half year results ( RNS date 20.08.20) had a commentary on SEALION with this line within;
"the project to be reactivated once the macroeconomic outlook improves and Premier's credit position better supports the funding of the project."

Its no good looking for anything positive from RKH management; they are impotent passengers. They are awaiting events totally out of their control .

Lets just hope PMO gets its financial house in order and an arbitration award arrives in our coffers.

I must apologise Mogger for my misreading of your post.
So its 24 months from Feb 2019 takes us to Feb 2021 .
So we have to wait and see where we stand next February with MG

Ultimately we could end up relying on article 13 of the ECT
It will be interesting to see what valuation is put on the MG exploration prospect if it comes to a payment of compensation..
I am not convinced it will be that significant.
Its alleged breaches of the ECT that are the basis of our current OM arbitration claim.

OM is the one that really could be very significant to our finances in the hopefully in the nearer term.

Mogger ;For the record ; I am a large share holder.

The case you linked to is yes indeed part of the long running dispute BUT the text clearly shows that it was a rejected appeal made by the municipalities.

translated extract;

10.19 On the basis of these considerations, the appeal filed by the Basilicata Region and the Municipality of Brindisi Montagna must be rejected.

11. The Basilicata Region and the Municipality of Brindisi Montagna must be ordered to pay jointly and severally the costs of the proceedings against Rockhopper Italia spa.

Jointly condemns the Basilicata Region and the Municipality of Brindisi Montagna to pay the costs of the proceedings in favor of the company Rockhopper Italia spa, liquidating them in Euro 6,000.00 for fees, over Euro 200.00 for disbursements and over general expenses in the amount of 15% ."

What is fair value? Made me think about how little NAVITAS paid for the giant Shenandoah discovery;

"Navitas acquired rights in the Shenandoah discover in March for only $1.8 million in cooperation with two of its partners in the Buckskin project:"

Were they lucky? Was that not the true market value?

hTTps://en.globes.co.il/en/article-navitas-jumps-on-positive-shenandoah-report-1001264557

Looks like we are going to partner up with some smart guys who can spot a bargain.

A good read.
Where to start.
I understand that RKH paid in cash and shares £29.3million for the whole of MOG including OM. Wasn't there also getting on for £10m in MOG's coffers too at the time?

The question is ; what is fair value for our 23% interest in MG ; an exploration prospect with a 23% COS?

Personally, I do not think we can hope for much.

RKH have not reported that they have started any arbitration proceedings so we can't really expect much action on this front. IF they start a claim we know it will take years.

The court case you previously referred to I once read a translation of. Its was about local authorities rehashing their old objections to the already in place MG permits. They lost and had to pay RKH's costs; 6,200 Euros we had to spend arguing our corner. It did not advance our prospects of getting a drill done, though.

I think we are in agreement here on the point that any compensation RKH might receive would be , as you said "insignificant"

That 25 fold increase in fees will hit the bottom line a bit of our income from our interest in the Guendalina offshore gas field whose production is declining.

Frankly ,we have bigger issues to concentrate on; these are minor sideshows.

This is a relevant read;

hTTps://www.petroleum-economist.com/articles/politics-economics/europe-eurasia/2019/italy-imposes-offshore-exploration-moratorium

This passage shows how many permits there are in Italy;

"The moratorium affects 73 existing exploration permits (47 onshore and 26 offshore), as well as 79 pending applications for exploration permits (54 onshore and 25 offshore) and five pending applications for non-exclusive offshore exploration permits."

The following passage shows just how tiny the fees are that RKH might try to claim back;

"The government is also set to increase 25-fold offshore concession fees, for both exploration and production, from 1 June 2019. Crippa says the fees, unchanged since 1998, currently bring in just €1mn/yr ($1.1mn/yr) for the state."

I respectfully disagree.
What losses can RKH prove.? The only 100% certain costs are what was paid for the license opportunity . In this case , because there was a reasonable expectation of a drill there were plans drawn up; how much would they have cost.?

I think RKH would have too prove on at least the balance of probability they would have made a financial gain from a commercial hydrocarbon discovery.
The Italian government would throw back in our lawyers face our own publicly declared COS of just 23%.
Turn it on its head; that looks like a 77% chance of not being successful ; more than a balance of probability against.

I think they could only hope for compensation for license fees and any planning costs including any survey .

I could see that years of expensive litigation resulting in an award that may not even cover legal costs.

Good afternoon Paul.

The BIG prize is from the OM arbitration.

Mogger wrote "The Monte Grosso prospect is going the same way as Ombrina Mare."

I respectfully disagree. I see no chance of that going to arbitration. Who would take on the huge expense on something we both agree would , at best, result in a very small compensation award. I am really struggling to see how any award could be made . The Italian government would argue there's no 100% proof there is any commercially available oil to extract. They could logically argue that by preventing a possible useless drill they may have actually saved RKH & ENI money!

Its fair and proper to point out that Monte Grosso is a modestly chanced exploration prospect where we have a minority interest.

RKH describe Monte Grosso very briefly here;
hTTps://rockhopperexploration.co.uk/operations/italy/

"Monte Grosso
23% working interest
~250 mmbbl oil prospect (resource)
23% chance of success"

"Monte Grosso, Italy (23% working interest)
Rockhopper transferred the operatorship of the Serra San Bernado permit (which contains the Monte Grosso prospect) to Eni during 2016. Since that time, options for the design of a well on the Monte Grosso prospect have been explored and work undertaken to secure the permits and approvals required to drill a well.

In February 2019, the Italian government introduced certain further changes to oil and gas law through the "Sustainable Energy Bill". These changes include, amongst other things, a temporary suspension on exploration activities including the drilling of exploration wells. Discussions are ongoing between the Serra San Bernado joint venture partners to agree a forward plan.