Member Info for longtermthinker

Hi Buzz,
Yes Sam said as much at the investors meeting, if COVID hadn’t hit, PMO would have done the BP deal, extended out the debt and they gone to FID and project sanction! Then COVID hit and the rest is history.

However in a way maybe it’s better they didn’t get going with SL because if COVID had hit a year later with the project underway, they might have taken up down with them. We have lived to fight another day, and if all comes good, we are keeping a bigger slice of the cake along with nothing to pay until first oil!

It’s going to be an interesting Q1 2022. Have a good one everybody whatever your plans, and let’s drink a toast as we bring in the New Year, to good healthy and happiness to all, and maybe a bit of good fortune to the RKH and Navitas partnership.

Warmest wishes LTT

What I can't understand is why there wasn't any indication of when the award would be given! As mentioned they where all ready to give the result in July/August, so why only say;

"On 21 December 2021, the Company was informed that the Tribunal had rejected Italy's request."

Why didn't they add, "Therefore we are in a position to render the award (meaning result of the case) by Q1 2022" or "End of January". Because all the work has been done, they have spoken to both parties about this, even Italian lawyers when speaking to the media back in July/August where demonising RKH for wanting to develop fossil fuels, so it was sounding like they had lost back then, then they were clutching at straws with this latest European Union jurisdictional challenge which they have now lost.

So what is the hold up, are they waiting to announce on Christmas eve so it can be lost a little in the media frenzy of Christmas/New Year lockdowns?

LTT

Have to agree Much, but then there are quite a few people who maybe bought in at the lows of 6p, so being able to get out with a 20/30% gain is not to be sneezed at.

Like you I am in this for the long games, got back in around the time of the PMO signed up Navitas, then watch the decline, although I had quite a lot of PMO at the lows before Harbour took over. I honestly thought Harbour would take SL to FID and beyond. Then after they walked I must have been crazy, but I sold all my Harbour shares and kept averaging down on RKH, mainly for the OM result, have an average of 10p so getting close to break even. But now I’m thinking the odds of this going all the way have increased dramatically. Anything around £30m payout and we are sorted, no dilution unless the Dock needs removing. However if Navitas and RKH are going for it, I’d imagine they would keep on the temporary dock to service the project, it would make sense. FIG will have got used the the convenience of the dock and won’t want to give that up until the new dock is up and running.

So I may cream off a few shares after OM and Navitas signing, but inclined to let the rest ride, as the nearer we get to first oil with only 450m shares in issue, the nearer we are to getting to £1+ per share and then some! IMHO

All the best for the festive season whatever you plans.
LTT

If Rock gets £30m back after paying the legal costs then we are looking at having roughly 7p per share in cash, so our 35% of SL and the whole acreage with a detailed heads of terms signed with Navitas is worth nothing! If we get £100m after costs then we are looking at 22p per share!

Interesting times ahead, roll on the New Year!

LTT

I was thinking the same Pauldrayton, the award was ready to be announced in July/August but Italy must have got wind of the amount and tried to put a last ditch spanner in the works, now that has been thrown out, I would imagine we should get some news pretty quickly, end of Q1 at the latest.

LTT

It's laughable really. RKH is about to sign in a partner who got $907m for the sanctioning of the Shenandoah Project. They are going to be operator with a 65% stake which they will most likely farm out to a player with deep pockets to carry further weight to the project thus enabling them to pass the hat around again to raise their's and RKH percentage of funding pre and port FID.

In the past few months, if not the past year since Harbour extended the sign up date for Navitas, do we imagine Navitas has just twiddled their thumbs! They know UKEF is a none starter and have known for some time, so if they were going to walk, they would have done so by now. They are getting 65% of ALL the acreage AND what, over $500m in appraisal, engineering data, etc, etc for FREE. All that money spent by RKH and PMO have been written off, Harbour has given it back so what is not to like about the deal for Navitas.

No Navitas would have done their homework, and I am pretty sure they would have to offer something up to show they can move this project forward otherwise FIG wouldn't be signing off on them taking over as operator for sure.

So here we are heading back down to pre RNS levels, the level we were at just after Harbour walked away! With a new partner about to sign and OM result in the offing. As I say, laughable.

LTT

Ah those were the days! I remember having loads of Desire shares and then one day though, “ Maybe I should hedge my bets, buy a bit of RKH as they have acreage around the edges of the basin, so when Desire hit, RKH would be dragged along on their coat tails!” Turned out to be the other way around!

But here we are with another chance, last chance Saloon though, if it can’t be done by Navitas then it’s not getting done at all, the boat will have set sail for sure.

Now where is that arbitration result, how can they drag it out for sooooooooo long and not update thier website.

LTT

although a lot less of a concern now we have Navitas about to sign up to pay our FID cost and 2/3rds of our development costs post FID.

I just checked out the ICSID website and looked up RKH case, (ICSID Case No. ARB/17/14) and I was surprised to see there has been no update on their site in the Latests Developments section since;

"October 30, 2019 - The Tribunal holds a hearing on post-hearing briefs in Paris."

There is nothing about the;

"The Tribunal has made significant progress and confirms that it should be in a position to complete its work in the course of July."

never mind the 5 pages both parties had to submit by 6th October. So what is going on over there, has the Italian Gov asks some Sardinian's to kidnap the arbitrators! Why nothing on there website with the progress to date?

At this rate there will be a share issue in the new year for sure, just hope RKH will have something positive to counter such a negative situation and hopefully it will be a token amount to carry them through to FID, nothing more, nothing less.

LTT

Agree Mirasol, but as mentioned my someone recently, RKH went and ran a successful drilling and appraisal campaign prior to PMO coming on board, so anything can be done if you get the right people in for the job. Still feel Navitas have an ace up their sleeve and already have someone in mind to take 25/30% off their hands.

LTT

after almost 2 years on the hook, the FIG is going to let them come to the signed and say, "Hang on a minute, we don't like the sound of this Navitas company getting a 65% stake in Sea Lion, sorry but we cannot allow it!"

I think there would have been some objection back in Jan 2020 when PMO and RKH invited them into the fold. But I hear you say "But that was for 30% of only SL, and they were not operator, this is a whole different kettle of fish!"

Navitas as been keen from the start and they have hung in there despite the takeover of PMO by Harbour. I cannot imagine prior to September, the thought of Harbour walking away hasn't crossed their mind and that Natives has put it to RKH that they might pick up the mantle. As soon as Harbour walked and the new FIG was signed in, this would have been run by them as a possible scenario and as was mentioned, there must have been some assurances that RKH and Navitas are going to run with it. Yes there is the 5 years clause in the contract but as the licences have only been extended out to November 2022, FIG will want some progress if the new team want to keep them.

So my mind things will start to happen in 2022, once the ink is dry they will announce a further partner IMHO, it would make sense for Navitas to share the burden and lets face it, 500m barrels with a further possible 500m barrels in Isobel and further upside, is plenty to share around. Even Shell with the Cambo field were in for only 30% until it got canned, which was only 51m barrels over the 25 year life of the field. What's not to like stumping up some cash for 30% of a 500m barrel field in shallow water, 150m barrels are a starter, with a further 150m barrels and then some to come!

In the current climate of longer term high oil prices, with Opec + not afraid to turn on and off the taps to keep oil where it's profitable, it's a no brainer, but it needs to happen soon as the writing is on the wall, Cambo is showing the direction the NS is going. IMHO.

LTT

Also at the bottom of the presentation there is this one line, in red highlighted in blue;

"Sea Lion is a significant development focus for both Navitas and Rockhopper"

Is this a message that they will crack on with this, seems a bit surplus to me after all the details in the presentation, why did they add that line! Read into it what you well.

LTT

I very much liked the sentence;

"Initial scoping work on lower-cost, fast-track project already commenced by RKH"

Sounds good to me, Sam said at the meeting that with a tail wind and an orderly exit of Harbour, a possible date of FID could be end of 2022.

LTT

Have to agree Oiluser, I think they should get an FPSO with capacity to grow with the development. Get a couple of wells in, 3 producers, 2 injectors, get it up and running then a year or two later when the cash is coming in, look at adding more, which would be easier to do with an FPSO with the capacity for say 80k per day. They would be crazy to limit themselves right from the start. So my thinking is they are looking initially to get 30/40k barrels per day in a Hurricane style development, then plan for further wells coming online over the coming years and appraisal Isobel. It all makes perfect sense.

The only other option is farm in Delek and go back to the full monty, they have a worked up Phase 1 project for 80k per day that was ready for FID in 2020, with a Phase 2 getting production up to 140k per day, so with a big muscles player like Delek it would be doable.

Interesting times are ahead for sure.

LTT

Was hoping for a retrace back to 7.5p to buy some more ( I must be insane ) but I am quite excited now about our prospects and this is without the OM award, if that drops this side of the sign up with Navitas and is anything above $50m we would be re-rated to 20p+ in a blink!

Reading through the RNS again it’s good to see they are going to use all the work done by PMO/Harbour ;

Technical work to commence by Rockhopper and “Navitas jointly in relation to a lower-cost, alternative development for Sea Lion utilising the existing extensive design and engineering work undertaken for the project in recent years“

I wonder if they will hire back the team involved in the engineering, it would make a lot of sense. Also Sam said at the meeting that he was already having conversations with vendors saying if RKH where in charge they want to keep talking to them about the Sea Lion development.

I know some are disappointed that we have given up 65% of the whole acreage, but we have managed to keep 35% of EVERYTHING with no plan to give up more should another player come onboard.

Let’s face it, it was one of the caveats to getting Navitas on board and get such a great deal! 8% interest on loan once signed to takes us to FID, then 2/3rds interest free loan for development! What’s not to like about that! Navitas should easily get another player involved offers up 30% of potentially a 1B barrel basin and then some! Delek would fit the bill perfectly.

I feel Linda at Harbour will dread the day she passed up on on the Falklands and Sea Lion, but then what do you expect from an ex Shell bod! Isn’t it in there DNA to pass up projects that are the making of others!
;-)

LTT

Hiya Much,

Love your enthusiasm, I was thinking along similar lines but would have to take into account the smaller development so if we work on an initial 40k barrels a day and RKH get 14k barrels per day to them, that’s just shy of 5m barrels a year; let’s say they clear $35 a barrels after lift costs, you are looking at roughly $175m per year before tax. Not bad if they still have only 450m shares in issue!

Of course this is back of the fag packet calcs it would go up and down based on oil price, but you also need to take into account the potential of further acreage being accessible once the phase on is done, then development could ramp up quite quickly indeed. And if Isobel comes in at another Sea Lion, there would be no reason the share price wouldn’t see the heady days of £5 again for sure.

LTT

afraid one of those blocks of 200k is mine! I couldn't resist, didn't think I'd get a chance today, thought we would be 8p+ but I don't think it's sunk in yet.

Yes there could be a fund raising in 1st Q 2022 if not OM comes in, but my feeling is it will be just a token amount to keep the lights on as once the deal is signed with Navitas they will stand all our costs at a loan rate of 8% up to FID. I can't imagine Navitas offering up that if they expected to drag things out for 2/3 years.

"In the event of a positive FID, Navitas will provide an interest free loan to Rockhopper to fund two-thirds of Rockhopper's share of development costs (for any costs not met by third party debt financing)".

So that means we only have to find roughly 11% of the development cost which on an $900m development will be approx $90m (which we could possibly get from a positive OM result). Of course if we get to FID, we will be in much stronger position, the share price would be considerably higher so there will be options for RBL or are a share issue.

My thinking is, there is another player in the wings, Delek fits the bill for sure;

"Delek continues to seek out additional synergistic and strategic opportunities, especially in North America and the North Sea."

If Delek comes in and takes on 30% of Nativas's share, then it's game on for sure, RKH would be re-rated in a blink IMHO.

Exciting times for sure, the ducks are lining up, can wait to hear the crack from Sharkies Bar again! LOL

LTT

That was a bolt from the blue, interestingly no leaking ship on this one either!

I have to say I am impressed with the deal, keeping 35% of everything going forward it not to be sneezed at and also the intention of RKH to retain this share of the spoils should another investor come in. I think this point implies it's on the cards, Navitas will have someone in mind to take over say 25/30% of it's stake, once the ink of the deal in signed I can see another player coming on board with access to money. It just makes perfect sense.

I also like the point of 5 year deadline, one issue many had with Sam was not putting that in the contract with PMO, so there it is, of course we don't want to be waiting 4/5 years for FID, and I think FIG would take away the licenses long before then if there was no move forward as lets be honest, if they don't get this off the ground in the next 2 years, it's never going to happen.

Great news also of the loan, it takes away a lot of the issue of a large near term fund raise while we wait of OM to come in, now wouldn't $100m after lawyers fees be the icing on the cake! Even just historic costs of say $30m would be great for sure.

The loan is at 8%, but I imagine once another player comes on board and FID is signed off, we should have access to RBL, thus getting a lower interest rate than that.

So it's looking pretty positive now, although the T need crossing the the i need dotting, 2022 is looking much brighter indeed. Am surprised the share price isn't higher, but it will take a few days to sink in, the true ramification of this deal. Also you can't blame those who bought recently getting out with a tasty 20/25% gain.

Good luck everyone whether you hold, trade or leave.

LTT

Yes that would make a lot of sense, get Harbour out and get Navitas in with some idea of a plan and commitment, e.g. Navitas put up $400m, Vendor financing $200m and RKH have to find $250m. Maybe even the FIG give a tax break to sweeten the pot! Yes $250m seems huge at the current share price, but with Navitas signed and a sense of direction and commitment, RKH could possibly rerate to a higher price and if OM comes in in January we could be in a much stronger position.

We need the ducks to line up, but if Navitas are still keen, they care coming in with their eyes wide open, no UKEF support, so they must have alternative opens for getting in the cash. With a smaller scale development plan in any prospectus it might just work!

LTT

LOL, nice one Godders, you are still hanging in their with a percentage of hope that it will come good. If you were 100% certain it was game over, why offer to go down with the ship, you'd be cashing in what little you had left,
yet you don't, you spout on "The End is Nigh" but you do not react to it. Therefore my only conclusion is that you believe that there is a chance things will turn around.

LTT

Hope you are right Much, was a bit concerned hearing about about Cambo, 170m barrel development being knocked on the head in UK waters, with loads of services and suppliers on the doorstep, doesn’t bode well for SL.

However have read a little about Siccar Energy and they are backed by some big energy players and have access to RBL so they will get it sorted I believe, even without Shell. Shell are still committed to the NS, they just didn’t seem to like this project anymore, so must be more to it than the Greens putting them off. I read it’s in 1000m water depth so not as easy or cost effective drilling as SL and I read somewhere Shell were concerned about potential delays and the economics of the project. Suppose there must so be concerns about the NS and taxes as the UKGov wants to appear more green they could start raising taxes further in the future to appease the greens saying profits are going into the energy transition! All the more reason to run the ruler over the project and walk away if it’s none core. Hmmmh I wonder if Harbour might drop into Shells spot!

Anyway, what we need is OM result. Sam said they run the numbers through different oil price scenarios so can’t see us getting the full $275m dollars but even our $30m of back costs would be great after the lawyers fees, but secretly I am hoping for more. $125m after lawyers fees would do us nicely, a re-rate back to 25p in a blink then we can start to play ball! Wishful thinking I know, but the alternative is a fund raise in 1st Q 2022 and it won’t be pretty!

LTT