Member Info for longtermthinker

sorry if this is a rookie question, but are we expecting Navithe as deal to be signed; then UKEF yay or nay; then FID?

Just my thinking is, after all this trouble getting UKEF to back the project; getting Navitas on board with hopefully deep pockets; getting suppliers nailed down on costs and possibly some skin in the game, why would they then take time over FID and ponder whether it should go ahead or not?

I'm sure there has been talks with FIG about what happens when another partner comes on board and everything has surely been analysed to death by now, so shouldn't it all start to move thick and fast after funding rather than FID, or am I looking at things too simply.

I haven't looked at rigs utilisation rates for some time, seems these days all we hear about is rigs being added or dropped in the US shale industry, but there must be a few idle offshore rigs that would suit us just fine floating about with nothing to do.

Ok maybe wishful thinking and jumping the gun, once UKEF comes in, then I'll start getting excited and be wondering what lead times are for equipment for development drilling.

Till then, drift, drift, drift me thinks.

LTT

Hi Mike,

Hope your well. Yes, but shocking, bit disappointing but as rpoodle or was it GS, who else has been doing much better? Far bigger players are not putting money in to mature basins with prospects, never mind opening up a virgin basin with nothing on site. We forget sometimes how remote the FI are and that anyone taking on this project will effectively be paying for development of everything on the islands.

PMO a couple of years ago was on its knees as oil prices hovered at $40 it looked like they would go under. Many more have not been so lucky.

I don’t see it so much as giving away, as gaining progress. Yes we have been unlucky with the fall from Grace of oil and the ridiculous race to the bottom with the shale boom. We are going to have an oil shock, it’s the cycle of things and I’d rather have 30% of a basin about to begin or be in production when that happens than wait till oil is over $75 drilling rigs and services tripling in price, then start negotiations to keep more of the basin.

PMO needed to share the risk and reward. Why are we so surprised at this outcome, it’s supply and demand. 1B barrels in the ground has no value unless someone plans to go get it. We have now jumped another hurdle, what has happened in the past has no meaning, we can moan, think about what could have been but it doesn’t change anything, what matters is what happens from now. Someone buying in today or even last week at the lows if they were lucky, in 3/4 years may talk about this moment as a life changing investment. (If it all comes to fruition) as GS I think said if this is signed we no longer need to worry about raising cash or diluting to billions of billions of shares to scrape cash together just to keep going. This is much more preferable to dilution.

Me I’m positive. I actually bought back in as things look far brighter now, we are no means out of the woods yet. But IF RKH survive to first oil as the oil shock wave hits, we could see a very tasty div; loans paid off in a blink and vast potential going forward of which we would still have 30% with no need to offer further percentages to pay for exploration drilling.

LTT

Yep hats off to Navitas, but they are just doing no different to anyone else. It seems shale will/is heading the same way, as companies fold or go bankrupt players will come in, buy for pennies on the dollar, have no debt and will actually be able to possibly break even or make money; they probably won't however be able to get loans to increase drilling.

To me, 30% of a possible 1 or 2 Billion Barrel Basin is better than nothing at all. Any loans will be paid off in 2/3 years of production and the basin will start to open up for sure, with cash sloshing about Isobel and Elaine exploration has to be on the cards; then Johnson has got to be worth a look with infrastructure in place. Lets just hope there has been major board changes by then.

Have to be a bit positive going forward me things. Credit where credit is due Moody did say it would be all happening in the next 12 months from the AGM, make or break, even though the share price has dropped and then only gained back what it had lost over the Summer on what is pretty promising news.

LTT

WOW, thanks Lsetown, perfect, done.

Back to RKH, do you think we will drift now back to the mid teens, I see the spread has widened and if we think about the Navitas deal not being signed off till end of Q1, what news are we expecting in between? I thought we might get UKEF, but someone pointed out, quite rightly it made more sense for Navitas to be signed off and then UKEF funding needs can be finalised, as surely UKEF is more likely to get involved if less funding is needed and another partner is signed up. Hhhhhhhhhm. Interesting, also PMO has a lot on it's plate with BP purchase in the North Sea so everything could become a bit more dragged out.

LTT

LOL Nigoil, don't clog up the board with your insights, there is real debate going on here, just put everyone on ignore and be done with it, your can then post and read only your own powerfully and thought provoking posts and slap yourself on the back in a narcissistic fashion.

Incidentally, open question, is there really a filter to put people on ignore? I know iii had one, but didn't know there was one here, could someone explain how to do it, just have one name for my ignore list. Most appreciated.

LTT

Yes Rpoodle, thanks for a great and thought provoking post. I think we need some clarification from the company as to what we have lost as well as what we have gained. I can't remember clearly (it's so long long ago in a star system far far away!) but did we get some cash from PMO as well? If so there will be tax that was deferred to pay on that or did we pay at the time?

Anyway as you say, the positive is a partner with surely some access to funding. Yes it does seem we have given away a lot, I can't work out what we have gained, it seems we have even given away a lion's share of Isobel/Elaine for very little too; but then we have been over a barrel for a few years now, it could be far far worse; PMO could have walked away to concentrate on Zama; North Sea and it's many other projects, many companies have done much worse than PMO. Tullow have had a really tough time; telling the market basically not much happening now for 3/5 years was crushing.

So to get a new partner after an number of years with little or no interest; to be getting to a point of having money available to actually get the show on the road; maybe that is the payment we have gained. I can imagine in a boardroom, PMO saying "Look we have a partner; they can secure funds; but you need to sweeten the deal and this will be a goer". Lets face it, shareholders will benefit longer term, just surviving and not being bought out for a pittance, makes it worth it. What other options do we have? The longer this went on, the less likely it will happen and then we run out of money and the dream is over.

Hope to get something from the company to make clear what is going on.

LTT

Tarthtrader,

I couldn't agree more, PMO have talked for a long time about sharing costs; in recent times it has become a necesitty and now we have it. Just look at any mid/major size exploration/development project and there are usually 3/4 or more partners sharing the risk and reward. A project in a virgin basin far from infrastructure, even with such opportunity just wasn't going to happen without others coming on board, more so in this current climate of yoyo oil prices tightening of investment.

There is a lot of talk about shale going from strength to strength, which has made a huge difference to the oil market and E&P sector, but the elephant in the room is why have all the major and mid cap players tightened their belts and put off investment and slowed bringing new oil to market whilst the shale drillers, even at lower and lower prices, just keep drilling and pumping? It would be like De Beers finding a new diamond mine in Africa where you just tap a rock and a diamond drops out, what would they do; flood the market with diamonds and decimate the prices they currently charge? It would be insanity. But shale drills and pumps relentlessly, no other type of business would over produce effectively cutting it's own throat, so again the elephant in the room is why would they do that, isn't that something you call a death spiral!

Anyway sorry for the off topic ish, but it does imply that by the time SL is pumping, we will be in a supply crunch and oil will be in the $70/$80s.

LTT

Nigoil, you seemed to have missed one of the most dangerous posters off your list! It seems everyone on this BB to your mind is a basher, has an agenda or is blatantly misleading.

We the news flash is, we all have an agenda, it's to invest and make a return OR sell and keep some profit. Hug and hold is no strategy, dismissing everyones point of view and sticking your head in the sand makes no sense and encouraging people to do that is the most despicable and dangerous thing to do.

These boards are to share thoughts, ideas. discuss pros and cons to help make informed decisions for oneself as everyones circumstances are different. Someone who bought recently at 16p would be right to take some profit; someone having bought at 35p maybe should hold or take less of a loss and move on, BUT that is not for me to say or for you, with inuedo that good news it coming, you know better.

My belief is that the vast majority of folk on here are genuine, they share their thoughts and fortunately their knowledge and expertese in areas I am not familiar. I feel lucky to have access to what they share even when I may not wholly agree.

Good luck with your investment, I think RKH has turned a corner and looks more likely to succeed, even with the giving up of a big percentage for seemingly very little; but still there will be a lot of money to be made way down the road if we survive (which is more likely now, but we are not yet out of the woods).

LTT (premo basher, manipulator and influencer!) LOL

Interesting point, they will no doubt have to get some good accountants on the case as farm out, carry, losing some of the carry (if that’s the case) hopefully it will take the tax situation lower and in our favor.

To be honest I’d like to see the FIG be a bit more flexible on the corporation tax to sweeten the deal, I know it’s very lucrative compared to many other regions, but that was when oil seemed to be always in the $75+ region. We are in a different world now, Brent is only touching near $70 because of Iran, when that all calms down we will be back to low $60.

So, what now? Steady drift tell near end of Q1? As RKH is purely news driven, can’t see what keeps us above 20p in these fickle times.

LTT

Thanks Suresh, think we can expect a drift then, there will be plenty of uncertainty until UKEF say Yayeeee or Nayeeee.

I still think it’s great news getting a new player to share costs with PMO but while uncertainty the share price won’t hold I think.

LTT

Of course Navitas has to do due diligence, there must be a huge amount of work to do to get to final sign off as a partner to RKH and PMO. Can’t help thinking that with UKEF looming it might be why they can still back away, maybe they are waiting for UKEF to come on board then it’s sign up, then all the ducks start lining up. Can only think PMO and RKH have taken this deal because Navitas have good access to money; PMO is on the ball with development and suppliers their fly in the ointment was where to get the cash when straddled with so much debt.

Interesting times for sure. Hindsight is a wonderful thing, but it’s worth bearing in mind how overlooked if not outcast the oil sector had been for 5 years or so. The fact PMO and RKH have even survived when many are in trouble shouldn’t be dismissed.

Looking forward to PMO update tomorrow maybe and indication of what they expect from Zama. UKEF must be getting close.

Good luck

LTT

Cheers Robpug,

suppose it does make sense, way down the road till then, but at least we keep 30% and the bottom line to all this (and hence the lack lustre share price) is someone else on board sharing costs with PMO makes the green light a much stronger possibility.

Onwards and upwards I hope.

LTT

It seems many are presuming we just gave up 30% of PL04a which contains Isobel, maybe I am reading it wrong but I thought this aligned interests over SL Phase1 and 2, it does not include PL04a. Maybe any extension of SL into that acreage keeps the status quo of 40/30/30 but Isobel is not part of the deal at this stage.

Happy to be corrected though if i've missed something.

LTT

Also important to look at what we do keep we still hold a lot of acreage that will be ripe for development once SL is up and running. Holding on to a hefty percentage will give a massive amount of scope to farm down in return for carry/funding. We still have 64% of Isobel deep, at this moment valued at nothing. Wait till SL is producing next door, what would say 30% of Isobel be worth then?

Very exciting times ahead, no great shakes for long term investors re the share price, we only got back to where we were in the Summer, but going forward it has to give confidence to the project going ahead.

I just hope this stays low till I get my isa allowance in April. For what it's worth, anyone who thinks this will be below £1 once development drilling starts will be missing out on a great opportunity.

Good luck

LTT

LOL, pity there isn't some other mid cap oily who got the rough end from ARCM in the past, all they would have to do is imply they are looking at PMO with an all cash offer of £1.20 a share, 30% premium and BOOM, ARCM would be toast!

LTT

Hey Much,

yes it's all very interesting, maybe a bit of dilution, maybe a percentage given to PMO partner to sweeten the deal, but this would no doubt be for further free carry to first oil. So if we make it to first oil the elephant in the room may be, as now, there is a lot of acreage RKH hold that currently is valued at a big fat ZERO.

Now how does that come into the mix once you have development drilling underway and first oil looming; then loads of cash washing about; a multitude of prospects a stones throw away and a rig looking for work close by after SL is ready to flow!

Very exciting times if UKEF sign off, it will be thick and fast after that IMHO.

LTT

What I mean is, hopefully the market will overlook RKH for a while after UKEF and FID so I have time to buy into a more certain future, which is why we are hovering around 14/15p.

Many including the bigger players are just not interested in a gamble, for them just wait and see, once some of the major risks are off the table, they will fill there boots at 25p, then most likely they will have an exit target of XX months to 75p. This is where private investors like ourselves who are less averse to risk can reap bigger rewards getting in lower and holding for longer.

LTT

To be honest after we get UKEF sign off and the initial bout of buying, I am hoping I can still get an ISA allowances full for 20/21 in April under 50p, will be happy to forget about them for 3/4 years because with PMO getting a partner and some free carry, there could be little to no dilution at first oil.

Of course we will have a share of production costs and be paying back any financing, but with a 3rd player involved and project underway I see no issue for RKH to obtain finance at a much cheaper rate than offered by PMO. So even with all that there will be a heck of a lot of money left over.

Suppose the big question is just will RKH get taken out before then for a couple of quid?

But the above all depends on UKEF which looks all the more positive with election result. Fingers crossed.

LTT

Gosh, biggest short on a company in Europe and undeclared until recently! How can this not be illegal! I don't understand how they could get away without reporting this. If they were a buyer of these shares, surely they would have had to declare their holding a long long time ago as it could be seen as predatory, and who the heck is lending out these shares?

Tomorrow should be interesting to say the least!

LTT

Probably the banks are still or at least have been very conservative with lending, I know when we were buying our house, (I know it's not the same) all the major lenders wouldn't even look at us; my own bank were I have had an account for 40 years and have run my business from was nowhere near a competitive rate because of my self-employed status.

Can imagine it having been the same with major banks looking at the oil industry, and hence why PMO almost went under and ended up with this current situation.

hopefully Zama and improving oil price will open the doors to better rates and then the higher oil price pays it off quicker. Finger crossed.

LTT