Member Info for longtermthinker

Erm Godders why would they want it to fail? The more cash they get in, the more it funds the Hobnobs and their bonus, which is what most people think. Not to fund a new Exploration bod to work with Navitas to get this show on the road!
LTT

Goddess, you’ll only be able to buy the shares inside your ISA wrapper if you have either spare allowance to add funds to cover the purchase OR sell other stocks in your ISA to cover the purchase of RKH shares OR as has been pointed out, once the dates have been set as to when you needed to hold RKH shares, you could sell 1/8th of your holding in the ISA and take up the shares at 7p with the funds.

Whoever, I presume you won’t be able to purchase the warrants within your ISA unless you free up further funds within the ISA wrapper or wait until next April when the next ISA allowance kicks in, then you could add funds for the purchase and then sell them at your leisure thus benefiting from being capital gains free! (One can but dream of such a scenario!)

But don’t quote me on the above, get confirmation from your broker, after all it’s what you pay them for.

LTT

However you will get 7000 shares and have access to 3500 warrants at 9p.

I think the best thing to do is wait for them to announce the timings and then work from that. But as Bloo points out, you could sell now and risk losing part of your 1/8th but be covered by the warrants you get.

Thanks to everyone though for explaining so thoroughly, but help. I’m going to try and take up all my entitlement, I think the warrants are a great idea to get more funds in should OM be a damp Falklands Squid. The funds should take us through to FID and should we need further funds on 2024, the share price SHOULD be a good deal higher than it is today! Famous last words!

LTT

P.S. Who is going to the AGM, it’s at the club house again? Could be a full house this year, Sam will be able to put on a spread of HobNods this year, the like of which we have never seen!!!!! ;-)

Godders, I thing if all share holders take up the offer then we are part of the 45% dilution, correct me if I’m wrong. It’s not like they have given away 45% to his mates, we are in on the action too if we vote so at the AGM.

Are you going to take up the offer or are you going to allow yourself to be diluted by 45%? It’s your choice, plus the full 45% only happens if everyone takes up there allotted amount AND then buys there warrants. Many will sit on them until the end of 2023, possibly some will forget about them entirely thus they will be cancelled. And let’s not forget, the share price would have to head about 9p to be worth having, which by your reckoning is never going to happen, so what are you worrying and moaning about, don’t do anything and watch from the sidelines.

Regards LTT

Well 7p is the line in the sand, can’t go below because nobody is selling, hanging on for there allocation and warrants, nobody is buying because why would you, your soon going to be able to buy an 1/8th of your holding and by default get a 1/16th option to buy up to 18 months down the line for 9p. ( if my maths is correct!)

When FIG sign off on Navitas and our new director comes on board to work with Navitas and power this project on, it would seem highly unlikely the share price would be sub 9p 18months from now. And that is presuming OM result goes against us and we get nothing. If my some miracle OM goes in our favor to the tune of $50m, with RKH track record I doubt it, but if it did. We would be heading to first oil with no further dilution and only our loan to pay back to Navitas.

Can I say “ It’s full of stars” (Who was it who used to say that in iii?)

Good luck to us all, there is life in the old dog yet it seems.

LTT

Has to be good for Borders going forward. Who’d have thought there would be appetite after all this time. The ducks are lining up, once Navitas are signed up and FID are sorted the game is on. Plus RKH has a lot of acreage near Darwin, so once they start to investigate there, Borders will easily be able to tag on some drilling. It’s all coming together.

LTT

Plus it takes any sting out of a poor OM result. We can lose the case now and it will not hit the share price so hard as we are funded through the next 18months or so. If OM comes in covering only costs of $30m then we take home $15m which would be welcome, but even if we have to wait for a payout or can’t get the money from Italy we have a buffer now.

Just wondering though, what happens if next week OM announce the result in our favor and an award of say $50m and the share price rerates to say 15p! Do we still get the offer of 7p and the warrants 1 for 2?

LTT

Yep, I feel that is a good sign, of course they have to give share options to bring someone in, but now they have the money to pay them a decent wages and get the right calibre of person to bring this project home.

I will be taking up the issue and getting my warrants, it’s a no brainer with Navitas shortly to be signed in by FIG they all hands to the pump. I wouldn’t be surprised if Navitas hasn’t already been going around with the hat, testing the water. They were pitching it at there last presentation with an improved CPR, it’s more than RKH, PMO and Harbour have done in the past 5 years!

LTT

Why the warrants at 9p for every two shares subscribed for at 7p? From memory they haven’t done this before.

Could it be if OM comes in a win and the share price doubles or trebles as £100m would be around 20p+ a share on cash, valuing SL and the Navitas deal at zero, then share holders could cash in their warrants and get the money they invested back and then some!

Just that thought. Even if OM doesn’t come in, the timescale on the warrants allows for Navitas to FID SL and I cannot imagine the share price be under 9p on such an event.

I look forward to hearing Much’s thoughts on this.

LTT

If it goes to the extra 60 days they it’s an odds on cert that we have won and have won big as it means Italy is fighting tooth and nail against it and don’t want the result to set a precedent. IMHO

LTT

Hi Croft,
I have no idea what is happening there, however I remember someone saying the decomm costs would be to pay for over the next couple of years as they were running at a loss. I have to agree, could they work over the wells to get some more life out of the fields even just to kick the can down the road for paying decomm costs (similar to what Harbour does), it would make sense, but then they would need money to do that and basically RKH don't have any until their either raise some cash or OM comes in.

Suppose they could renege on paying the decomm and let Italy take them to court!
;-)

LTT

I think so LaticsRule, they may wait it out and keep the powder dry until the result comes in August, however I feel if OM is extended out by another 60 days at that time, then I think RKH will pull the trigger and raise some cash.

I think they would need to raise about £10/£15m to cover them for a couple of years to FID/Sanction, raise less and they risk running out of funds, should there be MORE delays. Raise more and they risk alienating shareholders further. I give Sam the benefit of doubt that he wouldn't want to dilute us out of existence, he would most likely do a placing and an open offer. The placing could be to Navitas as someone suggested, giving them a seat on the board. I'd be totally up for that, keeping our board in check and keeping them on their toes!

Also let's face it, if OM is delayed until October, we can be pretty sure Italy are going to do all they can to delay payment further and further, so we would need funds to cover the wait or in preparation of not getting anything at all!

By the way, could there be a possibility of Italy reducing the payout if they allowed OM to actually be developed? Not that I would want RKH to head down that path again, but in this current energy crisis, it would be good if RKH could sell OM for someone else to develop for a nice wad of cash, thus getting two bites of the cherry!

LTT

Hi LaticsRule,

I think the reason the share price is where it is, is due to the lack of trade. There is no appetite for RKH shares, it's as simple as that. I think someone posted that those who have RKH have got there fill, (I know I have, and wouldn't buy more even if the share price dropped to 4p) and those waiting in the wings are doing just that, trading elsewhere. Plus nobody is selling as the carrot of an OM ward by August is managing to keep us on the hook!

Even a meagre award would keep the wolf from the door for the foreseeable, and at the very least get us to FID back end of 2023 or early 2024 (although I had hoped for sooner on that score, Sam under promising maybe!). Once FID is ok'd the share price would/should be much higher, meaning raising funds would be less dilutive if needed.

However if £100m drops in our laps after funder fees, we are looking at a rerate to 22p to 32p+. So there lies the reason we are in a holding pattern stuck at 8p IMHO.

Regards

LTT

I wonder if they will suspend trading when they drop the OM results RNS.

Of course if it's just $30m, once the lawyers take there cut of 50% then $15m will hardly add anything to the share price, might be worth 2p or 3p in positive vibes knowing that we won't suffer dilution for a few years if at all until project sanction.

However if by the remotest possibility we were to get say $200m, that could be worth be worth 33p per share in cash alone! We could see 40p to 50p in a blink if you add on some value to the Navitas deal/potential and FIG sign off, so under that scenario wouldn't it be prudent to suspend trading?

LTT

I wonder if Harbour is regretting walking away from the Falklands now? Suppose they do have a big tax credit to work through but even so, once a government gets used to getting the money in, what’s to stop them doing it every time oil heads above $85+ per barrel! Thus capping NS profits.

LTT

Wonder if Harbour is starting to regret walking away for Sea Lion in the Falklands, 26% corporation tax and 9% royalty.
Crazy times, I'm bad to break even here! PMO 20p range, never expected that with the production level they have at these high oil prices!

Regards

LTT

I like this bit;

"Royalties
A royalty of nine per cent (9%) is payable on the market value of any petroleum won.
Provision has been made in the legislation for the royalty to be reduced at the discretion of the Governor if:
reduced royalty payments would encourage development of smaller fields which would not otherwise be economical"

I don't know how Navitas will wrangle a reduced royalty in the current high oil price, but they may be able to talk them into giving them 1 or 2 years of royalty free production to pay down the debt more quickly, thus securing the long term life of SL and the surrounding development. It would make a lot of sense to offer some wiggle room to expedite a quick development!

Let's also not forget that the new plan of Navitas, $1.3B development and 20 wells, cuts the development time by 1 year, looking at knocking off 9 wells taking approx. 40days to drill. The only real sticking point is the FPSO and long lead items.

LTT

Fiscal Regime

For information on acreage rental view our acreage rental page

The Falklands fiscal system comprises:

a variable acreage rental
9% royalty on production
26% corporation tax on adjusted chargeable profits.
There are no signature bonuses, no production sharing contracts, no back-in rights, no local market discounts, etc.

The system is relatively simple, transparent, and aims to encourage exploration and production activity in the region.

The Falkland Islands Government is committed to ensuring that the overall fiscal regime remains attractive and conducive to attracting future investment.

Royalties

A royalty of nine per cent (9%) is payable on the market value of any petroleum won.

Provision has been made in the legislation for the royalty to be reduced at the discretion of the Governor if:

reduced royalty payments would encourage development of smaller fields which would not otherwise be economic
needed to extend the life of a producing field
in any extended period of extraordinarily low petroleum prices a 9% royalty would lead to the abandonment of a field.
Royalties will be payable in respect of six-month periods ending as set out in the Offshore Petroleum (Licensing) Regulations 1995 & 2000.

Corporation tax

Corporation tax is 26% on all profits from exploration and extraction activities. A lower rate of 21% is available, for other (non-oil related) activities, on the first £500,000 of profits (with effect from accounting periods commending on or after 1/1/2017; £1,000,000 before this date).

The jurisdiction extends to the whole of the Falklands Designated Area.

All petroleum extraction activities are taxable, as are capital gains on licence transfers.

Contractors are taxed on activities within the Designated Area, and the production licence holder is liable for taxes payable by contractors in default ("Schedule 6").

A 2-way ring-fence operates around the designated area which restricts relief of expenditures on ring fence trade to ring fence income and relief of expenditures on non ring fence trade to non ring fence income.

Pageofcups, where did you get the FIG info from? Was it on their website or is it a recent update?
Many thanks

LTT

Has there ever been a claim against Italy that has been lost or a claim instigated by Italy that they have won? As it would be hard for them not to pay up when they have used arbitration in the past and have got a payout.

LTT