Member Info for cyan2

Its all a waiting game now. Hoping for Arbitration good news and hoping POO continues to recover.
Hoping that PMO wins in the courts and general normality returns.

After reviewing CitizenTS contributions, I have placed that poster on filter.

Please do not spread falsehoods CitizenTS;

You wrote of me ; " (well we already know he doesn't hold any of these) "& "He doesn't hold any of these"

I have previously pointed out that I am a substantial holder of RKH shares as in this extract from my 2nd May 2020 post;

"I hold a significant number of RKH shares but Nigoil has done a great disservice to any reasoned debate about our future prospects."

Are you another Nigoil avatar?

Good afternoon Investor2210

Am interested in why you think BOR are cheap?

You paid 0.9155p for a share with a 30% spread

Are you aware Landsdowne holdings sold all its 67.613m for 0.1p very recently?

I read this on a rival BB

"there are no more cash bonuses "

Extract from the RNS;

"Cash compensation

Base salaries for executive directors have been permanently reduced by 20 per cent. All benefits related to base salary, in addition to the existing cap on any annual bonus awards, will be linked to the newly reduced base salary. It is anticipated that any base salary increases over the next five years will be restricted to the rate of inflation only, other than in exceptional circumstances."

"... the existing cap on any annual bonus awards, will be linked to the newly reduced base salary"

CASH bonuses appear to remain

The annual report highlights how large they can be;

p43 https://rockhopperexploration.co.uk/wp-content/uploads/2020/05/2019-RKH-Report-20APRIL_SCREEN-FINAL.pdf
"Annual bonus
For 2020, the Executive Director annual bonus will be determined as a percentage of base salary based on performance against pre-agreed corporate and personal objectives. When deciding on the level of bonus awards, the Committee will have regard to the extent to which achievement of the objectives has contributed to progress against the Company’s strategic drivers. Bonus payments will only exceed 50% of base salary in circumstances of exceptional strategic progress. The Committee has the discretion to decide the form of any exceptional bonus payments which may be in shares and/or cash.
The Committee has agreed the following objectives for the financial year ending 31 December 2020:
> Protection of the Company’s balance sheet
> Completion of the Navitas farm-out
> Progression of senior debt financing for the Sea Lion project.
The Committee previously agreed to remove progress towards the Final Investment Decision on the Sea Lion Development from the executive directors’ bonus targets. A one off special bonus of between 100% and 200% of salary will be payable at project sanction with the exact quantum of this bonus at the Committee’s discretion."

Today's RNS shows that pressure can force change.

"As part of the review of remuneration, the Board sought independent remuneration advice and consulted with several of the Company's largest institutional shareholders. "

The implication of that is the II's thought change was necessary to keep their support; they obviously did not want pay increased!

"Base salaries for executive directors have been permanently reduced by 20 per cent"

Imo, too little too late. The basic pay is far too high in relation to the size of the business and its dwindling cash resources.

I have long argued that executive remuneration should be linked more to the equity's performance.

" the Option Scheme represents a rebalancing of executive director remuneration more heavily towards equity in order to achieve greater alignment with shareholders,..
"In addition, each of the Company's non-executive directors have committed that rs, in particular in the event of the successful progression of Sea Lion and associated future share price upside."20 per cent of their fees, after tax and national insurance, will be used to purchase shares in the company."

On the face of it the new option arrangements do that, but....we have a little bit of "swings and roundabouts" here as we consider the option numbers;

"In lieu of their contractual notice periods for the 20 per cent base remuneration reduction, executive directors will receive options to subscribe for an aggregate 3.1 million new ordinary shares in the capital of the Company ("Ordinary Shares"), exercisable at a price of 1 pence per new Ordinary Share (the "1p Options"). No payment will be made for any variable elements of pay. These options will vest after one year's further continuous employment."

3.1 million at ONE PENNY! "for the 20 per cent base remuneration reduction"
That eases the 'pain' a little bit

"In place of the LTIP scheme, executive directors will receive options to subscribe for an aggregate 18.0 million Ordinary Shares, exercisable at a price of 6.25 pence per new Ordinary Share"
"In addition, 5.3 million 1p Options and 5.9 million Market Price Options will, in aggregate, be issued to Company employees"

6.25p; the expectation and ambition for our share price is not exactly sky high is it?

Our future financial security remains based on receiving a large arbitration award in a timely manner.

CitizenTS wrote;

"I've said before the arbitration award is not a particular focus for me. The impact on the share price is/would be only really small compared to SL getting done,"

The award is CRITICAL; its a matter of RKH's survival as a going concern IF you want to avoid a huge dilution.

Without a large award its clear from all the numbers that RKH would have to fund raise to survive to a possible first oil.. An equity issue from weakness would be highly dilutive.

I would rather see PMO absorb us that sink more cash into RKH and keep our board so handsomely remunerated.

You can learn a lot from history.

The liabilities are real , current and substantial.

We could not complete a deal where we were paying NOP to take CIVITAS off our hands; that is revealing.

In respect to the Italian assets I will summarize my comments;

I highlighted that the CIVITAS assets liabilities were assessed at circa $6.3 USD at the end of 2016.

I identified that the CIVITAS abandonment liabilities may become liable from MID 2022 based on the comments from the NOP CEO in 2017 as to the gas fields expected life.

I pointed out that EDISON predict RKH cash balance as ONLY $5.346 million at YE 2021

I also pointed out that RKH have declining production from the offshore Guendalina gas field .

2017 production averaging approximately 290 boepd net to Rockhopper.

2018 production 180 boepd

RKH September 2019 presentation stated "Net production: 140 boepd (last 12 months)"

At what point does decommissioning becomes an issue there?

I also pointed out that our last annual report states RKH decommissioning provision total $13.561 Million.

A very large arbitration award arriving in RKH's accounts would be great.

Good afternoon CitizenTS

you wrote; "Cyanski, perhaps you've noticed, but the abandonment costs you've been talking about are in ITALY. Or maybe whilst swirling around in disgust you missed that!"

No, I am fully aware they are in Italy; I mentioned the fact the liabilities are in Italy in my previous posts in this thread.

Please review the content and then comment on the substance.

"So if you vote Sam & the rest of the board off who do you propose to take their place who can do a better job? "

Answer; PMO management

I really doubt if RKH will be in existance in 3 years time.

To last the course and remain independent we need so many things to go just right which, most importantly includes; receiving promptly a large arbitration award from the Italian government. Also we need ; POO hitting $55 really quick; PMO getting their new arrangements approved by all the courts; a new submission to UKEF being approved VERY quickly; then, we could see first oil in 4.5 years. Say Q1 2025.

Without RECEIVING a large award we are faced with a MASSIVELY dilutive fund raise to enable us to survive to a possible first oil; IF its ever sanctioned.
Our arbitration claim is being closely watched because a win for us is likely to open the doors to many similar claims.
Our future should not have come to this; relying on receipt of a huge compensation payout.

After looking at the numbers , including liabilities and timescales; I have come to the sorry conclusion that RKH is unlikely stay the course to first oil. Maybe PMO will absorb us in a paper exercise.

I think our best future is to be absorbed by PMO.

See here; uk.advfn.com/stock-market/london/rockhopper-exploration-RKH/share-news/Rockhopper-Exploration-plc-Director-PDMR-Sharehold/82321436

Good morning Surfit
Those shares are perk our expensive pair get; "Rockhopper Share Incentive Plan ("SIP")"
You see Moody & Macdonald need enormous basic pay, bonuses and incentive plans to motivate.
A gradual minor dilution.

Further to my post on Saturday outlining Rockhoppers Italian Assets and the decommissioning liability.

I have found this interview with Northern Petroleum's CEO Keith BUSH regarding the agreed taking on of Rockhoppers Civita gas production where RKH planned to PAY Northern Petroleum $1.6 m to take off their hands as there was de-commissioning liabilities .
view here;
hTTps://www.youtube.com/watch?v=ziQ1BecDWyA
The important bit was that he thought there was "Five or so" years production left.
He was speaking in mid 2017; by implication decommissioning could become an issue from mid 2022 onward.

When RKH released an RNS in respect of this agreed disposal they highlighted the decommissioning costs;

"In accounting terms, the net liabilities of the Petroleum Licences as at 31 December 2016, including the future abandonment and decommissioning provisions, were EUR5.8 million."

hTTps://uk.advfn.com/stock-market/london/rockhopper-exploration-RKH/share-news/Rockhopper-Exploration-plc-Sale-of-non-core-intere/74953583

This deal did NOT complete so the EUR5.8 is going to be an issue for RKH; maybe sometime after mid 2022.

That is a fairly significant sum to find; it equates to circa $6.3 million . Likely RKH will want to push back that bill as much as possible.

Bearing in mind that Edison predicts RKH cash position at YE 2021 at only $5.346m you can see how difficult our finances are.

A BIG arbitration award arriving very promptly is vital.

I recently wrote a post on ADVFN about our other 'assets'
Here is the relevant remarks that highlight these have decommissioning costs at some point in the not too distant future ; includes our 20% interest in the offshore gas field where production is falling fast.

"In 2017 RKH tried to dispose of some Italian assets. The deal involved RKH PAYING the "buyer" $1.6m to take them off our hands and save us large decommissioning costs later!

See here
8.6.17 rns
hTTps://uk.advfn.com/stock-market/london/rockhopper-exploration-RKH/share-news/Rockhopper-Exploration-plc-Sale-of-non-core-intere/74953583

The deal fell through and we kept the dream assets .

see here;
3.1.19
hTTps://uk.advfn.com/stock-market/london/rockhopper-exploration-RKH/share-news/Rockhopper-Exploration-plc-Corporate-Update/78979764

The September 2019 presentation stated that these assets; "Net production: 120 boepd (last 12 months)"

RKH have production from the offshore Guendalina gas field

2017 production averaging approximately 290 boepd net to Rockhopper.

2018 production 180 boepd

RKH September 2019 presentation stated "Net production: 140 boepd (last 12 months)"

also " Efforts continue to manage decline and reduce opex"
Can not find a more up to date number .

At what point does decommissioning becomes an issue ?
The last annual report states RKH decommissioning provision total $13.561 Million"

As for what happens if we lost the case? Very bad news. An equity fund raise would likely have to follow such a result imo

Good afternoon greendave66
You wrote ; "Awarded then bags galore"

Depends how much really. We have to remember that RKH are running out of cash. The Edison report thinks RKH will only have $5.346 m USD at YE 2021. Assuming some cost cutting reducing annual spend from circa $5.3m to $4m ; I can not see RKh having sufficient funds to first oil without a really decent award. $50m received after costs would be ok, imo Have to remember other expenses may arise; like decommissioning in Italy.

I have lost faith in our boards ability to manage the finances.
The 8th April RNS had this passage;
"The Company continues to actively manage its corporate costs and has reduced G&A by circa 50% over the last 5 years. In these particularly difficult times, a further review of corporate overheads has been initiated with additional cost savings of circa 30% of G&A identified. Implementation of such cost reduction initiatives has already commenced."

Cutting directors pay has not been a priority; bonuses YES!
Am afraid what our team will do with any award.

Still waiting for news of cost reductions ; nothing in the 30th April RNS. Will they take the hints that they should cut their pay?
I still can not understand how they managed to spend $19.3 million on pre-sanction costs last year.
I would like this expense explained.
They are not getting a favourable vote from me and I have quite a few shares.

Good morning Surfit and Mogger

The arbitration result is critical to RKH's finances going forward. We MUST receive a substantial sum to avoid a fund raise in a couple of years.

You highlighted the Tethyan case which has a lot of pointers as to how our arbitration claim may proceed.

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

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

The ICSID ruled against Pakistan in 2017, but it took them to 2019 to determine the damages owed to Tethyan.

I do hope we that we don't have to wait two years, like Tethyan has, between the "decision" that we have "won" and the determination of the award!

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

The article does not read like Tethyan was paid by anyone....yet.

If the Italians do not pay us promptly ; its down to us to pursue through the courts.

The ICSID will just send a letter on our behalf, see here;

hTTps://icsid.worldbank.org/en/Pages/process/Recognition-and-Enforcement-(AF-Arbitration).aspx

"An award made under the ICSID Additional Facility Rules is binding on all parties to the proceeding (Article 52(4) of the Arbitration (Additional Facility) Rules). If a party fails to comply with the award, the successful party can seek to have that award recognized and enforced in domestic courts."

"ICSID itself has no formal role in the recognition and enforcement. However, if a party informs ICSID of the other party's non-compliance with an award, it is ICSID's practice to contact the non-complying party to request information on the steps that party has taken, or will take, to comply with the award."

How long will we have to wait to see IF we have won and then; how long will it take to actually get paid?

Good afternoon Surfit.

If you read the glossy annual report you will note our two leaders got a 1.5% basic pay increase from 1.1.2020.
Have a read here P42 and 43

hTTps://rockhopperexploration.co.uk/wp-content/uploads/2020/05/2019-RKH-Report-20APRIL_SCREEN-FINAL.pdf

MOODY received a £76k bonus and MacDONALD £62,667

BUT look here;

"The Committee agreed that further bonus payments in respect of the 2019 financial year of £38,000 (SJ Moody) and £31,333 (S MacDonald)will become payable upon execution of the Sea Lion farm-out agreement and related documentation with Navitas and Premier."

I despair. They are paid handsomely already. Other industry bosses have announced huge pay cuts BUT not our guys.

True; UKEF were not ready to possibly sign off financial guarantees until PMO had sorted its financial affairs with the court case approval of its new scheme arrangements .
In fairness to DURRANT when he said "ready to go" I think he was referring to all the developments technical plans and environmental reports being sorted.

I think its fair to say PMO have at best been over optimistic ; at worst misleading in their statements on the timescales to sanction.
Problem is I think DURRANTS timescale is VERY optimistic and we have been here before with sanction predictions; like it was supposed to in 2017 , then end 2018, then end 2019.

I remember Robin Rose in January 2018;;
www.investorschronicle.co.uk/shares/2018/01/30/the-extraction-podcast-premier-oil/? (from 10 min 50sec)

On SEALION "aim to get FID by year end"

POO averaged $ 71.34 during 2018 and yet SEALION did not achieve FID.

IF PMO was nearly ready in 2018 as he intimated; then why did RKH have to spend an eye-watering $19.3 m in 2019 pre-sanction costs? Our share of costs then being 40% suggests that both company's spent circa $50m! On what I ask?. Certainly not all on the 60 or so staff on the SEALION project.

I will not be supporting any future equity fund raise.

I think I was being rather optimistic with my $20 m number; I agree that $50 m would be nearer the mark.

Good morning Godders99
You wrote; "Thanks cyan 2. Wasn't hat loan extension a Navitas agreement? What happens if/ when that agreement doesn't come to fruition?. Durrants optimistic 12 is ridiculous. There's a good 6 to 12 m lead time on a UKEF application!"

If NAVITAS walks its the EXTREMELY bad news. If a new SPA is not signed and they leave, we are left in trouble with the old arrangements in place that we know PMO can not afford to honour. In that case ;be prepared for the worst, imo.

I agree ; DURRANT is being wildly optimistic with that 6-12 month delay prediction.

Good morning Surfit
You highlighted the possible arbitration award numbers in your post;

Eddison OM "......We estimate that these will be recoverable at c $20m on a risked basis in our valuation using a simplified approach, which assumes a 50% chance of recovering the associated acquisition costs. We have not carried out a loss of profits calculation, but PRESS reports suggest it could be materially higher, with the claim running up to €275m plus interest..."

I re-post here a link and extract that suggests that IF we win ; any award could be reduced by 50%

arbitrationblog.kluwerarbitration.com/2018/01/27/rockhopper-vs-italy-weighing-legitimate-expectations-investors-due-diligence-ma-deals/

Extract;
"(Most likely) Outcome: 50% off
In cases where the respondent proved investor’s lack of due diligence or failure to minimize losses, tribunals often made the Solomonic decision of reducing by 50% the amount of damages awarded (e.g. MTD v Chile, Award § 244–246; EDF v. Argentina, Award § 1302-1312), by holding the claimant accountable for half of its own losses and the host State liable for the other half."

Here is another interesting link;

"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.
The World Bank's International Centre for Settlement of Investment Disputes (ICSID) ruled against Pakistan in 2017, but until now had yet to determine the damages owed to Tethyan.
Tethyan board chair William Hayes said in a statement the company was still "willing to strike a deal with Pakistan," but added that "it would continue protecting its commercial and legal interests until the dispute was over. "

Further comment on that case;
hTTps://www.cadtm.org/Illegal-projects-How-World-Bank-Arbitrators-Mugged-Pakistan
======================

I do hope we that we don't have to wait two years, like Tethyan has, between the "decision" that we have "won" and the determination of the award!

The article does not read like Tethyan has been paid....yet.

The good news to take from the Tethyan case is the absolutely HUGE award that is many multiples of the investment the company made.
This bodes well for a possibly large lost profit component in our award, IF we win.

Whether we get paid promptly, or at all, without another fight ,is the question.

As for what cut the will our legal team will take; I do not know .

If this is not sorted by then end of 2021, I think we must be aware of the risk that RKH will be looking to fund raise in early 2022 as their funds may be as low as $5.346 m at YE 2021.