Member Info for longtermthinker

Hopefully he is busy crossing the “T” and dotting the “i” on our contract with with Navitas. I think it was mogger who found details of Navitas saying end of Jan!

Maybe we could really go for the trifecta; Navitas signed up, then OM result giving us a cool £100m clear after payment to the funders, then Delek announced as a deep pocket partner coming onboard! Now wouldn’t that me nice! It wouldn’t hurt the share price either! 50p + on news like that IMHO.

LTT

Flaky, RKH are too close to FIG to have their nose pushed out, can’t imagine FIG would allow Harbour to walk, then a predator take out Rock. Plus going forward Navitas will want Rock and partner to pay their share of costs for future development, there is plenty to go around, why not share.

LTT

I particularly liked the “Sam’s car failed the MOT” LOL

LTT

Have to agree, the ship sailed on UKEF early last year and Navitas are signing up in full knowledge of that. There is no way they are going cap in hand to UKGov.

If anything they would be going with Sam to FIG and level with them, it's not going to happen unless there is some flexibility on tax or royalty payments until costs have been paid back. Ok the tax regime it pretty sweet in the Falklands, not as sweet as Guayana, put up there with the lowest tax rates, so don't expect them to relax that, plus they will want some oil income as soon us possible if this things gets off the ground. However they could reduce the royalty for 3/5 years after first oil to help the investors get there money back quicker and then bump it back um there after.

It just makes sense otherwise who can afford to take on the risk of a new province with oil prices having knee jerk reactions. I know OPEC+ has got a steady hand on the taps theses days and are ready to open and close it to keep oil prices around the $70/$75 mark, but an odd dip down to $60 is still possible and thats what the money people will be aware of. However it doesn't take into account the coming tight oil market that is forecast for late 2022/2023 due to massive underinvestment and the inability for OPEC+ to raise production in any meaningful way should they world start heading back to some form of normality.

So my feeling for what it's worth, Navitas have either the money lined up or a partner with deep pockets waiting in the wings, for 2 years they have been waiting for PMO then Harbour to pull the trigger I cannot imagine they have been sat twiddling their thumbs.

LTT

Have to agree Buzz, they said they were close last year in July/August so they will have an idea on costs and how much is being claimed at that time, RKH lawyers are not going to change the bulk of the claim, that will be fixed, this will be to add on the costs to both sides for the 5page submission and work done on that.

So it shouldn’t be long now, what is a week of lawyer fees from both sides to add on, £50k, suppose they have to add it on, but updated costs sounds like they are ready to close the case and issue for/against.

After that I wonder if they will issue an amount at that time. Suppose as with all these things, they will rule, so if they rule in favor of RKH then they will say, “Now we will deliberate the amount to be awarded and set a date to formally announce the award”.

Of course if they rules in Italy’s favor they it will be open and shut! Hope not though.

LTT

"Heads of Terms with Harbour to exit the Falklands and Navitas to farm-in;
Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and production company with key interests in the North Falkland Basin, is pleased to announce that Rockhopper, Harbour Energy plc ("Harbour") and Navitas Petroleum LP ("Navitas") have signed detailed heads of terms for Harbour to exit the Falklands and for Navitas to farm-in. The proposed transaction remains subject to definitive documentation and completion subject to, inter alia, regulatory approval."

The detailed Head of Terms can be walked away from no doubt, but it has been signed by Harbour, Navitas and RKH and it states "Detailed Head of Terms" so it implies a lot has been looked into/gone over and thus they are awaiting definitive documentation and the regulatory approval from FIG saying they will allow Navitas to take over operator-ship.

As Stewart MacDonald is only with the company until the end of Jan, one could imagine they would want it all signed, sealed and delivered by the end of the month, but they are saying Q1 so they have until end of March, but would like to think Harbour would want to be out as soon as possible.

On the matter of Stewart MacDonald leaving, I know some have implied a rat leaves a sinking ship, but one could also imply that Stewart MacDonald was being pushed out as an unnecessary expense. With Navitas due to take over the purse strings, why would we need a full-time finance guy? So better for him to say, "I have decided to move on to pastures new", rather than, "I am surplus to requirements and they have given me the boot!". I know which i'd prefer to put on my resume!

LTT

Now wouldn’t that just be the perfect trifecta!

One can but dream!

LTT

Well if you go by logic, then logic dictates that if we receive £100m clear after funding/lawyer fees we should have a Market cap of 22p on cash alone. If we add on the current 9p valuation as being the 35% of hope that Navitas sign up and move forward to FID, then you get 31p per share.

A more conservative view would be we get £50m clear and with the hope we get a MC of 21p per share, but that deosn't take into account any wind down/getting Harbour out costs or the Dock Decom that will raise it's head in a couple of years.

But when has RKH followed any of the rules. We are sat on 35% of 500m+ barrels with a possible 500m+ in Isobel and lots of exploration potential and then is without taking into account our southern acreage and the potential there that may come in to play once we have a footprint in the Falklands.

So to be honest you can just pick and number and hope for the best!

LTT

From memory at the Investors meeting I am pretty sure sub $1B was mentioned, suppose its an arbitrary figure. It makes sense to get it below $1B and start with a smaller footprint like Hurricane Energy did and thus crack on, on a "expedited basis".

However I have been thinking (I'll probably need to lie down afterwards!) maybe we are looking at this all wrong. Navitas seem keen as mustard about coming in board, they are looking over all the work done by PMO/RKH engineer etc, to look at a low cost alternative, but the negatives to that are, smaller footprint, smaller returns and not an efficient way to get the oil out, and it risk leaving valuable oil behind for a quick buck. Not to mention restricting future growth by starting off small, with a smaller FPSO.

PMO/RKH had worked everything up ready to go, they were looking at going for FID end of 2020. So why not take on the whole of Phase 1. They got it down to $1.6B, imagine if FIG did a Guyana style deal, no royalties until initial investment is paid back, of even reduced royalties, the Phases 1 as it stands becomes doable, if they get in a partner with cash and some B4LL5, get the vendor financing of $3/$400m, why not, Navitas and partner wouldn't have spent a penny on discovery; appraisal; engineering. It's there all on a plate ready to go, in a tightening oil market.

So if Navitas go it lone then yes a smaller footprint makes a lot of sense, but I cannot see that happening, they will get in a partner to share in the risk and reward and I think they will have someone lined up already, in the same way they had Dr Nadav Sorek lined up for his role, he wasn't got onboard for Shenandoah that's for sure!

LTT

I like his linked in profile;

“About
An Energy & Environmental Engineer with global experience designing Oil & Gas field development plans and improving reservoir management while keeping the environment safe and clean.”

I think FIG will be happy with him onboard, it would seem Navitas have not been resting on their laurel.

Roll on an RNS saying Navitas are Operator then onwards and upwards.

LTT

But what could Harbour ask for? If they are walking away I think they are getting off pretty lightly to be honest, they could be on the hook for decom costs of the Dock. Also what could they get, they led Navitas a merry dance and then said no, so they could hardly say, “look we don’t want to do it, but pay us $100m and we will let you take over our 60% stake”, to which Navitas would have said, “Erm no thanks, Sam has just offered us 65% to come onboard just for paying most of their share of costs to first oil once they get 100% back from you!”

I’d imagine FIG would have had something to say about Harbour offloading to someone else and the tax implications would be a nightmare, so better to just walk I imagine, plus I think PMO wrote off a lot of the costs prior to the deal ( although don’t quote me on that).

LTT

Awax, I have to agree, they have been thinking about this for some time and I would imagine they have looked at several scenarios, with and without Harbour. Lets face it, they have known for some time, more than a year that UKEF was a none starter, so they must have been putting feelers out to see who might come on board. Even if they cannot formally announce until they have signed with RKH and gained approval from FIG to be operator, they will have had discussions with various parties, vendors etc about a way forward to see if they want some skin in the game. Wasn't there something like $400k earmarked as vendor financing on SL Phase 1, so surely someone could stump up $100/$200m on a $900m smaller project!

LTT

Chevron wouldn't be in the frame, along with anyone else with interests in South America, Argentina would but pressure on anyone working there or even with it's neighbours, so I would imagine the likes of Delek would fit the bill for sure.

Nothing to see here until OM and or RNS saying Harbour have gone. Still surprised we haven't heard anything on that front as I believe Harbour had 90days grace to decide/handover so why hasn't there been an announcement saying "The 90 Days have expired and Harbour have slung their hook!".

LTT

Hi Surfit,

gosh Exxon are having a good run out in Guyana that's for sure. I believe RKH and Navitas will be looking at repurposing a vessel as Sam mentioned at the investors meeting that the ship yards in S.Korea and China were booked up for years, which seems about right with Exxon planning up to 10!!!!!!! So the only option will be to take on one that is getting a bit long in the tooth or becoming available if the really want to move the project forward on an "expedited basis".

If they want to do a Hurriance style project to get things up and running they wouldn't need a huge capacity FPSO, although my concern would be that once up and running there would be nowhere to go to increase production if they got something that could only process 40K barrels a day, but then it would give them an income stream to then enable drilling and appraisal on Isobel, etc and then commission the building a purpose built FPSO that can cope with much bigger volumes.

Interestingly when reading the link you supplied I saw the following;

"The Canje Block is operated by ExxonMobil and is held by Working Interests partners Esso Exploration & Production Guyana Limited (35 per cent), with TotalEnergies (35 per cent), JHI Associates (BVI) Inc. (17.5 per cent), and Mid-Atlantic Oil & Gas (12.5 per cent)."

I realise they are drilling in deep water so much more expensive needs, but shows how even the big players don't take on all the risks themselves, even on blocks where it's like shooting fish in a barrel. So what I'm getting at is we should expect a 3rd party to come on board, sooner than later. If it is sooner then it really is game on!

LTT

Hi Awax, for clarity, Navitas said they may bring in a partner if the development required it,

"· Potential for an additional project partner dependent upon funding requirements - to be defined through ongoing development and financing processes
Should an additional partner be required, Rockhopper does not intend to reduce its working interest"

So I am thinking they will get a 3rd partner involved, I cannot see Navitas taking on all the risk of the project and let's be honest who takes on a 500m barrel project and be on the hook for 90%+ of total costs! No my feeling is, they will bring in some muscle, for say 30% of Navitas's stake, so the split will be Nav 35% RKH 35% and New Partner 30%. The new partner gets in by offering to share the costs of FID and development 50/50 with Navitas, so RKH still gets a free ride to first oil and then pays it back from 85% of revenue at 0% interest which has got to be worth $10's millions in saved interest! I would think RKH would find a way to fund their share from the OM money if it's a good payout or from RBL or even a share issue, of course at much higher share price that today.

Lets face it, I'd even be up for raising some funds through a placing once FID is done and project is sanctioned. Share price at such a time would be 50p+ and what is there not to like about that! Keeping that 85% as revenue would enable one heck of a dividend payment! I am sure an accountant will crunch the numbers and decide what the best option is, keep the interest free carry or issue shares or RBL. Can't imagine any benefit of RBL as there will be interest to pay, how can that trump interest free!

LTT

EG777, I am like you, bought in the Desire days and then think I bought some RKH at the back of it, thinking if Desire hit, RKH would get pulled up with them, plus I didn't want to put more money into Desire as they were heading up in price! Think my best buy was a couple of £1k at 14p in Rocky! But biggest holding by far was in Desire. Sold a few near the highs and then sold on the way down. Wish I'd listen to Stu (at least I think it was Stu in iii) who said PMO was the worst partner ever and he was out! Sold the last lot of RKH at a loss about 5 years ago, but as I'd sold at higher prices on the way down I probably came out up a little overall so RKH owed me nothing.

Got back in just before covid, mainly into PMO and then a little of RKH at the 20p mark, sold out PMO at just over a £1 pre-covid (more good luck than good management), then watched PMO crash, then got back in PMO again around 15p and then started buying Rock. Once Harbour came on board foolishly I thought they would go for it with Navitas! Went to the Rocks investors meeting in Sept and also recently sold out all my Harbour shares after I realised they were going nowhere. Put the proceeds into RKH for the OM result, thought even if they only get £30m after paying the lawyers it would bump the share-price up and I could make a tidy sum with an average of 10/11p, so Navitas was a real surprise, thought we would be much higher on that news alone, but this is RKH after all!

So where do I stand. well I am most likely to get out half my holding on a positive OM result, it may only be worth 5p on the current share-price but it would be worth taking particularly with my heating bills set to go up 50%+ from April! But will let the rest ride and see what Navitas and RKH plan to do. I will keep my finger hovering over the sell button, but I think there is a good chance they might just get this over the line. If they do, if they go for FID and project sanction, then even a meagre holding could be worth an incredible amount of money, particularly if they keep the 35% of the whole shooting match, with Navitas funding pre-FID costs at an 8% interest rate and then post-FID interest free up to 2/3rds of RKH's share of costs! On such a result a 10 bagger would be underestimating bit time. Once Navitas and RKH have got a foothold in the Falklands then the whole acreage opens up, Isobel could be another Sea Lion!

And there is the chance Navitas brings in a partner, they most likely have someone in mind as we speak, if they get announced as coming on board then WOW, I would not be selling any this side of £1. But back to reality, a good OM result and Navitas signed in news and harbour out would do me nicely. Good luck to us all for 2022.

LTT

Have to agree Much, we must get some news this week or next, if for no other reason than to say, “Harbour has left the building and RKH have taken back 100% of the licence. We are looking forward to signing with Navitas by the end of Q1.”

I wonder if they will add more meat to the bone when the sign and give an outline plan of how they are going to fund the project and how they are planning to shrink it, after all they have had a good few months to think about it, surely they haven’t been twiddling their thumbs!

LTT

Didn’t someone get an email from Sam saying they had looked into repurposing a vessel as an FPSO or was that just a dream I had?

I think they would be better taking on a 2nd hand or repurpose as building from scratch would not only be expensive but would take years, I seem to recall him saying at the investors meeting that the ship yards were so busy and booked up years in advance.

LTT

I was thinking something similar to be honest Hoppa, but thought to be conservative I’d work on 2 years, but most likely it will be at least 3, in fact with a fair wind, the current dock might be used for the up coming influx of equipment for the development of SL!

I wonder if we will get an RNS tomorrow saying Harbour have gone, either way, good riddance if you ask me, they should have told us well before last September instead of keeping us and Navitas on the hook! Seems Harbour are just looking at the same old assets, adding on incremental production in the hope of kicking the decomm can down the road! They had a chance of getting in on a new oil province, I do hope in time they will regret it. Sticking with Mexico and Zama will bite them in the a55 for sure!

Let’s see what the new year brings eh.

LTT

I would seem FIG are using the temporary dock and plan to phase out its use by 2024 as the new dock comes on line then have the dock removed.

So we are looking at a couple of years before we are on the hook for decommissioning of the dock and removing it completely. Could be a little wiggle room as these things never go to plan and on time particularly with Covid sticking around, but if we work on 2024 we have 2 years, so at least we won’t need to raise any funds for that anytime soon. Plus if we get Navitas and a partner onboard and a FID sorted by 1stQ 2023, our share price should be considerably highly so minimal dilution.

By the way, Happy New Year, hope you all had a good one, and let’s hope 2022 is a damn sight better than 2021!

LTT