The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
Maybe they are wanting some sort of insurance or backing but cannot see this Government or the next for that matter offering it. Oil is well off its highs and yet the Gov hasn’t done anything about the EPL that is killing the NS and causing companies to think hard about further investment or to invest elsewhere.
Labour wants even higher rates with no tax breaks on drilling so how can the current government even consider looking at any support for the Falklands! Also even if the current Gov offered to underwrite it, Labour would just rip up and agreement later. Very shortsighted if you ask me, but it would be political suicide to touch it with a barge pole!
LTT
Hi Croft,
I'd like to think after they have done the development drilling on Sea Lion they would drill a few exploration/appraisals on Isobel and Elaine to firm up a development plan going forward, particular when Isobel and Elaine could be another Sea Lion or bigger. With regards to FID on nearby targets for tying into the SL development, I presume they will need an FID on further drilling and tie-backs (think about the current situation in the NS with FID getting knocked back or not happening due to the EPL), but it would be a no brainer to sign off on things as the infrastructure is close at hand, it's not like a full blown new development.
In the recent RKH presentation they talk about drilling a further 5 wells post first oil about 42months later, I imagine this is to offset natural decline to add to production as the they are saying a plateau production of 80K with a peak of 100k, so they will have to get an FPSO that is more than capable of managing those kind of numbers. I believe Thenorseman found a possible candidate that could manage that sort of production.
If you look at the link below;
https://rockhopperexploration.co.uk/wp-content/uploads/2020/01/Investor-Presentation-Navitas-HoT-7-Jan-2020v3-1.pdf
It's actually the 7th Jan 2020 presentation showing how PMO/Navitas/RKH were going to develop Sea Lion. (If covid hadn't come along what might have been!). On page 11 it has a graph showing phased development. I haven't compared it to the latest RKH presentation but there are similarities to the specs and plan that's for sure. This is why Navitas are motoring along, the lions share of the work has been done, Ian Ramsey will be just fine tuning with his team, confirming rates with suppliers and then depending on where Navitas are with getting the cash, getting ready to green light the project.
Hope that helps, hopefully someone with more knowledge that I can fill in the gaps as to what's involved as per your question.
LTT
Hi CitizenTS, yes it appears to be so,
"2: that Rockhopper shall, within 30 days of the date of the decision, apprise the Committee of arrangements agreed with Italy for the mitigation of the risk of non-recoupment or that negotiations have failed and, in the latter event, propose concrete arrangements in accordance with the decision for the mitigation of the risk of non-recoupment."
So reading it again, it seems that the Committee are asking ROI and RKH to come to an arrangement and if they cannot, then RKH has to say how they will ring fence the assets that RKH lawyers will go after so they cannot touch the money/assets until the annulment outcome 1st Q 2024. Presumably in an escrow account of RKH choosing and in a jurastdiction that is preferable to RKH and their lawyers.
Then the Stay will be lifted and RKH lawyers can start going after ROI property or assets where they see fit. No doubt they will have a list of low hanging fruit and easy pickings they can start with.
It should all start to get interesting from the middle/end of June.
LTT
Sorry just posted my school boy error, exchanging £1 = €1 which it obviously does not, so it's more like 22p per share, but you get the drift.
LTT
Whilst we are in this limbo of waiting for the next step with OM, will they or won’t they set up an Escrow account to shelter seized assets from the clutches of RKH’s Board or will they not be able to agree and thus RKH and their lawyers are unleashed. Also while we wait for further news from Navitas who are no doubt beavering away lining up the ducks ready for FID (Fingers crossed).
I thought I would hypothesize as to where the share price COULD be by the end of March 2024, which lets face it, is not that far off once the AGM is out of the way at the end of June! So part one is if we presume that we win the OM annulment and the assets/cash is sat in escrow and therefore it’s a simple case of withdrawing the full €265m (which would be €247m asked for in August 2022, plus approx €18m accrued this past year at €1.5m per month). If we say we keep 75% of that we would have €198m. Of course there will be tax to pay no doubt, but for this exercise let’s say we are €150m clear. Now that’s 25p per share in cash.
So what value do we add on for Sea Lion and the surrounding acreage? At the moment almost nothing. Our current market cap is £77m and I would attribute at least 50% of that to the pending OM result, so that would be 25p + 6.5p = 31.5p per share. I have to say that’s a pretty good share price to have after being out in the wilderness for pasted 3 year where we haven’t seen a share price much above 16p.
But what of Navitas, are they going to keep quiet until 1st Q 2024 and then say FID is done? Would that be worth double the 6.5p I added earlier for announcing FID? So we get to 38p per share, Once the rig is on its way to drill development wells, what would that add to the share price?
It’s all guesswork, sentiment at this current time says Sea Lion is unlikely to happen, that the OM award is going to get annulled or it will get halved or quartered. However if Navitas announce funding is underway; a rig contract is booked, the chances of this going ahead look up dramatically.
I won’t go into the numbers of what we could be worth at first oil, but if we make it to that point as shareholders still with our 35% intact and €150m to pay our share of Pre-FID costs and a good chunk of our Post-FID costs, then £1+ could easily be surpassed. That's a heck of a return from today's share price. IMHO. Good luck to us all.
Regards LTT
Thanks Auson, I'd forgotten about that Environmental Impact PDF, just shows the extensive work PMO actually did and hence why Navitas are able to steam ahead with things. They basically have all the information they need to press the FID Go button. I wonder if any of the quotes PMO got in pre Covid are still valid? Sure Ian Ramsey is on the case as we speak. I don't think he gave up his 17 year career at Murphy Oil to be sat on his hands!
LTT
hi arp1, i agree with most of your points, however i don't think (just my opinion) that the stay will stay, the wording in the rns seems to point to the stay being removed either way, the only difference being if the roi and rkh agree on an escrow with an international bank (outside of italy), then any assets seized will be ring fenced in that account. this is so rkh can't spend anything until the annulment in ruled on, as the concern was, a small company like rkh might seize assets, liquidate them into cash and then sam and the board go on a ****** to vegas and blow the lot! thus roi might have difficulty recovering the amount, if any, that was annulled.
;-)
so, imho the ball is in roi court, they can agree to the escrow and have assets seized, but safe, or they can protest, stamp their feet and spit the dummy and have assets seized and rkh can start spending.
also with regards to the 33p per share, we would be due a bit less that that as i think sam said on a $100m win we would owe roughly 35% to the funders, so we would keep approx $165m give or take, still an impressive sum indeed, far more than the $45m i had hoped for as a good outcome.
regards
ltt
Hi Buffit, your guess is as good as mine I’m afraid. Common sense dictates that should ROI not agree on an Escrow account to put assets, then the Stay would be lifted (although it seems it will be lifted either way, just at the whether RKH can get their hands on the cash now or after the result on the annulment in 2024).
So if the Stay is lifted in 30 days plus 10 because ROI won’t play ball , then RKH lawyers can start taking assets. Surely this would mean RKH market cap would increase by the assets acquired, particularly if not held in escrow.
But then when has common sense prevailed in the stock market! All you have to do is look at Harbour for that, is Linda kicking herself having walked away from Sea Lion, if she isn’t now, she possibly will be if Sea Lion starts producing in 2026 as Navitas are suggesting.
LTT
Buffit, I think more possibly it will be from week commencing 5th June when we should be looking for an update as they said 30 days from 25th April plus 10 days for ROI to reply to what RKH have proposed. That is of course if RKH and lawyers wait until the 30th day to submit their proposal, if however they get back to them on the 25th day with a "We cannot agree with ROI" then ROI have just 10 days to say why or the Stay will be lifted and RKH lawyers can start earmarking assets to seize, although I imagine they will have a list all prepared to make things as awkward as possible for Italy. IMHO
My thoughts are we should hear the outcome pretty quickly once the 30 days +10 days are up. But with RKH you can never be sure. If nothing else we should get a good update at the AGM.
LTT
Current market cap is about £80m, so we are looking at roughly 28p per share should they rule in our favor in Q1 2024, plus the assets will either be in escrow or RKH’s lawyers will be free to go after assets from next month.
So with the above in mind, how much gets added on for Navitas galloping towards FID? 5p? 10p? 20p?
Interesting times ahead me thinks.
LTT
Hi Thenorseman,
I thought what about the BlueWater's FPSO Glas Dowr? It's double hulled suitable for NS, so that ticks the box on being suitable for the Falklands, and can do 60k bpd. I thought this because they were initially talking about a much reduced project, but seems Navitas are back on track talking about 80k to 100k per day which your choice seems to capable of doing.
To be honest I’m glad the project is looking at a bigger FPSO, I was concerned a smaller one would limit the development of Sea Lion and the surrounding prospects. Now it seems full speed ahead.
LTT
MD I think if they are planning first oil in 2026 they will have to start drilling late 2024 or early 2025 at the latest. Fingers crossed they are cracking on behind the scenes sourcing a suitable rig.
It would be great if they popped a hole into Isobel, Argos acreage and even Borders acreage while down there, it will all depend on the rig spec and if it has some down time between development drilling. Fingers crossed for everyone.
LTT
MD how can you say it’s nonsense to sell or buy, you don’t know people circumstances. You bought and bought Argos, kept telling everyone they would go up more than RKH, where did that get you and those who listened to you?
Don’t get me wrong you have been on the money this time with you news about RKH however you should not be calling anyone naive for making a decision based on their personal circumstances.
LTT
how this share is still sat at sub 20p.
We have just got a presentation from Navitas saying, "Sea Lion Project-The next big thing", "First oil by 2026", etc, they even have a pie chart that has Sea Lion taking up almost 3/4 of it! They have Ian Ramsey and his team on the case and have got FIG hiring staff to take care of the paperwork as and when it comes along to get Sea Lion up an running. The big man himself went to the Falkands, how can they not go for FID early 2024?
They have well and truly nailed their colours to the mast! Anyone thinking this is not going to happen baring some black swan event is possibly going to miss out on a great turn around of the company. IMHO
I am no saying buy, I'm saying sell into the rise, although many will, just to get out and be done with Rockhopper once and for all. I'm just thinking out loud as to why we are still at around 13p with OM and a proactive partner.
Hopefully onwards and upwards.
LTT
You might be lucky Happy if you wait for the fall back, but this has 20p+ pretty much nailed on now if you look back to where we were in 2019/start of 2020 when things looked a lot brighter for PMO prior to Covid.
However we have increased volumes; lower costs per barrel; a committed partner talking FID 2024 and first oil in 2026 AND an OM award due to drop early 2024!
Still seems a steal even at current levels. IMHO
LTT
Would prefer an FID Dec 2023 but then that’s just me being selfish and thinking about my warrants. LOL
Still it’s fabulous news, Navitas are cracking on with things that’s for sure, it makes sense getting this update out particularly if they are going to be rattling the tin and passing around the hat in the 2nd half of this year, which they will have to do if they want to keep to the announced schedule.
All good in my books though. We are counting down the days till OM update as to what ROI plan to do, the money coming in in 1stQ 2024 will be perfect timing.
LTT
Nice one DEM,
Hopefully that painting is a representation of around the time of first oil, when the OM award has covered our Pre and Post FID costs and the first tanker is on its way for sale at $85+ per barrel!
And the big chap on the right in red with the curly hat is Sam, laughing out loud celebrating the take-over offer for the company having just drilling on Isobel and they have found she’s bigger than Sealion!
One can but dream.
LTT
Hi Happy,
I am of the same feeling, cannot believe we are still around the 11p mark particulalry after the last update on OM which says we have possibly 30/40 days to find out if ROI will stump up the cash into escrow or RKH lawyers can start proceeding to take assets! (that's how I read it anyway). If by some miracle ROI do put the cash in escrow then surely they would have to add some value to the shareprice as it would almost be nailed on that we would get 50% of it, and there would be no wait or chasing to get the money!
And even if we were valued at 50% of the OM award , it would mean all the work done by PMO, Navitas, the licences, EVERYTHING is valued at nothing!!!!
It's a crazy world.
LTT
Have to agree Much, even if the annulment reduces the award for some strange reason by 30%, then I would presume the costs would be split 70% paid by ROI and 30% paid by RKH.
Either way, I feel RKH will have something in place to cover the costs such as giving up a percentage of the award. As was said earlier, 1.2m Euros a month covers more than enough representation fees and then some. IMHO
LTT
I don't think the ROI should be allowed to get away with paying anything but the full amount of whatever the ICSID say we should be paid at the end of all this. it's not like we are desperate for the money, plus if they string this out to Q1 of 2023 that's an extra £12m+ in our pockets.
No, I think the ICSID have made a good call, ROI have 30days to put up the cash in a neutral account or RKH and it's lawyers can go for it with the Stay lifted. The ball is now firmly in the ROI court, if they comply they have the option of possibly getting the award partly annulled and thus getting some of their money back, however the plus side for RKH being that when the the decision is made we get all or part of the award straight away. A win, win.
Still not sure how they account for the interest as the award is 190m plus interest and although the can get a rough idea to Jan 2023, if the annulment decision is made at the end of Q1 that's a different of roughly 4.5m Euros in interest! I mean that would cover the Hobnob bills though to first oil and then some!
;-)
Still can't believe we are still at 11.5p with such excellent news. This has to be a buy at this price to double in a month!
LTT