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Hello again HappyInvestor100
you wrote;
"They have $10m cash balance, which is probably more than enough for a few years of G&A. The $3m fee will need to be addressed."
The success fee is £3m GBP
Note this line in the results;
" ..recurring expenditure is currently expected to be around US$4.0 million per year."
Rkh have not got the cash to last a few years unfortunately.
Good morning Godders99
Shareholders have not been given the full picture for years. There are some serious cases where management have not been fully up front . Notably regarding the reasoning behind the sale of our useful Egyptian assets. MONSTOUSLY huge bills from PMO were the reason BUT our management were not frank at the time about the TRUE reasoning. It took a couple of years before MOODY finally fessed up the company HAD to sell to avoid a fund raising then.
Now we are really weak financially again with an immediate call on £3m BEFORE any award proceeds are received. Who knew that was possible?
How long will it take to receive anything with annulment proceedings that may take 2 more years? I doubt the Italians will rush to pay up for quite sometime after that.
In two years we are looking at those huge decommissioning liabilities and how to pay?.
Always thought it concerning that MacDonald walked leaving 6p options behind but retaining 1p options. That was a red flag for me; very concerning. Now we see the fuller picture and Rkh's likely need to refinance again and his possible reasoning is clearer to me .
I did not participate in the last fund raising.
Good morning Happyinvestor100
Relying on our funders good will regarding the £3m we NOW owe them is not ideal.
"A separate success fee of approximately GBP3 million is due to the Company's legal representatives on establishing liability and an award requiring Italy to pay over EUR25 million in damages. This amount is not covered by either funding agreement. Given Italy's request for annulment, the Company is in productive discussions with its legal representatives as regards to this payment."
Let's hope they are charitable .
That £3m should have been highlighted in the placing RNS
Rkh's cash position is really weak and remember the liabilities coming down the line as mentioned in the 15h June 2022 RNS;
"...the Company holds legacy interests in various Italian licences following its acquisition of Mediterranean Oil and Gas plc in 2014. Many of these interests will require abandonment at some point in the future. As disclosed in the Company's 2021 Annual Report, the total estimated cost of the eventual field abandonment and site restoration was US$14.2 million. Currently no material costs in relation to these activities are envisaged before the end of 2024. To the extent that activities are planned before the end of 2024 they can be funded from existing resources."
Good morning SpaceHoppa you wrote:
"Cyan, No win, No fee.
They did win, hence a fee."
I understand the concept of no win no fee. Trouble is this success fee requires payment before any award MIGHT be received. Does not require Rkh receiving the actual cash ward in the bank.
Ultimate fee, if we get paid; will be tens of millions.
15 June 2022 RNS extracts
"The proceeds from the proposed Placing and Subscription are expected to provide the Company with sufficient working capital to the end of June 2023. Any additional proceeds from the Open Offer would provide working capital beyond this period depending on the amount raised."
Future funding is an even more serious issue now.
" All of the Company's costs associated with the arbitration to date have been funded on a non-recourse ('no win-no fee') basis from a specialist arbitration funder. Should damages be awarded, the funder will receive a proportion of the damages based on funds spent and the size of any award. "
Where did Rkh management spell out the £3m success fee?
Also; the costs of pursing payment SHOULD have been included in the the 'no win, no fee' agreement .
Am not impressed .
Mirasol wrote;
" " Loxley asset potential value of $1bln "
:))))))))))))))))))))))))))
Only requires £2 mm for a well - which they haven;t got..."
Its a lot more than £2m.
I listened to the evidence given at the the Loxley enquiry. UKOG stated the Loxley drill would cost £7m. IF successful full field development would cost £59m.
The RNS properly records the current situation regarding the FIG tax liability at £59.6m
I am still of the opinion that this tax bill relates to the benefit from huge carries that Rkh never actually received and as such the "irrecoverable" clause has effect. It follows that the liability should disappear.
Although the RNS does not highlight this possibility , MOODY did state that he thought it may disappear in a presentation last year.
IMO; You can not tax any entity on a benefit that they did NOT actually receive.
MOODY obviously thinks the same as he stated in the linked presentation. from 9 mins 47 secs
hTTps://secure.emincote.com/client/rockhopper/retail-investor-presentation/index.html
Good morning p777 you wrote;
'Cash burn down to 1.5mn full year at current run rate is positive ..'
The RNS has this line;
".. relatively stable G&A cost of US$1.5 million in H1 2022.." Six months
Suggests $3m per annum.
However the RNS has this later line ;
" ..recurring expenditure is currently expected to be around US$4.0 million per year."
Good morning Sienna39 you wrote lines which included this;
"But with today's oil prices and profit after $42 per barrel that's $50 profit on 120.000 barrels that's $6.000.000 35% is $2.100.000...wow"
That 120,000 figure was inserted by MOODY in the RNS;
"Sea Lion alone is capable of producing at over 120,000 barrels of oil per day with significant upside."
We need to look at what production we can actually look forward too and not a theoretical best case.
While it is factually accurate; 120,000 barrels a day IS possible. It must be explained to potential new investors that this number was the planned, years ago, target by PMO with a huge TWO phase development .
In their last plans PMO estimated the cost of just the single phase 1 would cost $1.8 billion
We have to remember that Premier worked hard on reducing field development costs and they had proposed a £1.5 billion project with 16 producing wells and a circa $45 breakeven. However, after consultations with likely supporters of finance ( maybe UKEF) they were advised to improve the field economics by adding 4 producing wells and thus bringing breakeven down to circa $40 per barrel.
This raised the recoverable volumes from 220 to 250 million barrels by the addition of 4 more producer wells .
If you read this presentation page11 here;
hTTps://rockhopperexploration.co.uk/wp-content/uploads/2020/01/Investor-Presentation-Navitas-HoT-7-Jan-2020v3-1.pdf
You will note these numbers for phase 1; "? Commercialising 250 mmbbls gross
? ~80 kbopd gross plateau production"
There is a useful chart that shows what could be produced with a 2nd phase.
So , circa 80,000 ; maybe even 85,000 barrels a day could be possible with a projected cost of $1.8 BILLION.
However; RKH have made it clear that Navitas and RKH are looking at a smaller , cheaper field development. Logic suggests production volumes would be lower.
We have to wait and see what the development plan will actually look like and whether they decide that a third partner will be invited to assist with costs.
Nice to put 120,000 barrels into the RNS but, the likely production volumes will be lower than 80-85,000 barrels that could be produced in the previously planned $1.8 billion project with 20 producing wells.
We can but hope that a later additional phase will later, also be financed to achieve numbers approaching 120,000 .
Have been trying to engage in a sensible discussion on ADVFN BB regarding the deferred tax liability; oh dear.
I repost some of my remarks here;
The deferred tax liability is one for the lawyers IF the FIG insist they are owed £59.6m.
This paragraph is clear imo
"The tax liability may be revised downward if the Falkland Islands' Commissioner of Taxation is satisfied that either (i) the Exploration Carry from Premier is utilised to fund exploration activities in the Falklands or (ii) any element of the Development Carry from Premier becomes "irrecoverable". "
Rkh have already paid tax on benefits they received and used the provision section I quoted to get the sum DOWN from £64.4 m to £59.6m.
As RKH did not benefit from all the huge carries it should follow that those elements of the carries are "irrecoverable"
You can not tax any entity on a benefit that they did NOT actually receive.
MOODY obviously thinks the same as he stated in the linked presentation. from 9 mins 47 secs
hTTps://secure.emincote.com/client/rockhopper/retail-investor-presentation/index.html
Sanderson is the master of selling 'transformational' projects . Over £54 million in last 5 years and he has achieved what?
There are a few serious red flags now. From past experience, when UKOG go quiet its previously been found that they are hiding bad news. For me the last RNS 'updating' HH was revealing in what it did NOT say; no production numbers. I was expecting UKOG to big up the first flush after the well was left standing so long; but NOTHING. How many tankers have been seen recently?
The other warnings are; nothing on a Turkish visit. No photos of a site visit glad handing their partners AME. The other is the dire finances. A rushed placing and the warning of another very soon. Sandersons mismanagement has been epic. He has now placed Loxley in the pending/may never happen box and has committed UKOG to ridiculous spending on a long term gas storage project that is many years from a possible completion and whose economic case is opaque. As for Turkey; a farce; dsrilling 5th rate propects no-one else wanted to pay for in a an area that has produced tiny volumes. Messed up first efforts now needs a shed load of cash chasing dribbles or nothing of value at all. The never ending dream chase; the pot of gold at the end of the rainbow. Does not matter to sanderson if UKOG never arrives; its the travelling ; keeping the 'show' on the road printing cash with ever increasing paper issues that matters; keeping the salary rolling in knowing UKOG has a desperate trapped shareholder base who he thinks he can rely on to double down in a vain hope Sanderson can salavage something from this car wreck.
There is only one person who will eventually be able to retire to the Bahamas.
Ocelot continually posts about high gas prices; fro example;
"Winter 23 natural gas is at 679p."
Simple questions; why is Sanderson dragging his feet over a Loxley drill?
Why is he trying to farm out which would give away a huge chunk of its potential value?
Didn't he want to keep the 'riches' all for UKOG?
Answer; He has more doubts about the £7m drill and its chances than he is letting on.
UKOG's RNS announcing the plan to try and farm out did use the word "uncertainty"
All the money spent arguing the case and now nothing but the hope someone will take UKOG's data at face value and gamble in Loxley.
Seen it all before. There are other companies with better PROVEN assets who can not attract farmins. I think Loxley will never be drilled.
Sanderson would rather spend millions planning a lunatic BILLION pound gas storage pipe dream than gamble on Loxley coming good.
I think the last time I posted a "sell" opinion was with XEL before their demise.
Ocelot quotes; "Should we prove commerciality, and we would know this within months, not years"
Well that might be the case IF Sanderson was fully committed to drilling Loxley ASAP and not spending cash on hydrogen storage planning .
Loxley now depends on a farmin.
UKOG RNS 20th July ;
"..the Company will now implement a pre-planned farmout programme, whereby the Company's costs would be either fully or part carried by any farminee. The Company believes that this is the most prudent course of action to both manage uncertainty and to help ensure the best use of the Company's working capital."
"uncertainty", "best use of the Company's working capital"
Sanderson thinks chasing gas storage is the "best use of the Company's working capital" ?
Loxley is going nowhere fast, imo. How many other companies have PROVEN assets that have been waiting years and years to be farmed out.? Look at JOG & PMG for examples.
The salt cavern storage project is Sanderson being grandiose again. He is not running a FTSE 100 company with cash to burn.
Sanderson proposes to spend "a modest" ,his words, "FEW MILLION " over the next TWO years seeking planning permissions for a mind bogglingly expensive hydrogen gas project whose economic (profitability) case is opaque BUT will cost north of ONE BILLION pounds.
See this RNS extract from 20th July 2022;
"....the updated expected capital cost to construct the 14 salt caverns, related surface facilities and the pipeline tie-in to the current national gas grid is GBP895 million. Together with the capital expenditure for the envisaged LNG receiving terminal and the project's green hydrogen generation capability, the project's total cost will, therefore, likely exceed GBP1 billion."
Its insane. Another crazy dream chase.
Time scale to potential START of construction is 4 years! Bet that time slips if it ever happens.
Listen to Sanderson here; https://www.youtube.com/watch?v=qLFkt9iBijY
UKOG should be using those "modest" "few million" being blown on PP for gas storage for drilling Loxley. Sanderson's reluctance to drill alone at loxley suggests to me that Sanderson is not that confident in the economic case of Loxley.
UKOG's open offer failed last year (10% take up)leaving them circa £4.2 m short of what they would like to have raised.
To fund both the Turkish drilling campaign AND getting PP for gas storage means millions of pounds needs to be raised.
UKOG are on their financial uppers. They had to do that emergency £1.25 m placing and have signalled another raise in within maybe 12 weeks.
Next raise looks likely to be highly dilutive, imo.
Penguins wrote:
"Ocelot has no idea what the risk reward is for Loxley - for reward you'd need to know the cost of appraisal and development, ....."
UKOG gave figures for an appraisal drill and possible full field development in their evidence at the Loxley planning enquiry.
An appraisal drill will cost £7 million. Possible full field development £50 million.
That's two numbers..as for the rest ..?
Good evening PennyorPound
We really do need to collect a decent OM award. Yes, FID is a key target but getting there and paying our costs and development share will need substantial funds we do not presently hold.
Remember ; the toxic Italian Junk gas assets have $14.2 m decommissioning liabilities and our management suggest these will be an issue after 2024.
From FID in, hopefully 2 years , to first oil is a LONG time.
Basically Rkh will have to fund raise again, somehow, in the future if we do not RECEIVE a large OM award payment.
Good afternoon LaticsRule
You wrote " I simply ask all holders to examine Sam’s stewardship and performance."
I do not know who was behind the rule change made months before MacDonald left that enabled him to leave and take 1p options with him.
The fact he left 6p options behind was not exactly encouraging in my book.
Who made that rule change call?
Just have to hope for the best going forward now.
InvesterInvester wrote;
"2pto 4p on good news quite possible.. imo.. VERY STRONG BUY imo"
That would mean UKOG's market cap be circa £353 Million at 2p or over £700m at 4p
Is that credible? Of course not.
UKOG is losing money, produces a dribble of oil and has already signalled another fund raise soon. To raise a couple of million pounds would require another 2.5 BILLION more shares IF they are placed at 0.8p.
So , with 20 billion shares potentially in issue soon , a share price of 2p would mean a market cap of £400m.
Its a ridiculous fantasy. Compare to other companies. I hold Genl (GENL). produces over 30,000 barrels a day and has circa $150million net cash. Is very profitable and pays big dividends . Its market acap is circa £387 million.
When you listen to Sanderson in the interview regarding the Hydrogen storage project (here; https://www.youtube.com/watch?v=qLFkt9iBijY ) you would think he was running a FTSE 100 oil company.
Its incredible; talking about the 'modest' planning costs 'a few million' as if it was nothing. Trouble is; UKOG have NOT got a few million.
Its nuts; a billion pound project several years away with no published projections as to potential profitability.
20.7.22 operational update extract;
"As part of the Company's Portland engineering and commercial studies it has now also received a preliminary economic model from Xodus, which details that the updated expected capital cost to construct the 14 salt caverns, related surface facilities and the pipeline tie-in to the current national gas grid is GBP895 million. Together with the capital expenditure for the envisaged LNG receiving terminal and the project's green hydrogen generation capability, the project's total cost will, therefore, likely exceed GBP1 billion.
The Company continues to talk to interested parties, potential contractors and potential strategic partners and to shape its vision for this new long-term project which is at the planning stage and remains subject to a number of conditions including planning consents and financing. A diagram illustrating the Company's current vision for Portland will be made available on the Company's website."
Where will the millions come from just to get this pie in the sky dream through planning?
Why can't Sanderson stick to getting one project right that actually may bring in a few hundred thousand pounds extra revenue in the nearer term , rather than these grandiose long lead time dream projects that costs eye watering amounts like hydrogen storage and geothermal.?