Member Info for cyan2

Lets hope these plans are nearing execution.
Originally posted here in JULY by another LSE poster;

OILFIELD INFRASTRUCTURE PROJECT
hTTps://www.tintoarchitecture.co.uk/project/falkland-islands-oilfield-infrastructure-project
An impressive video

Good morning Ralph. I like to keep an open mind and consider all sides of the arguement. You may well be right.
HOWEVER; as pointed out, the power station contractor is in Southhampton. Why would the position require a month in Aberdeen.

For me; that suggests SEALION related. Time will tell

Olliesky; on 21st November you flagged this up as a "Strong buy" when the price was 16p.
Why?

Why isn't this being bought? Because the sentiment at the moment to the O & G sector is pretty poor and doubts remain.
Until the signatures are on the bottom line nothing is gauranteed . It remains a binary bet here until those signatures.
I think it will "happen" and that's why I am 'invested' , or is it gambling? . lol
Next 6 months could see a lot of news; will be like the buses; none for yonks and then three follow each other to your stop; I hope!

My interpretation of where we stand.
It appears its taken the credit agencies 3 months to consider the PIM'S and that they were "well received". I believe that they have agreed in principle; it looks good to go and something they will participate in, subject to the due dilligence; the double checking by the bean counters and legal eagles.
From what little has been publically revealed; it appears fair to assume we have had at least one month of the DD.
So much of the timing of the final confirmation is out of our hands; one can appreciate the necessity to extend the license term.
RKH still believe that the FDP will be submitted to the FIG by April. How long will the FIG take? It really should not be that long as they have had sight of so much project detail already.

The approval of the FDP by the FIG is really critical to RKH because , at that moment , the PMO carry comes into force and RKH's cash worries diminish considerably.

Hi specu18.
How old is that e-mail? I note this line in it; "if, as hoped, the application is well received, the company anticipates it could move into a phase of detailed lender due diligence and documentation before year-end."

On 14th November PMO RNS stated;

"Premier's applications for senior debt financing in relation to its operated Sea Lion development in the North Falkland Basin continue to progress through the export credit agencies' due diligence processes. Discussions also continue with several interested parties about farming into the project. In November, Premier received approval of an extension to the PL032 Discovery Area licence term to 1 May 2021 from the Falkland Islands Government."

From what PMO are saying it appears the application must have been "well received" and is NOW in due dilligence.

The Edison report is well worth a detailed read.
www.edisongroup.com/wp-content/uploads/2019/08/Rockhopper-Exploration-Two-material-events-on-the-horizon.pdf

We have previously discussed the financial position and I addressed a raised concern that RKH had a seriously large additional cash requirement. I repost relevant passages from my earlier analysis here;
Look back to a presentation by Sam MOODY on 11th September 2017 here;
hTTps://www.youtube.com/watch?v=Kb_9ymza7Bg
At the time of this presentation the estimated development cost was $1.5 Billion
About 11 min 40 Secs onward he mentions the plans to received UKEF assistance to the value of $800 and the target for venodor financing of $400m.
Here is the critical clarification 20 min 35secs;

"We have a $337 million development carry net to our retained 40% in the first phase of SEALION; so , if we put that financing package together we will need to contribute NOTHING from the point of sanction to first oil on SEALION"

SEALION's development spend has been recently revised to $1.8 Billion.
So if PMO obtains $800 m from UKEF plus $400 m vendor financing and we add RKH's $337m we get a total of $1.537 Billion . Subtract that from $1.8 billion and you get a cash shortfall of $263 million.
RKH are liable for 40%; therfore their possible cash requirement is $105.2 m USD.
PMO have offered RKH a $750 m USD standby loan so that's a modest sum for PMO to find and may not required at all IF we get a really great arbitration award.

The August 2019 Edison report also has these lines;
"We believe Rockhopper is funded through to Sea Lion Phase 1 first oil given current operator estimates of capex (c $1.5bn gross through to first oil) and debt capacity."

This belief includes factors in their earlier cautionary one-year contingency ; a possible longer delay to sanction.

Should reassure investors as to RKH finances.

Timing is the big question. I think the question of intent to develop has been well articulated by Tony DURRANT , yet the market discounts heavily.

I note that Edison in their number crunching cautiously included a one year contingency in their August 2019 report here;

hTTps://www.edisongroup.com/wp-content/uploads/2019/08/Rockhopper-Exploration-Two-material-events-on-the-horizon.pdf
"We have not revised our Falklands valuation at this point with Sea Lion Phase 1 first oil assumed in mid-2024. We essentially include a one-year contingency over and above management’s guidance."

Its not impossible that we could get FID in the spring 2020,, imo. All depends on decision makers in UKEF and any possible new partner. On balance , I suspect it could well be later.

"Cyan you are incorrect in stating Chatham is not attached"

What do you mean by "attached"?

RKH presentations are quite clear; Its obvious 20-40% of Chatham is not in the Arg licence;
See pages 7 & 8
https://rockhopperexploration.co.uk/wp-content/uploads/2016/05/2013-AGM-presentation.pdf

As for "johnson" Its GAS see p7 here;
https://rockhopperexploration.co.uk/wp-content/uploads/2016/05/2016-Results-Presentation.pdf
and here;
http://www.argosresources.com/exploration-to-date.php

"Johnson contingent gas resource
The Johnson contingent gas resource was discovered by the Shell well 14/5-1 drilled in 1998. The well encountered potentially significant net gas pay of up to 130metres in early Cretaceous sandstones. A portion of the Johnson gas discovery appears to extend into Licence PL001."

"No one at present showing their hand as to the significance of the extension of both territories at the same time and also more importantly the one drill condition put forward by FID to Argos."

The significance to me is the FIG are giving ARG a chance; maybe a last chance, to drill or potentially lose the license.

Nigoil. I find the specualtion and your reasonong that ARG would be drilled ahead SEALION frankly incredible;
To call another poster naive when you post Statements like this really do take the biscuit:

"Mogger i know you're good but to dismiss Chatham / Rhea being drilled first is a little naive especially if the F/O partner for Pmo also does a deal with Arg. Why do you think Arg have just been given an extension by FIG to their licenses and the Bod have been waiting patiently?"

The bod have been waiting patiently for years because they haven't been able to attract a partner and the one they did have walked. You are trying to hint at some cunning secret plan with PMO amd another to prioritize a Argos license drill ahead of SEALION. Its just fantasy.
Just because the FIG have given them more time can not reasonably be interpreted there's an increased chance of a drill; the license was going to end; either the FI extended or ARG lost it. The FIG extended BOR's license ages ago; no sign of any progress there either.
I can only assume your going on and on about Argos prospects repeatidly on RKH thread because you have a special interest in that shares performance.
As for Chatham; its an unproven exploration target as are all of ARG's. Only a tiny area of chatham is in the Arg license. See page 5 here;
https://rockhopperexploration.co.uk/wp-content/uploads/2017/10/Investor-Presentation-November-2017.pdf

There has been much discussion on the RKH thread because there is one frequent poster trying to ramp ARG.
You have to use your common sense and look at the hard facts and this warning from ARG themselves;
Remember this warning from Argos;
http://www.argosresources.com/perch/resources/arg-2018-annual-report.pdf
"General exploration risk
Whilst results in the surrounding area are encouraging with respect to the oil and gas potential of the area and interpretation of the seismic data has indicated extensive prospectivity within the Licence area, no commercial volumes of oil or gas have yet been discovered and there is no certainty that such discoveries will ever be made."

ARG are light years behind other Falkland players. BOR have drilled and made a COMMERCIAL discovery, yet they are still waiting for a farmin. and their share is in the basement. ARG got an extension for 18 months on the license; it does not mean anything has improved in their prospects. ARG have less than a million dollars left; the clock is ticking. To keep the lights on they will have to raise funds in a couple of years. I think the ramping ARG prospects is without reasoned foundation and very fanciful. I think some are looking to make a fast buck trading ARG on the back of the extension.

PMO announced on 22nd August that they had started the farm down process.
I only hope they have are now mulling with somone. Don't want that process dragging on. If needs must PMO and RKH will have to o it alone.

"Is drilling in the Falklands a gamble? No!"

Do you remember DES and FOGL ? Interesting drilling they had!

Where is the pressing incentive for PMO to WANT to drill on Argos license anytime soon?
Everyone knows that Argos are in an awful financial position. RKH ad PMO just have to wait until Argos management have blown their last $800k (approx estimate). In two years Arg management might have to beg a takeover by us.

Of course there is the dream scenario; a new player comes along who is keen to engage in FI exploration gambling.
But, Arg are way behind BOR who have drilled AND got a large find; yet they are still waiting for that all important farmin.

As I say; we would all be in so much better place with POO at $100.

To be fair; in 18 months time If Argos have not drilled I would think the FIG would , more likely than not, extend again.
I think the timescale is unrealistic; just 18 months to sort a new partner agreement ; contract and mobilize a rig; hugely challenging.
If PMO sign up to this ARG license drill in 18 months ; I will eat my hat. lol

"Question , why have Argos accepted a eighteen month licence and more importantly agreed to a one drill during that period."
Maybe because the FIG dictated the terms; get on with it or else?
Lets see what happens. My guess is there will not be a drill on Argos in 18 months. If only POO was $100 again; i would be more hopeful then.

Good afternoon Isetown;
Good post.
In my recent post discussing the standby loan and a possible cash shortfall I worked out that RKH MIGHT need to avail themselves of $105.2 million from PMO .
So, at 15%, maybe about $16 million in interest to pay to PMO pa. However ; if there was a great arbitration award there may not be any need for ANY of the $750m standby loan at all.
As for the details from the feb 2016 corporate upodate. There has been no recent mention of that quarterly payment. Has the more recent startegy of hopefully using UKEF support, and maybe guarantees, negated RKH making any contractor gaurantee payments? A good question for RKH to clarify on.

Lets reflect on where RKH will quickly be; production volume to RKH in excess of 30,000 barrels per day. Lets assume $60 per barrel and each month is 30 days. Gross earnings per month $54 MILLION USD, or $162 Million per quarter.

The outstanding CGT has reduced marginally after negotiations ; down from £64.4 Million to £59.6 million. see here page 19;

hTTps://rockhopperexploration.co.uk/wp-content/uploads/2019/04/RKH-Annual-Report-2018.pdf

Chatham is a prospect whose vast bulk is within RKH license area. See page 11 here;
hTTps://rockhopperexploration.co.uk/wp-content/uploads/2019/09/Investor-Presentation-September-2019.pdf

A couple of small spurs at the extreme edge , marginally cross int ARG's license. Drilling Chatham from on the Arg license is clearly speculative but obvoiusly in a very sub optimal area. As for the Rhea stack; drilling and testing them all effeciently would require a drill WAY to the NW well away from any RKH interest.
Argos really needs to attract a new partner because otherwise they are doomed to a fate similar to FOGL; being swallowed by RKH or PMO for a very modest amount of paper. Specualtion about any drilling on Argos ahead of SEALION is very fanciful , in my opinion.

Kris; Play with this interactive 3D field representation. You can move it around and can get details of all prospects. To properly assess all the Rhea stacked prospects any drill would be a long way from SEALION;

www.argosresources.com/3dtour/

ARG have less than one million dollars in cash. They had better find a sugar daddy again or else they will be toast in 3 years without a fund raise.