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Well , Navitas, RKH and FIG have been aware since COP 26 that UKEF was going to be a none starter, and I doubt they would have been banging their heads against that brick wall!
Everything now hinges on funding IMHO, the partner, FID and project sanction if that is not one and the same as FID. Funding is the linchpin and everyone has been aware of that for some time.
Can’t help feeling with Navitas and RKH recent updates and a few articles in the media, that this is coming to a head.
What will news bring, a much anticipated re-rate of the share price or will it be a damp squib with us all looking to the next news, “once the rig is heading down there it will be reflected in the share price!”; “Once the FPSO arrives then……….! Or even, “ Once first oil is pumping surely there will be a re-rate!!!!!!!!”.
Of course my money is on a nice bump up sooner rather than later, but it’s strange times with the demonetisation of oil despite it still being the life blood of the world economy, so you never can tell!
LTT
Sorry everyone, I should correct my last post, it wasn’t Buffet who talked about shortages by 2025, it was Occidental’s CEO. Still a fair point though, as we head hell for leather into renewables, with wind farms being paid to stand down on windy days (is it just me, but that sounds crazy), renewables are not going to the magic bullet people think!
LTT
Hi Builder, that was my thinking also, it is almost a certainty that the adhoc will rule in our favor, possibility of a partial annulment is incredibly low unless they have found a loophole or corruption.
With that in mind we should be €80m the richer by the end of the year, 15m by the end of June at the latest. The other €65m coming 6-9months after, maybe sooner as I can’t see them dragging it on, they will want to finally put this case to bed. Then all being well if whoever is successful next year in getting the cash out of Italy, we might be in for a little Brucie Bonus! Not sure where the total stands at the minute but with interest to this time next year we must be knocking on the door of €300m! No wonder somebody offered up the cash to RKH for the award, they must be pretty confident of getting the money.
Hopefully we will have some update from Navitas long before then. Partner/Partners before FID and of course funding. Wonder what will be announced first, funding or partner?
Must be good timing to get cracking with Buffet talking about shortages and Saudi’s adding fuel to the fire (excuse the pun) by knocking expansion to 13m per day on the head!
Seems like a perfect storm is brewing, no wonder Navitas are chomping at the bit to get SL into production.
LTT
Pages, who is doing these costings? Navitas have a whole team of people looking at an FPSO and long lead items now, Borders did a RNS last January, those costing will already be out of date and still the big question mark is a rig, who would send a high spec deep water rig all that way with mob costs. If RKH had the money to drill the lookalike prospect close the Darwin they could share costs and it would be doable, but RKH will have to get Sea Lion over the line first.
I do hope something is happening below the surface, but as of yet there is little sign. What is better 100% of dreams or 25% of a possible plan? I thing that is what it will come down to, a free carry for 25% if we are lucky.
Regards LTT
Hi Thenorseman,
Thanks a lot for your reply, so it seems Navitas could still be on track for first oil back end of 2026, particularly if they use the Munin as you say, it’s done waxy oil previously so odds on that’s our FPSO.
Have to agree also with what you said about the board. With the story unfolding they could possibly do a bit more to promote Sea Lion rather than resting on their Laurels with a free ride. Why not do the rounds, big up the potential and get the share price up.
It would be great to get €80m from OM in the bank and have a share price of 30p+. Who knows, the time might be right to then make an offer for Borders, 20m and some shares might just swing it if Navitas chips in, then the Southern Basin is sewn up and ready to farm out once SL is up and running because once SL is pumping and boots are on the ground, everything comes into play IMHO.
LTT
There are many things that could happen, but one scenario is that RKH and Navitas take over Borders and they tie up the Southern acreage.
As it stands the board are resting on their laurels and nothing much is happening where as with Navitas and RKH it’s all about to kick off. So one option is once funding is sorted and RKH have their €80m+ in the bank, possibly by Q3 this year if the annulment goes in their favor, they could make a cash and share offer for Borders. RKH share price should be materially higher once they have the cash and the funding/partner is sorted so why not.
£15m cash and shares in RKH. I can see shareholders going for that as it would be a fast track to production and exploration rather than sitting and waiting for SL to get up and running.
Navitas would be crazy not to go for it and tie up the whole of the Falklands, then they could farm out to a bigger player and they could take a stake in the whole acreage, drilling a few wells on the combined assets. Darwin could be appraised and the lookalike prospects in RKH current acreage could be tested. It would make complete sense IMHO.
The alternative is to wait, and wait and wait a bit more. Borders have no money, they have a plan based of if’s and they would need a high spec rig to drill whilst they have no EIS, not production plan or anything submitted to FIG who are focused on, and have enough on their plate dealing with Navitas and RKH.
Don’t get me wrong, I have a small holding here and would love a big player to swoop in and buy the whole shooting match for 25p or 50p a share, but the tide is turning, even Saudi has knocked the investment to expand production to 13m+ barrels per day!
Regards LTT
Hi Thenorseman,
my comment was said very much tongue in cheek and I totally agree, RKH needs a total redesign of their website like Navitas or as you suggest Upland. Suppose they are between a rock and a hard place, damned if they update, "Why are they wasting money having a new website when we have no income", and damned if they don't, "Why can't they make it more investor friendly and promote the heck out of the potential!".
Hopefully with the 15m cash coming in from OM and a possible further 65m sometime after April and before the New Year, Sam and Co. might invest in a total redesign for the website and lay things out more clearly and promote our assets a lot better. As you say anyone stumbling across RKH for the first time would not be impressed, and anyone who has invested in the past and looking to come back into the fold, would think nothing has changed in the past 10 years!!!!!
By the way, do you still think the Munin is our FPSO? As you seem like someone from the industry, do you have any insight into how long a refit to spec an FPSO might take?
Many thanks
LTT
Thenorseman, but they have updated the website and Navitas have too, go into the operations section and click on Sea Lion, there is an animated flip around bit about SL. Ok, so not a lot has been done, but Navitas has gone to town on updating their website.
LTT
I cannot see Sam wanting to keep the share price lower, he has a tidy sum invested, why would he not what the shares to rise.
RKH put out an RNS before Christmas say have done a stonking deal with a Specialist Fund that once signed off could be worth 80m+ AFTER paying lawyers and litigation costs. They have also just done a great corporate update adding some meat to the bones of what Navitas are doing. So what more can RKH say?
We are now waiting on FIG and Navitas for the next pieces of news, which hopefully will be by June, but who knows.
I am petty sure Sam and the board are as frustrated as the rest of us, but nothing is going to put a firecracker under this share until we have funding. I see now, that is the catalyst that will get the ball rolling. We have been here so many times before with UKEF and PMO and no-one is buying until that piece of news drops.
After that, the handbrakes comes off IMHO, as everything will slot into place and news will start to come think and fast.
LTT
“It was agreed that realistic estimated timelines are essential in taking this work forward (initial estimates appear to be highly optimistic)”.
I wonder who is being optimistic or who is scared that they might just have to pull their finger out and sign off on things and get up to speed. FIG seems to drag their feet a little, how long does it take to say YES to the OM deal and move on!
They have been waiting for this for over 10 years, the least they can do is make sure they have the right people in the right positions and trust them to do their jobs.
Hopefully Navitas will drag them over the finish line as they are planning first oil after 5 wells, that’s incredible!
If they can get the long lead items on order, the FPSO refitted and a rig booked and on its way down to drill. Surely FIG can work back from first oil date end of 2026 and prepare for it, not say it’s a little optimistic! Better to plan for that and if it slips so be it, than push the timescale out to 2027/28. As my Dad used to say, give and inch, they will want a mile.
Come on funding and partner, once that’s done there will be no excuses.
LTT
If you look at the Bluewater website and look at the fleet and the click on the Munin on the map there are is some more info that says it has produced 90k+ per day, so plenty of wiggle room rather than just go for a 50k and have nowhere to go, which to be honest was one of my concerns about the quick start up to get to first oil, they would have been stuck at 45K per day.
So it’s all good to my mind. Roll on funding and partner news.
LTT
Happy I totally agree, Navitas have not just been a breath of fresh air, they have been a typhoon of it. With all the news of new hires for Sea Lion and FIG team ; the recent upgrade to resources and the lowering of costs AND RKH stating they have earmarked FPSO’s (note the plural, or should it be FPSO’ies) that are available. Why or why are we languishing at 11p?
On top of that we have €15m hitting our bank account soon that pays off Harbour and lawyers, with another possible €65m by the end of the year!
Suppose what everyone is waiting for is “show me the money”, once funding is sorted, then I imagine we will rerate to reflect all the other positives because at the point FID is a done deal. To my mind this will go hand in hand with a new partner/partners coming on board IMHO.
LTT
Slashing the royalties makes a lot of sense, even if they halved the royalty for the first 3 to 5 years, FIG would still make a lot of money and they would be showing support for the project to get it off the ground, also payback would be quicker to investors , plus it might incentivize Navitas/RKH to get up to 55K per day all the sooner. It’s a win, win.
They could also have a staged royalty, 3% first 2 years, to support the project to get off the ground; 6% years 3 & 4; going to 9% from year 5.
I imagine this has already been discussed with FIG in great depth.
LTT
I think any rig would be down there for a while. If you imagine 5 wells and they get to first oil, then the next 6 wells to get production up to 45-55k why not have the rig do some exploration/appraisal's while it’s free. It could easily potter about for then next 2/3 years until the rest of the wells need drilling, plush they will have revenue coming in to pay for it.
LTT
To be honest I can’t quite believe we are almost there. I know they are saying 2026 late for first oil, but when it kicks off there will be so much happening, Rig mob, boots on the ground, pipes and mud etc arriving, and as many have said, that should start to happen beginning of 2025, if not back end of this year.
Maybe the stone on the mountain side has been nudged!
LTT
I wonder if they have some down time with the rig, if they would consider drilling a couple of exploration/appraisal wells on Isobel/Elaine, it would make a lot on sense and also bring back a little of the excitement of the old days.
LTT
I think you are on the money there Thenorseman,
“The FPSO has a disconnectable turret enabling redeployment to another NFB field and allowing a second, potentially larger vessel to replace it on Sea Lion with increased production capacity above 80,000 bbls/d.“
The Munin has such a turret and is available, and can easily do 55k+ per day.
It seems strange that RKH have quoted Navitas’s recent report and then added meat to the bones. Can we also expect some news from Navitas this quarter with regards partner and funding?
They are sourcing long lead items and have a FPSO in mind, which means they must have an agreement in principle. So funding must be close. Maybe partner too?
LTT
WOW fantastic update! All we need now is the partner and funding sorted and we have the treble!
Surely the funding is all but sorted, the economics of the project just get better and better.
LTT
Thanks a lot Alma, so plenty needs to be lined up prior to drilling. Very interesting.
LTT
I don't think that no RNS for a while is confirmation that Navitas are doing nothing. All you need to do is look back through Moggers posts in particular to see what is happening behind the scenes and get 2+2.
All the signs are there if you care to look, such as, Ian Ramsey and team hired to work solely on Sea Lion; the money paid to FIG to get their team up to speed, in readiness to actually be able to understand the in's and outs of what Navitas and RKH are proposing and sign off on it; the shipping regulations being put into FIG legislation; Navitas last November saying still on track for first oil 2026, not to mention the multiple times RKH and Navitas people have been down to the Falklands.
All these things add up. Navitas are paying out a lot of money and putting in a lot effort to walk away IMHO.
As I have said before, if they are serious about first oil even the back end of 2026, they need to start the ball rolling on the FPSO, Rig hire, long lead items soon. To get the 11 wells done prior to first oil it would take a least 1.5 years of drilling. I'm working on the fact that from spud to target depth they were drilling in about 30 days on the last campaign, so I'm working on 45days to drill a development well (please someone in the business correct my assumptions). So a rig would have to be mobilised 2025, or even back end of 2024 if they wanted to hit the good Summer weather for the start of drilling.
Actually I have a question for anyone in the industry if I may, can the subsea stuff be done alongside the drilling or is it connected up after the rig has finished all the drilling? Sorry if it's a silly questions, just trying to get my head around the process of drilling, doing the subsea stuff and then connecting to a FPSO.
Anyway, I can't imagine them keeping all the prep IF they are doing anything, under wraps for much longer.
LTT