Member Info for longtermthinker

I think you're right there Paul, I think the arbiter Italy picked will have to air their concerns and disagreement with the consensus. Still as you say, what is the hold up? They can't possibly leave it until July as then with holidays it will be September/October before they give a verdict if we are lucky! But then knowing RKH's luck, they will take the extra 60 days and Sam will have to raise some cash before then!

Maybe whoever said about the price being held down is right, they are doing so for a placing and an open offer. My concern is how must dilution do we have to take on the chin. Does Sam do a small interim placing/open offer to last until the OM result, thus limiting dilution, or does he do a big one to help us ride through right up to FID and project sanction and cover any decomm costs in Italy although with a much greater dilution?

It's a difficult one. Even so I still cannot fathom why we are currently hovering around 8.5p with FIG about to sign off on Navitas; OM due in the next 90/150 days, with a proactive partner who has already presented a $1.3B, 20 well development plan to their shareholders? Strange indeed.

LTT

Just wondering if anyone had any thoughts on the Navitas plan they recently presented?

If they are looking at a $1.3B development with 20 wells in total, how many would be producers and how many thousand barrels per day would we be looking at?

The PMO plan was 29 wells of which 20 were producers topping out at 80k barrels per day. So could we say with 20 wells we would have 13 producers and 7 infection wells? So we would be looking at about 55K barrels per day or is it not as simple as that?

Thanks in advance

LTT

Yes it might seem crazy to expect some wiggle room over tax, but that’s only because we are in an energy crisis where the big oil companies are making a lot of cash. But how quickly could that change, Putin gets toppled, Russia moves out of Ukraine and everyone is friends again, then oil drops like a stone to $60!

LTT

I think they will get the money from they same group they tapped up for the Shenandoah project. Don’t forget the partner at the Navitas presentation said it was the first time in his career he’d ever had the total cash up front.

It seems to me Navitas are the deal makers, they are connected, it 2 years they will be reaping the rewards of Shenandoah, but I’d like to think they will have FID ‘d SL before then and are sanctioning the project. They don’t seem to hang about, case in point being they just presented an updated CPR and talked about a 20well $1.3B project before FIG have signed off!

LTT

Munin Owned by Bluewater is ready for deployment, can do 60k a day.

LTT

Secret, I think Sam said they were looking at converting as there was no point commissioning an FPSO as all the ship yards were booked up years in advance. I wonder where they could get something that could cope with 50k barrels a day?

LTT

I wonder what production rate they are targeting, must be north of 55k per day. Either way, it seems they have been busy going over the PMO/Harbour/RKH plans and have come up with a $500m saving.

Interesting times are ahead, Navitas not even signed off by FIG and they are talking about the project and have published an updated CPR.

Now all we need is OM to come in with $100m+ clear and we are truly game on! Actually on the matter of OM, how do they work out the quantum (if that is the correct term)? What I trying to get my head around is the working out of lost revenues/profits, when do they start from and when do they calculate the end point to? It’s it the end of life of the field had it gone ahead of until they closed the case, as the oil price have been pretty high for some time now, do they take that into account?

LTT

Just watched the Navitas presentation on LinkedIn, couldn't understand what they were saying, but they did talk about SL, it wasn't a footnote tagged on at the end.

Interestingly they had someone there from Beacon Energy and he said that it was a big deal that Navitas secured the funds for the Shenandoah, they secured ALL the funds prior to FID, he said it was the first time in his career that they had all the funds up front. Make of that what you will.

LTT

At first read I thought similar, it would be amazing if FIG offered some tax incentives to get the party started.

However it could also mean FIG are still wanting there tax for the PMO development that hasn’t gone ahead!

Sam touched on this at the meeting last year saying RKH couldn’t owe tax on something they never received however FIG saw it differently. The sign off might be dependent on RKH meeting them half way otherwise the Navitas deal is on hold.

LTT

I suppose it would be good to see if Italy have ever had a ruling in their favor, it would then seal the deal. They can’t go against a binding judgement if on other occasions they have taken the money when it’s gone their way!

LTT

And there is the issue, why would anyone take a rig to make a stab at Rhea when there are many prospects around SL to tie in. Plus they are looking at a smaller footprint to start with, under a $1B investment a Phase 0.5, so once the oil starts pumping they are going to concentrate on adding production where it’s easy, not go wildcatting Rhea.

Of course way, way down the road there will be opportunity to drill Argos acreage, maybe a partner will come on board for Argos once SL is given the go ahead and Navitas/RKH can share some mob costs letting the rig go off and drill for Argos and Partner. It would make sense, but nobody is heading down there to drill anything until SL is FID’ed and project sanctioned imho. I hope I’m wrong, a big player signing up with Argos or Borders would give Navitas and RKH a welcome kick up the ar53!

LTT

But Mirasol, your forgetting Borders own 100% of their acreage, ok so they have very little cash, no partner and would probably need $500m just to get a rig down there to appraise it, never mind development which is YEAAARRRSSSS away!
;-)
I really hope they do have someone in the wings to sign up, but talk of £1 a share is pie in the sky! Either someone will take them out for 10/20p a share or farm in leaving them with 10% for taking on a drilling campaign and possible development way, way down the road!

When the think about the work that has been done on SL, environmental studies, migration patterns of marine wildlife, impact assessments, the list goes on and on. Borders and Argos have even started so what makes them think they will beat RKH to the post, IF RKH can even get on the starters block!

LTT

So if we got £100m after paying the funders we could re-rate to approx 20p a share, however that would value SL and the southern acreage, also the farm in by Navitas at 0p.

LTT

LOL so on this great deal that Argos and Borders get, they won’t have to pay tax on what they receive! They will, any farm in and there will be tax to pay so don’t kid yourself. RKH won’t have tax to pay because PMO didn’t deliver. IMHO.

Regard LTT

But how much do they have to give away for a drill Falky, nobody is heading down to the FI for one drill! Hi hope Borders pull something out of the bag I really do, but they will have to give away a large slice just to get a appraisal campaign up a running never mind development!

LTT

However a profit is a profit and your trading strategy will be very different from ours Falky. Always better to take some off the table than stay all in! You should be aware of that more than anyone.

LTT

I would presume as the development shrinks the costs per barrel go up, it was mentioned at an AGM a few years ago when Sam was asked what it UKEF didn't offer any support ( this was prior to Navitas coming on board) and he said something like, the project could be shrunk down, but the costs would increase and returns would be much lower.

I will be interested in what they say once FIG have signed Navitas on as operator. I want to hear at a minimum what the forward plan is with some idea of a timeline. PMO strung RKH on with the UKEF carrot for way, way too long, which with hindsight we can see was more to do with stalling due to their financial situation than anything else, if UKEF had come on board I think PMO would have found another excuse to kick the can down the road as they were skating on thin ice hoping for higher oil prices, then covid hit and the ice broke!

"· Rockhopper and Navitas to jointly develop and agree a technical and financing plan to enable the development of the Sea Lion project to achieve first oil on a lower cost and expedited basis post sanction"

There is that word again "expedited". I hope they crack on with FID and get the project sanctioned. Let Navitas show us the money.

LTT

Well it’s news, cannot understand how they can close the case and not say who has won. Thought the would have said the have ruled in favor of RKH and now they would sort the award, after all didnt they say this back in July last year, as nothing has changed since then apart from some lawyers expenses and interest to the calculated they should be able to sort it pretty quick!

However as it accustom with anything RKH, they have a knack and grasping defeat for the jaws of victory! Don’t get me wrong I think we have won but can’t help feeling we will get back costs plus interest only. Still it would be a good amount to have, $30m 50/50 split means $15m which would keep the wolf away from the door for some time!

So am positive, but reserved. Good luck to us all.

LTT

I think from memory anything up to $50m was a 50/50 split, $100m was more like 65/35 to RKH, not sure if it reduced further after that but $25m would do us nicely indeed, $65m and we are game on and anything above that, well it's the stuff dreams are made of! We would have no need to dilute and raise a penny. We could afford possibly our pre FID costs thus not taking out a loan/diluting and we could then accept the interest free loan up to production and have money to pay our share of costs not covered by the loan, again negating further dilution.

All of the above is only possible if we win and get a decent award. It not then I see a 25% dilution to give us enough cash to carry us through FID and then to first oil. Although I would need to see some strong assurances that Navitas and RKH were steaming ahead towards FID and project sanction before parting with further cash, as if they were to drag it out as PMO did, we don't have Egypt assets to sell off this time to keep us afloat, we would dilute into oblivion.

LTT

Could this be on the cards? Hurricane are extending the contract for continued production at the current high oil price, but possibly it will be let go 2025 as the oil price drops (can’t see oil staying at $100+ that long as demand destruction will set in and the economy goes into recession). So could the Aoka be utilised? It is a 30k barrel per day which could be a bit small for us, but then if they want to expedite a quick development it might be a good start to get the cash rolling in sooner rather that later!

Just a thought.

LTT