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My understanding there are $4.1 Billion of UK tax losses that are an attraction.

PMO's planned acquisition of BP production is planned to take advantage of them. Just how much of that $4.1 b they will use I do not know.

However ; Its worth noting that the rumours of Apache interest in a bid for PMO came well after the PMO plans to buy the BP assets were made known to all.

In my opinion, anyone who thinks Apache taking over PMO has ANY positives for RKH is mistaken. Look at the debt mountain Apache has.
A takeover would only make sense if Apache's motivation is to take advantage of PMO's $4 billion tax losses. Apache has significant North sea production.

Good afternoon Bloobird
Yes,
The article penned by Bryce Elder

"What a load of rubbish.
There is literally no chance at all that apache are buying out pmo and dropping sealion !!!! Why even say it ?"

I mention a possible Apache takeover of PMO only because this bid rumour was reported in a Financial Times article dated 4th July. There has not been any denials from either Apache or PMO.

Look it up on the net and have a read of their analysis. They are tetchy about copyright so I am not reproducing it here. DYOR

Who knows what Apaches interest might be? My belief is it might be that they like the NS production and PMO's rather useful tax position.
Its entirely possible Apache would not want the SEALION development; we do not know what may or may not happen. Hopefully there will be no such deal with Apache.
I mention it because the road to SEALION's development has been littered with banana skins.
Just exclaiming 'rubbish' and 'no chance' ; is not a reasoned argument.
I would start attacking the story by highlighting Apache's own financial issues.
Read the FT article .

I sincerely hope Apache do not get involved .

So many things need to go just right for SEALION to ever proceed.
PMO needs finish sorting their longer term finances. I note recent progress.
NAVITAS needs to have signed AND FIG approve new deal. Looks likely
POO needs to be North of $55 by summer 2021 at the latest to stand any chance of FID in Q3. Very uncertain; is that a credible hope?
UKEF support must still be available . WAS a given but now uncertain.

Then we have the tricky arbitration questions; IF & WHEN?

IF RKH has not yet received an award by Xmas 2021 BUT FID has been announced ; I would expect RKH SP to have risen significantly. In that case a fund raise by RKH need not have a devastating impact on the share price. Have to remember that although our partners will start to pay our SEALION development costs by way of a loan; RKH still will have its overheads of circa $4m pa to pay until first revenues in q3 2025 (best case).

At best I give us a one in three chance. We have been let down by PMO so many times before one must view their very hopeful chart estimates with great scepticism .

Who knows what other banana skins may cross our path? How about PMO being taken out by Apache who decide to drop SEALION?

What value has Moody added? What is his useful skill set? He is not an oil man. We are carrying a very expensive suit. I suspect that part of the reason our pre-development costs are so ridiculously high has been that our top team have been relying on expensive consultants.
It appears way over $23.2 m at least was spent on th 'pre-development' of SEALION last year; on what? Paying 40% the wage costs of the circa 60 staff PMO had on the SEALION team?
If all 60 staff were on wages of $250,000 pa ; the total wage bill would have been $15m. RKH share at 40% would have been $6m.
I can not fathom how last years costs could have been so high; $19.3m plus $3.9; not forgetting another "up to" $10m to pay maybe this year. Whats that $10 m all about? More spending last year?
You can see why the EDISON has been dumped. Careful reading of their research highlighted the dire cash position going forward.

The reason they sold the Egyptian assets is because they had to. PMO had been dropping huge pre-development bills on us.
Its incredible how so much money has been spent just preparing for SEALION
8th April 2020 Results

"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."

So, 19.3m plus 3.9m plus another 'up to' $10m was spent on pre-sanction costs.

That's a lot.
The figure for 2018 was $11m
The figure for 2017 was $6.7m

You have to remember that Edison were predicting RKH cash position at year end 2021 would be $5.346 m.
Recent cost cuts may improve that , imo, to circa $7m.
However; without the cash from the Egyptian sale I think RKH would have been looking to an early fund raise.
As it is we are still going to run out of cash before best case first oil WITHOUT receipt of a big arbitration award.
If you look at p.23 of the PMO presentation here;
https://www.premieroil.com/sites/default/files/presentation/20201h-results-presentation.pdf
You will note best case first oil is summer 2025

The arbitration award is VERY important to give us the chance to avoid a fund raise which very likely, imo, would be by issuing more shares.
Whether SEALION goes ahead relies on POO being in the right place next year and whether financial support is still available.
I am hoping the FIG sees the risks and amend the tax terms.

It appears hat PMO shareholders are taking significant pain to keep the show on the road. The question for RKH shareholders is; can we avoid a dilution here to keep our show on the road?. Its all about the arbitration and the receipt of a significant award.
We have until 2022 to receive a cash injection necessary to keep the lights on until a possible first oil. If no award is received a equity fund raise is likely with an alternative scenario being absorbed into PMO or , less likely, Navitas.
I do not see any other outside interest appearing.
Everyone has to be realistic as to what award proceedings we may receive. Firstly the lawyers will take a huge slice, and secondly, because RKH knowingly bought a blighted asset a 50% award cut is considered likely.
We also have to hope Italy pays up, and fairly promptly too; IF we have won.

As far as I can see that's the first time a SEALION phase 2 specifically appears in a PMO presentation since the 2017 full year presentation published in March 2018

hTTps://www.premieroil.com/sites/default/files/presentation/180308-2017-fy-results-presentation-final_0.pdf p 19

Must not get too excited as I have read and heard too many hopeful SEALION predictions from PMO and Durrant over the years.

Will PMO be able to tap UKEF support in the future?; one of many questions.

Good morning Neilius

Page 12 of the presentation is VERY interesting. Despite the $194.1 million write down I see that PMO still hope to develop phase 2 SEALION . That is very significant.

All our futures rely on POO North of $55. It would also be good if the FIG gives SEALION development an additional push with a a period of tax breaks.

A link to the Tethyan case;

"hTTps://www.reuters.com/article/us-pakistan-mine-military/world-bank-court-orders-pakistan-pay-58-billion-damages-to-tethyan-copper-idUSKCN1U80GT

"A World Bank arbitration court has ordered the Pakistani government pay damages of $5.8 billion to Tethyan Copper"

"The company said it had invested more than $220 million by the time Pakistan's government, in 2011, unexpectedly refused to grant them the mining lease needed to keep operating."

Getting the cash is another question......

An other view on the case; hTTps://www.cadtm.org/Illegal-projects-How-World-Bank-Arbitrators-Mugged-Pakistan

In my opinion; an entirely frivolous and without merit arbitration claim would have been easy to result pretty quick. The longer this takes makes me speculate they are in a difficult stage where they are calculating what is the right award figure.

However the Tethyan case had a long delay between announcing the claimant had won and the actual calculation of the award figure.
The ICSID ruled against Pakistan in 2017, but it took them to 2019 to determine the damages owed to Tethyan.

The big plus in that case was that the award was really HUGE ; multiples of the actual monies the aggrieved had spent . That holds out the hope we could get a large award for lost profits.

Partnering with PMO has been our downfall. PMO's weak finances have held back development but PMO would say its general world market conditions. That is a part of the story , in my opinion. The main issue is that it was too bigger project for PMO; They could not afford it.. The deal was too generous and you can see why PMO have been YEARS looking for another partner.
Should have pressed 'go' in 2018 with high POO which averaged $71 for the year. We have been misled by PMO, imo especially Robin ROSE who in January 2018 who stated they aimed for project sanction that year.

You have to remember the huge costs for phase 1; $1.8 billion which was upped, on advice from 16 producing wells to 20 to increase recoverable volumes from 220 to 250 million barrels and to improve field economics.
Breakeven is now $40 per barrel.

Other phases would have similar huge costs. I think that phase 2 development was hoped to start a few years after phase 1 if you look at the presentations.

I expect PMO's report tomorrow will confirm what they signalled ahead; a circa $200 m write off for later phases of SEALION leaving us with just phase 1 potential. I hope for further clarifications.

I think there is a logical reason why the signing was delayed; a period of serious reflection.
Navitas published this on 7th January;

"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."

After signing the SPA it would have been forwarded to the FIG for their approval .

We had a long period of radio silence from Navitas before they indicated they were still interested and are still awaiting news of a signing.

On 15 July PMO stated;

"...a small core team is progressing the commercial and regulatory work streams, including the farm out to Navitas for a 30 per cent interest in the Sea Lion licences. Premier, Rockhopper and Navitas are finalising the farm out documentation, and discussions have commenced with the Falkland Islands Government to obtain approval for Navitas's entry onto the Sea Lion licences."

This should have long been done and dusted. My reading is that there was a really serious long debate about an early complete abandonment of the interests.

Good afternoon ralph
You wrote;
"What would happen to the Tax they owe for the farmout?"

That deferred capital gains tax bill applies to the still existing farmout deal with PMO , in particular the value of the huge carries.

Its hoped the FIG will approve the new arrangements with NAVITAS which removes the giant carries. In this case the clause that states 'if deemed irrecoverable' comes into play ; the tax liability would disappear, imo.

This is just my interpretation.

Not convinced there will be an oil shortage in a few years. The big opec producers can just open the taps a bit more as required. Its all about not over producing to keep POO at a reasonable level.
Where will RKH be in a year or two from now?. Best case scenario is we receive a really big arbitration payout and SEALION is sanctioned. Based on the value of the development funding Navitas will have to invest I reckon that's equivalent to circa 34p a RKH share. Best case in two years I could see RKH up to 35p to 40p IF they have a big award on top.

Worst case is RKH collapses completely and there be ZERO value. Circumstances to create that are no, or insufficient ,arbitration award AND SEALION is abandoned. If SEALION project is wound up there will be costs. Add together with RKH's small cash resources and a toxic asset base with $13.5m of decommissioning liabilities maturing after 2022; I can see total wipeout. The management will try and fund raise but for what purpose; just keeping their jobs. I will not support ANY future fundraising.
Two very extreme scenarios; its a huge gamble here.

Not sure $49.53 would be quite enough. The 'old' SEALION development plan costing circa $1.5 billion had a break-even of circa $45 and with great care got down , I think, down to circa $43.
Durrant years ago stated PMO's project sanction price was at least $55 to give them the required profit margins.

PMO had feedback on the projects economics and I am making an assumption here; that it came from UKEF. As a result the plans were amended with further drills to the south and the costs upped to $1.8billion. The improved economics dropped break-even to circa $40.
At a pinch , I suppose, they might say go at $50; but I doubt it.
This is where I think the FIG really need to start smelling the coffee here; SEALION needs another tax incentive, imo.
I suggest a two year tax holiday from first oil; this might be enough to encourage our partners to press the'go' button.

And this article is from 13th August;

https://www.theeconomyclub.com/boris-johnson-ties-down-ukef-to-curtail-fossil-fuel-projects-abroad/

Good afternoon Ovets

Read here; hTTps://www.theguardian.com/environment/2020/aug/12/boris-johnson-poised-to-stop-uk-funding-overseas-fossil-fuel-projects

published on 12th August