Member Info for Fernan10

Good afternoon.

I noted that ERCE independent audit of Sea Lion included, in addition to 2C 517 mm barrels of oil (gross), around 2C 230 mmboe of natural gas, for a total 2C resource of 747 mmboe (gross).

See RKH news release on May 17, 2016

what would be the ultimate destination of this natural gas resource? is it going to be used as a source of energy for the FPSO?

is the resource big enough to justify a stand alone LNG development?

Is it possible to assign any reasonable value to this resource?

Thanks in advance

Fernan

In last interview, Gil mencioned that both Jethro and Joe are "visible targets", as "we can actually see the bright spots on them"

From Wikipedia

"In reflection seismology, a bright spot is a local high amplitude seismic attribute anomaly that can indicate the presence of hydrocarbons and is therefore known as a direct hydrocarbon indicator. It is used by geophysicists in hydrocarbon exploration."

"A bright spot primarily results from the increase in acoustic impedance contrast when a hydrocarbon (with a lower acoustic impedance) replaces the brine-saturated zone (with a higher acoustic impedance) that underlies a shale (with a higher acoustic impedance still), increasing the reflection coefficient. The effect decreases with depth because compaction for sands and shales occurs at different rates and the acoustic impedance relationship stated above will not hold after a certain depth/age. Below this depth, there will be a crossover of shale and sand acoustic impedances and a dim spot is more useful to hydrocarbon exploration."

"The relationship between hydrocarbons and direct hydrocarbon indicators, such as bright spots, is not straightforward and not all bright spots are caused by the presence of hydrocarbons and therefore they should not be treated as conclusive evidence of hydrocarbon accumulations."

I don´t know if the same bright spot was visible in Hammerhead before its discovery

Regards

Fernan

From note 22 to 2018 FS:

On the 8 April 2015, the Group agreed binding documentation ("Tax Settlement Deed") with the Falkland Island Government ("FIG") in relation to the tax arising from the Group's farm out to Premier Oil plc ("Premier").

The Tax Settlement Deed confirms the quantum and deferment of the outstanding tax liability and is made under Extra Statutory Concession 16.

As a result of the Tax Settlement Deed the outstanding tax liability was confirmed at £64.4 million and payable on the first royalty payment date on Sea Lion. Currently the first royalty payment date is anticipated to occur within six months of first oil production which itself is estimated to occur approximately three and a half years after project sanction. As such the tax liability has been reclassified as noncurrent and discounted at 15%. The tax liability was revised downwards in the year ended 31 December 2017 to £59.6 million, due to the full benefit of the exploration carry being received from Premier on the 2015/16 drilling campaign and the Falkland Islands Commissioner of
Taxation agreeing to reduce the liability on that basis in line with the terms of the Tax settlement Deed. A foreign exchange gain of US$2.2 million (2017: US$3.8 million loss) has been recognised in the year.

Just a correction: by letting the Sea Lion expire, the FIG will not lose the right to receive the deferred income tax owed by RKH.

But, in that case, the recovery of that debt will be extremely difficult, if not impossible

Regards

Fernan

By letting the license expire (in order to give it to another company, as one poster said) the FIG will lose the right to recover the U$ 83 million of deferred income tax owed by RKH.

I know that RKH has other assets in the FI, but their monetization (in oder to repay that debt, should the Sea Lion license is cancelled) is a few years away

This income tax debt is the best reasurance RKH have in order to have the Sea Lion license renewed at the end of the current term

Just my oppinion

Regards

Thanks very much for the info

Regards

Fernan

Good afternoon sirs.

where could I find the info about current Institutional shareholdings?

Thanks

Fernan

Good morning.

I live in South America, and here there are some limits to ask for a judicial review of an administrative decision.

If you have the chance to make your objections in the previous administrative instance of the process (as in this case) then, then you only can ask for a judicial review of the official decision in case your objections were rejected or not taken into account in that decision

You can not make new objections in the judicial review instance that you didn´t previously make in the administrative phase of the process.

This have 2 purposes:

- to give the administration the chance to correct its errors by itself
- to alleviate the work load of the judiciary.
- to not defer indefinitely the execution of administrative decisions

Suppose Ain Taisce didn´t make any objections to PVR permission up to the deadline of 30 March. Now it wouldn´t be impossible for them to say in the judiciary instance that, por example, the site survey proposed by PVR didn´t take into account the particular situation of an specified type of fish that lives in the area affected by the survey. They should have made that objection in the previous period, in order for the administration to consider that objection in their decision.

Regards

Fernan

As I posted here on March 12, I had sent the following email go Gil (see my previous post):
----------------
Dear Mr Holzman:

continuing with my previous email, I see from latest presentations that the cost of the first well to be drilled in Guyana will be around US$ 7,5 million (net to ECO).

This number will be substantially higher than previous estimates. Accordingly, wih the current amount of cash in hand, ECO will be able to drill only 2 or 3 wells in Guyana.

I think it would be interesting for ECO to take advantage of the amazing rise in the share price in recent weeks, in order to raise some money, to increase the funding available for drilling in Guyana.

At today´s price, ECO could raise for example US$ 22 million (the amount necessary to drill 3 additional wells) with a dilution of about 15%-20%

I think that, in such a case, the negative effect of current shareholders´dilution will be more than compensated by the fact that ECO will have the funds required to drill 5-6 wells. Given the characteristics of the Orinduik block, and its proximity to Exxon´s discoveries, the chances for ECO to make a game changer discovery in 5-6 wells will be close to 100%.

Under the current situation, ECO will be highly exposed to the results of the first 2 wells. Any negative outcome, and the share price will crater. Having additional funds available for drilling more wells will substantially reduce the risks associated with the upcoming exploration campaign

_____________

Thanks Mr Holzman for doing the right thing.

Before today´s news, I was thinking about selling part of my holding here, in order to limit the exploration risk (there is still a chance of more than 50% of having a dry hole). But, taking into account the running room provided by the new funding, I will be here until the end.

Regards

Fernan

From Cannacord July 2018 report:

"Appointment of Standard Chartered - a highly credible bank - is an important step
towards the formal process of corralling the funding for Sea Lion. It is difficult to gauge
the timeline that could lead to potential project sanction but we still see Q1 19 as a
reasonable target. "

Then, in July 2018, they saw Q1 2019 as a reasonable target for project sanction, after putting all the financing in place obviously

Their views doesn´t seem very accurate

Regards

Fernan

Ovets:

Regarding: "There are plenty of examples where, once EC funding has been approved, commercial participants are far less nervous about joining in."

That´s exactly my point. And I thinks this becomes the most important issue to be sorted in the financing structure of SL. This is the reason why I insist in the need to get an early indication from UKEF.

Mogger:

Regarding:
"You won't get what you are asking for until FEED is complete. Only then will the UKEF be able to fully audit the project and then provide the guarantees required. Whether they will publish such a document is another question though."

I don´t agree with that. As the US Eximbank puts it, LOI are provided on the basis of the "general eligibility of the transaction", without entering into the details of the project. The goal of this LOI is to give an early indication to all parties involved in the project that ECA funding is viable, and the project is not deprived to potential access to the facility due to for example national security reasons.

Regarding: "The example you gave earlier was from the American EF department. I don't think you can accurately compare the two government departments."
I don´t agree with that either. Both ECAs are governed by the same OECD guidelines. There is nothing in the guidelines that prevent an ECA to provide a LOI if it finds it feasible to do.

If there is not any LOI from UKEF, I don´t think there is a need to look for excuses/justifications for it

Regards

Fernan

Mogger:

I would like to see TD announcing that PMO had received a LOI from UKEF with indicative terms for the provision of funding/guarantees for Sea Lion.

Nothing special. Just do it the same way that they announced the LOIs with contractors.

Regards

Fernan

Ovets:

this is not what I asked, but thanks anyway for your repply.

My concern is that, given the high level of political risk of Sea Lion, it´s necessary to have access to UKEF funding/guarantees in order to have banks and equity investors onboard. TD has said something like that recently.

The issue is that, after almost 10 years from the initial discovery, I have never seen any sign of HMG´support for the project.

Regards

Fernan

As far as I know, there is not a Letter of Intent (LOI) from UKEF, there is nothing.

Correct me please if I´m wrong

Regards

Fernan

Any sign yet that HMG is willing to provide funding/guarantees for the project? Thanks in advance Fernan

Ovets:

Regarding: "As for LOIs, as this would be sp sensitive, is HMG/PMO obliged to publish such commitments?

That´s not my point. PMO/RKH didn´t publish the terms of the Letters of Intent signed with contractors por the FPSO, subsea, helicopters, etc. But they ANNOUNCED that those LOI have already been signed.

why didn´t they do the same thing in relation to UKEF, if they had had a similar LOI for the provision of funding/guarantees?

Regards

Fernan

In a project with a high level of political risk as Sea Lion, I understand that the early involvement of an ECA providing political risk guarantees could be the critical issue that triggers the access to other types of funding (commercial loans and/or equity).

Just my oppinion

Regards

Fernan

Here is another example. In this case, the "Letter of interest" (LI) that is issued by the USA Eximbank:

__________________________________
Apply for an LI during the bidding or negotiating stage of an export sale when the following conditions exist:

You need an indication from Ex-Im Bank on the general eligibility of the transaction participants and the goods and services to be exported.

The repayment terms and other program guidelines in the LI provide you with specific enough guidance for your transaction.

An LI is generally issued within ten business days of Ex-Im Bank's receipt of an LI application. The terms and conditions in the LI are valid for six months. At the request of the applicant, an LI can be renewed at six-month intervals, for up to two years; however, its terms are subject to change. Please note that an LI is not a commitment to finance a transaction or project. Ex-Im Bank may request additional information in connection with an LI application. Issuance of a Letter of Interest is at the sole discretion of Ex-Im Bank.

Review of an LI application includes comparing transaction information to Ex-Im Bank's cover policy and identifying any potential issues that may need to be analyzed in more detail, should a formal application be submitted.

____________

Regards

Fernan

As I said before, I think that, after more than 2 years of talking, it would be reasonable that the UKEF agency have produced at least a non binding letter of intent to participate in the project, with indicative terms of the funding/guarantee scheme.

I worked in projects that included Export Credit Funding. Such non binding letters of intent from Export Credit Agencies, containing indicative terms, are not unusual at the early stages of the funding process. This facilitates the involvement of third party providers of funding (e.g., banks).

The fact that, after 2 years of talking with UKEF, nothing have been produced, even with preliminary (indicative) terms, could be a sign that HMG is not all that convinced to openly participate in the development of Sea Lion.

Just an example, here is what one Export Credit Agency (the turkish Eximbank) states about the issue of letters of intent:

____________________________________________
What is a letter of intent?

A letter of intent is a document indicating that the export transaction or project may be financed under the Buyer’s Credits. A letter of intent does not incur a financing commitment and the financial terms of a prospective loan will be determined according to the prevailing market conditions at the time of the official loan application.

We issue letter of intents in English language only. Depending on the request of our exporters, we can issue letter of intents in two different forms: with an annexed ‘‘term sheet’’ indicating the tentative financing terms or without a term sheet.

Letter of intents with a term sheet have a validity of 3 months while those without a term sheet are valid for 6 months. We can extend the validity period of our letter of intents, if our exporters demand such extension on valid grounds. We expect our exporters to apply in writing prior to the expiry date of the letter of intent and to pay the application fee again.

What are the advantages?

By issuing a letter of intent indicating our financial support, we help our exporters to gain competitive advantage while participating in international tenders or negotiating with their buyers.

What are the conditions?

We require our exporters to be established in accordance with the Turkish Commercial Code, to have a high commercial standing and sound financial management, and be experienced in their fields.

Our terms of financing are determined on a case by case basis. We provide financing on commercial terms and in accordance with the OECD Arrangement on Officially Supported Export Credits.

_____________________________

Regards

Fernan

Ovets:

I´m sure that if the "security of supply" was such an important issue for HMG, by now the UKEF agenty would have produced at least a non binding letter of intent to participate in the project, with indicative terms of the funding/guarantee scheme.

In the past I worked in projects that included Export Credit Funding. Such non binding letters of intent from Export Credit Agencies, containing indicative terms, are not unusual at the early stages of the funding process. This facilitates the involvement of third party providers of funding (e.g., banks).

The fact that, after 2 years of talking with UKEF, nothing have been produced, even with preliminary (indicative) terms, could be a sign that HMG is not all that convinced to openly participate in the development of Sea Lion.

Just my oppinion

Fernan

Regards

Fernan