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@hydraides: you are correct that the absolute worst case scenario is that RKH will go bust. In my post, I wrote: "The one thing we can do pretty well is to calculate what the expected SP is if RKH reaches first oil.". In other words, the "worst case scenario" assumes RKH reaches first oil, because the other scenarios won't need a calculation.

At the end, I also mentioned that the difference between the share price of the 'worst case' scenario (assuming reaching first oil) and the current SP is mainly caused by "the uncertainty if it will be produced at all and the time it will take until RKH will actually start making money"

Hopefully this will clarify it a bit more

Medium scenario (small win, $75 oil, 45k production)
RKH would have a profit of $219 million per year, 450 million shares and a loan of $370 million. Assuming a profit to company ratio of 1:10, it would be worth 2190-370=1820/450=$4.04 per share or £3.23 per share.

Great scenario (big win, $100 oil, 60k production)
RKH would have a profit of $365 million per year, 450 million shares and a loan of $233 million. Assuming a profit to company ratio of 1:10, it would be worth 3650-233=3417/45=$7.59 per share or £6.07 per share.

And this is of course only for phase 1.

As everyone can see ... There are a lot of assumptions and risks are multiplied in the SP. The worst case scenario where first oil is reached is about 5 times as much as the current SP. This is already a huge difference, which is caused by the uncertainty if it will be produced at all and the time it will take until RKH will actually start making money

Like mentioned by others, the future SP depends on many factors, which are difficult to quantify. Just to name a few of these factors:
- current assets
- fear of equity raise
- expectation of Sealion being developed
- expectation on the OM case
- how heavily current investors are already invested
- oil price
- political situation
- uncertainty about the actual plans/timeline for Sealion
- uncertainty about the HoT being agreed upon by the Falkland Islanda Government

Any one of these factors can keep the SP down, but I agree with many on this forum that things might change 'soon' (I.e., before the end of this year). Estimating/predicting the SP for the short term is difficult and contains many uncertainties. The one thing we can do pretty well is to calculate what the expected SP is if RKH reaches first oil. Assuming RKH reaches first oil, we then also know that the stock price should move to that level, although this will definitely not be in a straight line.

Assumptions:
Total costs = $1 billion (RKH share = $350 Millon)
Non-funded part = 1/3 * 350 = $117 million (2/3 = interest free loan = $233 million)
Yearly operating costs = $4 million
Years to first oil = 4
Current cash = $3 million

This means that RKH needs about 117+4*4-3=$130 million to get to first oil.

Nett OM award can range from losing ($0), small award ($15 million), large award ($50-300 million).
If OM is lost, about $5 million (10% dilution) should be raised initially to reach the FID (assuming 2 years from now, although I hope FID will already take place at the end of this year).
With a small OM award we won't need an equity raise until FID (although maybe a loan to bridge the time between winning OM and getting the money). Then the remaining $117 will be raised after FID, which should be a lot easier.
With a large award nothing or only a small part of the development costs should be raised.

Assuming the development costs are raised by means of a loan and not through extra shares, This means that we will have either 450 million or 500 million outstanding shares (win vs. no win). And a loan of max 390 million (117 + 28 (8% * 3 years) + 233 interest free + 12 operating costs)

On the income side we have;
Mean daily production = 30-51.000 barrels per day (RKH share = 10-17.000)
Costs per barrel = $40 costs (probably a bit lower)
Oil price = $60-100
Profit per barrel = $20-60
Profit per year = $73-365 million

In the absolute worst case scenario ($60 oil, no OM award, 30k production)
RKH would have a profit of $73 million per year, 500 million shares and a loan of $378 million. Assuming a profit to company ratio of 1:10, it would be worth 730-390=340/500=$0.68 per share or £0.54 per share.

Medium scenario (small win, $75 oil, 45k production)
RKH would have a profit of $219 million per year, 450 million shares and a loan of $370 million. Assuming a profit to company ratio of 1:10, it would be worth 2190-370=1820/450=$4.04 per share or £3

@OceanGuardian: can you elaborate on how you made your prediction?

Godders, I asked Sam a similar question. He said that we can't know the timing on OM. There is also no date set for a potential equity raise. Sam didn't say it directly, but I think he's waiting with plans for raising funds until at least the proceedings have been closed because that will provide RKH with a fixed deadline.
Sam also confirmed that we don't need an equity raise if OM is favourable. We should see the warning of an equity raise as a way to plan for the worst (even though we are all hope that it's not necessary).

In the mean time they are working towards getting "this all over the line with FIG and push on the project and financing, which Navitas will be good at."

Personally, I belief that the committee thinks that a few weeks is similar to them as 'about a month', so 2-6 weeks.

For now I'm going to wait (again) and hope the few weeks are over soon

Given their trackrecord, I would guess that a few weeks is deliberately a bit vague. The alternative of being done 'soon' would be to say in a month, like they said last year. Therefore I assume it can be anything between 2 and 6/8?? weeks. The 28th of March was 3 weeks ago, so OM news should come anywhere between tomorrow and the 20th of May. I'm keeping my fingers crossed and hope that this news will take away today's anticlimax

Assuming everything gozzie posted on afvdn is really from the signing of the HoT, then I believe the following are the key points:
- Navitas signed the HoT on the 15th or 17th of April ( not completely clear to me)
- Navitas will buy all shares of PMO/HBR, which is 65%
- the shares will be transferred within 60 days of signing (i.e., mid June)
- Navitas will also get 6 million and 700 million of tax deductibles but will also take over the liabilities for the temporary dock
- from the moment of transferral (mid June) RKH will get a loan for all costs up to the FID for 8% interest
- RKH will get an interest free loan for all post FID costs
- 85% of the free cashflow (when in production) will be used to pay off the loan
- if there is no FID in 5 years (+ possibly 18 months of extension), RKH will get full ownership back

The most important thing Sam has to do is not the communication with shareholders but to make sure Sealion will be developed asap.

And what should Sam say without compromising current negotiations?

It was good that he communicated the rough plans in December. It is also good that he at communicates the next working day after deadlines, even if it's to say that the deadline has been moved backwards. And Sam also responds to emails. I would love to know how things are going, but we have to wait a bit longer (again).

I rather have a blast of an RNS on the 2nd of May with agreed upon plans that have been signed including also an update on OM, than some vague RNS saying things will happen imminent.

And OM takes ages, but every day without a result is also a day closer to a result.

3 more weeks to wait and then we hopefully know more.

The previous RNS mentioned they wanted everything signed tomorrow. This doesn't mean they will inform us tomorrow too. My prediction is either Friday or Monday

A RNS is often one or two working days later than the deadline... so it's probably between the 28th of March and the 4th of April

It might be that the negotiations for an out of court settlement are delayed deliberately by RKH. It's not unthinkable that they want to get everything with sealion (and harbour and Navitas) sorted out first, before the OM results become public. Others believing you're in dire need for cash does change the dynamics for negotiations. Imagine Harbour saying that they want a few million. Right now RKH can say ... Sorry, we can't because we don't have it.

I agree with LTT. It might seem simple, but if we take into account the few things we heard from Sam in between, it's not. Negotiations with so many parties (FIG, Harbour, Navitas, RKH and maybe a new partner) is always complex and it's indeed better to make sure everything is done right once and for all. They first said everything with Navitas would be finalized at the end of Q1 and later mentioned that the things with Harbour is extended until the 31st of March. So basically they are planning to have everything sorted out by the end of Q1. I expect an RNS on the 1st of April or on the 4th of April. Previously they also published RNS's one or two working days after the deadline.

Assuming Sam is on board and traveling back, what else can we expect? Would an RNS already be imaginable for tomorrow?

We know that the 90 days of harbour have already passed. We know Sam said that the papers would be finalized in Q1. And Navitas apparently said it would even be finalized in January. At least I believe Mogger mentioned this, and his research is normally impeccable.

So assuming Sam might need a day or two to talk things over back in the UK and assuming the details have been worked out in the Falklands with all involved. Then it would be likely that we will see an RNS this week. Am I missing something?

I hope they write back first thing Monday morning in the form of a RNS!

Hi LTT,
You remember it correctly. At the meeting they mentioned something like 900m for the downscaled version. It's of course better than nothing, but indeed the downside is that a lot of work needs to be redone, while a ready to go plan is on the table. The downsized plan not only prolonges the time to first oil with about a year, but also takes a lot longer to develop the full potential of the Falklands. So I am hoping that Navitas is thinking in the same line and realises that they will make more money in the long run if they can get the full project up and running. But regardless of what will happen, downscaled project or full, I will be very happy when they actually go for it and give a FID.

They announced this summer that they needed roughly a month to wrap up. The request of Italy messed that up, but this is now resolved. Logic would dictate that it will be wrapped up within a month from now

let me provide you with a few answers to choose from:
a. They are working on a deal with Italy to prevent a final verdict and aren't allowed to talk about it (are they allowed to say that they can't say anything?)
b. The Arbiters had a nice long holiday (if so, they should be back to work and we would expect an answer really really soon)
c. Because of political forces, the verdict is delayed (when would communication be expected in this case?)
d. Something else entirely

With every day passing, option a becomes more and more likely to me. Did anyone recently inquire at RKH how everything is going?

Which is exactly why we need a representative of the PI's to get a seat at the board. If there are any (hostile) takeover plans, we should have some say I in it. I prefer Sealion to go ahead with RKH on board, but should HBR want to take us out, I want all the PI's to profit (a bit) from it and not just Sam

RKH doesn't have to pay anything if they don't win. That's also why the lawyers will be especially happy if RKH wins.

In theory they could pay for everything with their own profits. They're making at least a £100 million profit a month with these oil prices.