Member Info for longtermthinker

Happy, I don’t think so, as has been suggested interest only starts as funds are drawn upon. If Navitas had any sense, which they do have an ample amount of, they would use RKH funds first, then their own, then the bank loans , drawing down on them as a when.

Of course it depends how Navitas structures the loans they are getting from Israel markets, to top up the $1B from the syndicate and $110m from RKH, so if it’s a straight loan at say 5% from date of funds being released then I’d agree with you. But why would Navitas do such a loan, knowing that they might not spend more than $100m next year. I imagine the bulk of funds will be used on drilling, and that won’t happen until late 2026 I imagine. The FPSO will get a contract signed and head off for refit, but would that require cash up front! 🤔

LTT

I would also not rule out sentiment, greed and the media all playing a part in the ups and downs of the share price.

The buying over this past year has been amazing, I never imagined we would be at 75p at this point, but here we are, with still FID to come. We can work out the numbers as to a value, but when has Mr Market ever followed the rules? Why did we get to £5+ all those years ago? Why did we plummet and then end up out in the wilderness sub 10p? Oil price and Covid played their part, along with Harbour walking away, yet the value in Sea Lion and the acreage was always there.

So, to my mind, we will be up and down before and after FID heading to first oil, but the trend will ultimately be up. Those ups and downs will be fuelled by selling after FID and then buying as the Aoka gets a contract signed and heads off to refit; the rig gets green lit; boots hit the ground and the hotel starts being built and lets not forget the chance of a partner coming onboard between FID and first oil AND maybe a take-over offer, although I hope not!

This Sunday is going to be interesting.

LTT

Philwad,

I cannot see a $22.m tax issue holding up an initial $1.8-$2B investment that is going to bring in a HUGE about of revenue to the FIG.

Maybe that is why RKH is raising extra funds so if push comes to shove, if FIG dig their heels in, RKH can just pay it and sort in out later or take it on the chin, as once Sea Lion is up and running, that amount will be chicken feed for RKH and FIG.

Why do you think RKH have done the Placing so soon? Everyone was thinking they would raise AFTER they got the insurance, count up their pennies and then raise the difference they would need. And yet they did it before, no doubt with a big nudge from Gideon, saying "Get your house in order, as once we have our funding in place on the 7th of Sept, it's all hand stop the pump!"

Plus the FIG breaks up at the end of October and the consensus is, they will need to FID before then, or risk nothing happening till Q1 2026, and that is if someone comes in and says, "I'm not so sure about this, maybe we should outsource some fresh eyes to give it all another once over!" Could Gideon and Sam take that risk?

So, I will give you the benefit of doubt, that you have genuine concerns about the tax issue, but for what it's worth, i think it's a none starter. Navitas, RKH and the International bank are not getting all the funding lined up so FIG can put a spanner in the works over a $22.3m tax issue that does/doesn't exist. IMHO

LTT

I thought 80p wouldn’t be crossed until after FID, but then, why not, as we get closer and closer to Navitas Funding meeting, which will be a week from now, then a week and a few days after our GM to hopefully sign off on the Conditional Offer and the OO, it makes sense, folks holding on tighter and the bid having to be raised to entice sellers.

Plus, the 80p warrants won’t hit the market for some time IMHO. Why pay 80p now and off them at say 90p or even £1 at FID when they can sit on them for up to 4 years, well after first oil. How much would they make on them then?

Interestingly I was reading the circular, and they say Phase 2 oil could be flowing in 2030, so that there is a 4+ year drilling contract with pretty much back to back drilling. Sanctioned possibility at first oil in 2028. I wonder what the share price will be at then? 🤔

LTT

“The partnership estimates, and based on the banking model, the construction costs of Phase A of the project development will amount to approximately $1.8 billion, these costs also include the deposit of cushions for interest payments and budget exemptions, if any), of which approximately $1.4 million (100% of which will be invested until the start of production from the project).”

I read it as it’s still costing around $1.4B just they need a buffer just in case there are overruns or unforeseen needs for extra cash. It also explains why RKH are raising more than many were expecting, to give themselves said buffer also.

Great news by the way.

LTT

That's the question I have, once FID occurs how does the Gross 2C Resources get reclassified? At this moment in time, it's kind of in fantasy land, yes X resources will be developed but only if YZ occur. If they don't occur, then the house of cards falls.

So once we have FID, how does that change and how is it recognised by RKH and in the share price.

Surely, despite what everyone thinks, there are still risks to FID, can Navitas get the funding; will RKH get sign off on the Conditional Placing; will the cornerstone bank and associated parties sign off on the loan; will FIG pull their finger our and sort the approvals, the Tax regime, RKH taxes before the end of Oct; if not and FID is pushed back into the Q1, will the new government be accepting of what has gone before, or will they want to go over it all again before sign off?

So what I'm getting at is, there is no such thing as a dead cert, and therefore, there must be till some risk on the share price. Once that risk is gone, what then?

LTT

Have to agree, some great info being shared on the BB of late, no Nods, winks, oily faces, oily overalls (remember that one LOL), meetings that may or may not come about, but can't say anymore, ALL IMHO DYOR!!!!!!!

Just some well reasoned, informative chat.

I have to say, I have learnt a lot about rigs! A pre-1990 could be a rust bucket with limited deck space; a 6th Gen would be overkill for our needs, however being newer and having more than enough accommodation and deck space, it could be a goer. They need to be up to UK regs, therefore, some of those drilling off Africa won't cut it, so even if Navitas and Borders could share one, it wouldn't be allowed. 5 year certification would also be needed before coming down, so that means possibly a dry dock check, hence newer is better, less fatigue.

Can Navitas cut a deal on a newer hot stacked, or does an older cold stacked fit the bill. They will have the time to get it anything out of mothballs and warmed up ready for when.......2nd half of 2026, then it will be mobbed down to the Falklands; 1 year + of drilling, before the FPSO arrives for hook up.

When you say it like that it doesn't seem that far away at all!

I understand what ZXY is saying about "Navitas don't have a good reputation for being reasonable / flexible", but isn't that just part of driving a hard bargain? The Israelis are know for being frugal, and wanting a good deal, as they are in the driving seat, why not. Just so I don't get shot down for stereo-typing, I'm a Yorkshireman, generous to a fault, however it has been said that the definition of a Yorkshireman is just a Scotsman that has lost his sense of charity, and if I was to cut a currant in half, i'd makes sure I got the biggest! LOL.

Also as for RKH giving up licences, I cannot see it. FIG has closed the loopholes on applying for new licences, so nothing it happening there until well after first oil IMHO, so why should Navitas and RKH have to give up any. Also the Southern Basin has tax losses against it, it's one of the reasons Sam didn't let it all go. So I cannot see FIG forcing that either.

Still it's all looking very promising. Next week Navitas funding meeting, the week after RKH GM, then FIG close up shop from end of October until effectively Jan 2026. Something has to give!

LTT

But Space, what happens if we vote it down; the insurance isn't paid, FIG require $25m for decommissioning up front, they also allow FID to progress only if $22m in back taxes is paid (even though we shouldn't pay, but if it means FID gets over the line), then Navitas wants to FID end of September and we don't have enough in the bank and spare cash to see us to first oil and through any unforeseen issues, payments!

What happens then? If Sam tried to get more cash at that time, the market would crucify him and us! Do you really think it's wise to put us in that position?

Sorry, I don't want to start this debate all over again, so you've said your piece and I've said my piece, I am voting For, the board have a better idea of what is going on in the open and behind the scenes, far more than you or I. We got a hefty slice at 7p and 9p warrants, if they had needed the cash for FID then, well the dilution doesn't bear thinking about.

KR

LTT

And more importantly does this mean we will get FID in late Sept or sometime in October? If not, it will be Q1 2026 before anything gets signed off, and there could be the possibility of new people in charge whom may want to go over all the small print of everything before signing off on a historical step that will change the face of the Falklands Islands and it's people, for good, for bad and forever!

LTT

Divi,

how can there be an meeting between FIG and new oily faces, from what I hear, the FIG will dissolve the Legislative Assembly on the 31st October 2025 with a General Election polling date: 11th December 2025.

Will this meeting take place before the 31st of October or will it be after the 12th of December, which would more than likely mean sometime in January 2026.

LTT

All the more reason for a partner to come in.

It will happen IMHO, either at FID or between FID and First Oil, there is no way Navitas will or can go it alone dragging RKH along on their coat tails. The more I think about it, the more I think it is too big for Navitas. Share the risk, share the reward.

The North Falklands basin is too much for two companies, it will take forever to drill and develop going at it piecemeal. They would be passing up on something that could be huge if they plan to go it alone, they need to grab this bull by the horns and move forward with it.

I see Navitas giving up 20% and RKH 5% for cash after FID to move forward with things faster. As was done with Shenandoah, they can sign off on Phase 2 and maybe 3 at first oil, maybe even before. With the cash for a percentage it gives Navitas and RKH a war chest to move things forward, no waiting for RKH to pay off their loans from 85% of revenues, and then they are only able to fund moving forward at a slow pace as cash comes in from production. Navitas would be fine, they will have Shenandoah and Sea Lion pumping at that point, but would RKH have any spare cash to explore further, drill Isobel, or even near by prospects to SL to tie-back! I think not, not without further fund raising.

A partner will come in for sure, it's just a matter of whom and when, and hopefully they don't come in by taking out RKH at an early stage.

LTT

Isn't the Borgland Dolphin right on the borderline of spec on water depth for Sea Lion, plus it came into service in 1977, and despite a major upgrade in 1999 it's getting a bit long in the tooth!

But as you say, the Hercules is well over spec'd for Sea Lion, they would be paying what, 50K+ per day more for the Hercules than a 4th or 5th Gen, (can someone in the know put me right on this). It might be ok an a 1 to 2 year contract if there were limited options, but on a possible 9 years back to back drilling?!?!? Of course, maybe Navitas' plan is to just get Sea Lion Phase 1 up and running then take a break, in which case, it might be viable to have a higher spec'd rig for that shorter duration, especially if they can share some of the mob costs with Borders and partner.

It drills to first oil, then the other 5 or 6 wells to complete Phase 1, a 2+ year contract. It then tootles down to Darwin for borders, maybe even pops a well into Isobel while it's passing, then it's off the clock, Border and partners responsibility. Then Navitas brings down a 4th or 5th Gen for Phases 2 to 5 knowing more clearly what they care doing. It might make sense to have an all singing and dancing rig that can accommodate a lot of crew to ease the burden of the Falklands at the start of drilling.

Hopefully we will know the plan soon enough.

LTT

Hi Gus,

well in all honesty I also imagined a 6th Gen Ultra Deep water rig was overkill for a moored 4th Gen's job. 9+ years of drilling is a long time to be paying over the odds on an over spec'd rig, but maybe Navitas are getting a good deal and have bigger plans for the North and South Basins, or a partner who is joining the party also has eyes on the South. It's going to be an interesting few months ahead.

LTT

CitizenTS,

"The 2008-built Hercules sixth-generation deepwater and harsh environment semi-submersible rig was constructed in South Korea and can accommodate 180 people. It can operate in water depths of 10 000 ft and its maximum drilling depth is 35 000 ft."

So I think the Hercules can drill Darwin and not break a sweat. Of course it would depend on Borders having a partner, the funds, Navitas allowing them to have some rig time. But if it is, it will tick a lot of boxes for everyone and would make Borders a buy should FID come to pass and the Hercules is the rig.

LTT

Maybe this is why RKH are rising the extra with the Conditional placing, to secure funds in case it comes to the crunch and FIG don't back down. RKH can just pay the $22m in cash to keep FIG sweet and not have a perceived debt hanging over them, that keeps the bank happy and gets FID over the line.

Of course is shouldn't be paid, you don't owe tax on something you haven't received, but if it's a stumbling block, Sam should just pay it off and be done with it. Take it on the chin to get FID done and dusted. IMHO

LTT

Don't know if anyone has seen the message on the RKH BB about a rumour of the Hercules 6th Gen drilling rig possibly being in the frame for Navitas, which could easily cope with the Southern Basins deep water.

Of course it's just rumour/speculation but if it came to pass and it was the Hercules, that gives Borders a rig and crew on the doorstep to drill a Darwin appraisal/exploration with minimal mob costs when there is a break in drilling on Sea Lion. Maybe that could happen after Phase 1 wells, between the start of Phase 2 drilling. That gives a possible drill or two in 2029 if Borders get their act together.

Of course I'd prefer it if Borders paid a share of rig mob from the North Sea and it arrived earlier and drilled Darwin first, but that is more of a daydream scenario.

Its is looking promising now though.

LTT

CitizenTS,

"It is a state-of-the-art tall derrick, dynamic-positioned unit of GVA 7500 design and is equipped with a full conventional mooring spread for operations in water depths of 100 to 500 metres."

The statement is that is can be conventionally moored to operate without DP in water depth of 100m to 500m, which is what FIG will require for Sea Lion development drilling, they don't want it burning up fuel unnecessarily. For deeper prospects such as Darwin it would run on DP. That's why it's a 6th Gen, so it can drill in extreme depths. IMHO.

But of course I could be wrong, but I don't think I am.

LTT

Thanks Mogger,

WOW that is a bit of a monster, a pretty recent build, warm stacked, North Sea, bit of overkill being a 6th Gen, but then it would be better for drilling Isobel and Darwin at some point down the line, when there is a bit of down time!

;-)

I suppose they have to be talking to someone about a rig, if it's on a 5 year + contract they might be on a discounted rate, or maybe it starts on a lower rate to get to first oil, then the rate increases year on year after that.

It's all getting incredibly interesting and exciting.

LTT

I don't think so violindog, they have a meeting the following week to talk about/getting funding sorted for RKH's share and their own share of costs not covered by the $1B bank loan. The Q2 report will no doubt have some production numbers and income projections for Shenandoah, blowing their own trumpet as to what they have achieved and how they are ready to do it all over again with Sea Lion. IMHO

Once Navitas have their funding meeting and RKH have theirs on the 16th of Sept, to get the Conditional Placing and the OO signed off, then it's anyones guess as to when the bank will say they are happy and have done due diligence.

I'm with the consensus on here though, that we could get FID at any time after the 16th of Sept, once RKH have proved they have more than enough cash at their disposal to fund their share, its game on. Also before the end of October/early November, which seems to be what FIG want to do before the election, otherwise it gets knocked back into Q1 2026, which would put first oil back to Q2 or Q3 at the earliest. I don't think Navitas would be happy with that!

But we shall see.

LTT

"Norway has made its biggest North Sea oil discovery in a decade, finding 134 million barrels of oil in the Yggdrasil field. This contrasts with the UK's approach to oil and gas, where the government has banned new licences and imposed high taxes on profits, leading to a predicted 70% fall in output over the next five years."

Fortunately we have a supportive governments backing to get us to first oil.

However what surprised me the most about this headline is the "Biggest North Sea discovery in a decade of 134m barrels", ( well, the recoverable volume is estimated at 96–134 million barrels of oil equivalent (mmboe).

Ok it's part of a bigger development but when you consider we have 900m with upside, it really makes you realise what a fantastic situation we are in as a holder of 35%, on the cusp of FID.

Navitas will not go it alone, they will bring in a partner either at FID as they did with Shenandoah, or between FID and first oil. It just makes so much more sense, giving that they need to open up the whole basin, not just Sea Lion, doing it piecemeal! IMHO

Be interesting to see how the share price reacts tomorrow with the rumour mill talking of Ithaca weighing in for a stake as part of the Placing. No idea if it's true, wishful thinking/hoping, but we shall see.

LTT