Member Info for longtermthinker

The change will happen when they start a dividend and then possibly a share buy back. If the oil price stays up at $75+ well in to next year, Harbour will be awash with cash, even paying down their debt, there will be lots of investors looking for somewhere to stick their money with a 5% return! Where else are you going to get that these days and in the foreseeable!

LTT

Hi Mogger,
how do you see the deal with Navitas, I know the can has been kicked down the road for Harbour to get sorted, it says in RKH update;

Following the announcement of the proposed merger of Premier Oil plc ("Premier") and Chrysaor Holdings Limited, Navitas has confirmed that it remains committed to the proposed farm-in. In order to enable the merger to complete and the new management of the combined entity to make a firm decision on the Sea Lion project, Rockhopper, Premier and Navitas have agreed to extend the exclusivity period for the farm-in to the earlier of (i) 30 September 2021; (ii) the execution of definitive transaction documents, or (iii) a decision by Navitas not to proceed with the farm-in.

but what does the above mean for Harbour? So Navitas is committed to the proposed farm in, but they could decide not to proceed. So does that give Harbour the option to not proceed with the Farm-in also, but could still go ahead with Sea Lion?

Interesting that they are not mentioning it in their reports. To my mind Harbour would be crazy to offer the same terms as PMO had to offer to get them onboard, they are far too generous, but can Harbour go back on the deal?

LTT

LOL, I'd snap their hand off if someone offered £1 per share, then I would invest 50% of the proceeds in said company, as if they bought RKH it stands to reason they are planning to develop it, so two bites of the cherry would be nice!

But there lie's the crux of the matter, RKH has very little value (hence the share price) with the thought of SL not going ahead. Once the arbitration gets sorted, even if we just got £30m, it keeps us in the game. PMO was saddled with debt, hence the fall from £1+ a share as one point down to currently 18p old money which is around what Harbour got us for. They cut a deal and got Toulmont, $4b in tax credits, everything! But we are not in such a positon, we currently have no debt and with arbitration we can keep the lights on.

If Harbour where to say no to Sea Lion we can start to market a fully worked up development project as everything would revert back to us. No an ideal situation and it would knock the share price but we would be in a position to let other players come and look a the data and the plans, if might even scare the FIG into sweetening the pot a little further to get things started after all the FIG have spent years of sorting the legislation around the development, they are building a new dock, plans for accommodation; would they really just go, "Oh well it was a nice dream while it lasted!" I think not. So the bottom line is there is value in RKH and Sea Lion, it's just the getting of it.

All we need is for Harbour to say work on Sea Lion is starting up again and that's it, it's game on. RKH share price might not go up over night, but anyone sniffing around would have to pay far more than £1 per share to take them out as they would be at first oil making £350k per day, this is based on current exchange rate $ to £; 24k barrels per day to RKH; based on $65 oil clearing $20 per barrel. Now of course they have tax to pay, but you can see how lucrative things can get, so getting a company for £1 per share that is making £130m a year would be crazy! and that doesn't include the potential of Phase 2 and Isobel Elaine.

September is going to be interesting indeed I think.

LTT

Well that's a result, it will be good to have a face to face with the board and air concerns and grievances after listening to what they have to say.

I'd like to know what has been going on behind the scenes that has justified their wages and share options, surely they have been doing something rather than waiting for the phone to ring!

Interesting timing too, as we know Harbour have their half year results in Sept, I believe it's the 23rd of Sept, so is Sam hoping/expecting some direction on SeaLion at that time? As I have said before, Harbour kicked the can down the road with regards Navitas so some news is due there by the end of Sept, if nothing else they will have to say, "We are still reviewing whether to restart activity on the SL project therefore we are extending the exclusivity deal out to March 2022!".

I have just been looking at the Harbour presentation from August and I have to say their international growth projects are not so diverse anymore, they have circular graph in the middle showing the split of 2p+2c reserves of 687mmboe but you take Mexico out of the graph and SealIon covers just shy of 75% with Vietnam and Indonesia taking up the other 25%. And surely they cannot be contemplating the first of two exploration wells on Block 30 Mexico until Zama is sorted, they would have to be insane!

Well hopefully we will get some news one way or the other and can have our investors meeting. Then either we are celebrating the re-start of SL or we can ask the board what back up plan do they have if Harbour having kicked the can down the road or walked away, what do they plan to do with all the data and information they will retain about the SL development and how they plan to market it? Will they ask FIG to give further tax breaks to make it more palatable before it's too late!

LTT

I think Harbour will renegotiate the deal, they cannot let it stand as it is, it is far too generous to Navitas. It was done at a time when PMO needed someone and they had to offer plenty to get anyone interested, which involved RKH giving up plenty as well!

Harbour if they are seriously interested in SL, then they will need/get in another hard hitter, someone with cashflow, as they cannot rely on banks to support further drilling these days. This would allow them to renegotiate the whole deal with RKH, Navitas and the new partner, which would involve Navitas and maybe RKH giving up a percentage of their acreage, but reining back on access to Isobel and further acreage that is offered up on a plate! IMHO

However they could also kick the can down the road until April next year when full year results are in. Not sure how shareholders would take that though especially as a major percentage come out of their lock in at the end of Sept I believe. There is also the matter of Neptune/Harbour merger rumours! If that is happening then all bets are off as it will a huge deal and everything else will go on the back burner!

LTT

Ha ha, these analysts , didn't they say that Harbour would be worth $7B when it came into being? Yet here we are sitting at $4.8B. I think Neptune owners are wanting out whilst the getting is good! It might be an opportunity for Harbour, but only if the price is right, hopefully Linda and co. will play hard ball as they did with PMO, if not let them IPO and see where that takes them!

LTT

Well we have to take some positives from this, as has been said before, if it was and open and shut case we’d have known by now. They are probably going backwards and forwards over the loss of earnings numbers and let’s be honest, Italy closes for August, everyone is at the beach so can’t expect anything till at least mid September imho.

I think we need to wait till after Harbour updates the market on its’s half year results and see if there is any mention of a direction with SL. Hopefully we may have the arbitration result by then.

LTT

Hiya Surfit,

Yes I have to agree, think Harbour need another player in the mix. If that were to happen I see the Navitas deal being changed, it is overly generous to Navitas and gives options (from memory) that lets them buy into Isobel and the rest of the acreage. After all the heavy lifting has been done to get phase 1 up and running, it would be crazy to allow them such a large piece of the cake!

My feeling it there will be some renegotiation, thus letting in a third player, giving them a 20/30% stake in Phase 1 and 2 then options of further acreage. However I think Harbour will play hard ball and get those percentages from Navitas and RKH, 10% from each of them, maybe give up 5% themselves. It would be disappointing, but if they were to offer free carry on Phase1 to RKH it might be worth it, then RKH pays its way on Phase 2 and further development in the region.

I think that is the best scenario we can hope for now, the alternative is wait till arbitration is sorted, say we clear $125m; we re-rate to 25p a share then Harbour offers 35p a share either all paper or cash. That way they get the whole shooting match and it can divi it up at it pleases. How many here would take 30/40p tomorrow and be done with RKH?

Just a thought.

LTT

This is totally hypothetical but could Talos get involved? They are wondering what to do about Zama, whether they stick it out and salvage something for shareholders or take Mexico/Pemex to court. Just ready the Mexican Gov has taken further steps to push out competition with its oil market reforms so can’t see any development or further drilling until there is a clearer picture.

Read Talos was looking at Greenfield investments, well you can’t get more green field than Sea Lion! Maybe Harbour are wanting the exclusivity period to elapse so they can offer it up to a bigger player. PMO was scraping the bottom of the barrel with Navitas, but Harbour has connections to bigger players with deeper pockets who would be ready to go, not sign up, then go rattling the tin around to investors.

Ok so maybe not Talos, but as I say, better connections than Navitas may be interested, Cairn have a hefty wad of cash coming, they need to put it somewhere!

LTT

Interesting to read Surfit, just shows there is money out there for the right projects. Harbour with the help of Navitas would easily be able to stand the costs of developing SL, at $1.7b over 4 years would be just $425m a year and I imagine the first couple of years the cost would be lower and then ramp up in the final years. Who knows, with the NS apparently in it's twilight, Harbour might be able to screw down it's suppliers a bit further and get it down to $1.5B. The attraction of locking in a project as a first supplier on the ground in a new province with a 15-20year life span has got to be tempting!

If Navitas stump up £450m and Harbour do the $1.05B, then getting back the $450m from RKH at 15% interests from first oil from oil revenue would be sweet for Harbour for sure! Mind you I would like to think if RKH got $100m payout and with FID and project sanction, RKH would have some banks/money men falling over themselves to lend us our share of costs at a much better rate that what Harbour is offering. An 8% turn on investment in the current market with interest rates where they are, I imagine Sam would be telling them to form an orderly queue outside the Salisbury offices!

LTT

Overts,

I should have said, "A new global independent O&G company" as is says in their investor presentations, but then is says a lot in said presentations like the quotes below.

-Execute high return infrastructure-led investments across the portfolio
- Achieve key milestones on growth projects
–Tolmount First Gas, advance Zama towards FID

I am not sure what they mean by infrastructure lead investments, suppose Zama could be put under that, but nothing to see there for a while IMHO. Tolmount of course, but across the portfolio, that's just further NS investment.

Interesting times ahead. I cannot see how they can pass up on Sea Lion if the number work, but stranger things have happened for sure, Oil to water springs to mind! LOL.

LTT

Hi Fecm,

I cannot see why Harbour won’t make a decision, they have been looking at SL for 4 months, Navitas are waiting to sign contracts and RKH ……. well they are just waiting! But all the while Harbour have committed to paying RKH share of costs of SL so I think Harbour either need to relieve themselves or get off the pot!

What are Harbour going to tell shareholders approaching the end of their 6months lock in! “Stay with us, we will be paying a dividend, but we have Zama up in the air and no idea when that is likely to go to FID; oh and SL, we need to think about that a bit more so watch this space, but we are still planning to be an international oil and gas company with growth potential through ageing end of life assets!”

I don’t think that will cut it somehow, but we will see, Harbour could come out with a purchase of Brazilian producing assets, at least that would be better than throwing money in to Mexico.

LTT

I see what you are saying Surfit, but they have pitch themselves as having an eye on international growth funded by the NS production. Without Zama, without SL they are looking at drilling exploration in Mexico and off the coast of Brazil, even if they have discoveries they are years way from appraisals and then FID ( with Mexico who knows what could happen in that time, no wonder Talos is considering legal action). So yes they could invest further in the NS for a quick return, but they are a one trick pony and I feel investors would start to rush for the door.

With regards UKEF funding, I just cannot see that coming in any shape or form with COP happening in Glasgow. No Harbour will have to go it alone or with Navitas, of course having the comfort of knowing UKGov has a presence in the Falklands and backs them up with regards to developing their natural resources.

LTT

Tomorrow is the first of September and Sam promised an investors meeting and Harbour have to let Navitas know one way of another. Harbour will have been looking into SL since before June apparently so they can't be kicking the can down the road for Navitas IMHO. Also Harbour have their half yearly results in September and their 6month lock in share holders will need to be appeased or they will head for the exit. So as well as an announcing of a dividend they will have to give some direction as the where growth is coming from. Seems like Zama will be a watch this space and not the "Long life, cash generative asset" they are imagining, it could be years of haggling before that gets off the ground and would they want to commit money to something that is going to be run by sometime with no experience in that water depth!

So that leaves us with SL, an oven ready project that is ready for FID, will Harbour walk away effectively reducing their future growth projects (if you include Zama as being up in the air) by 75%.

LTT

put this below in google search and you can see some pictures on Facebook of the event!

Salisbury and XR meeting

Plenty of photo opportunities but hardly going to make the nationals I think.

LTT

Hi Psych8,

Not sure if the can even contemplate an FID this year now! That statement has been on the website since Harbour came in to being, at that time the unitization was still being discussed. Then Pemex got a 3rd party to redo the numbers 60/40 in their favour even though they haven’t drilled a well, then when an agreement couldn’t be reach it was left up to Mexican Energy Commision who awarded the operator ship to Pemex! And Talos is still figuring out what to do, where to take them to court. So no, I don’t see an FID sign off anytime soon.

LTT

Well the wording may not have changed, but the position compared to Zama much have changed! Zama is still in limbo and Harbour would be unwise to drill any wells of block 30 with the Mexican government stopping new licenses and Pemex running the show with regards Zama, but with no money to fund the development!

All we need is the FIG to give some further tax break or a flexible royalty payment link to the oil price and it's game on! Well it gives the green light for Harbour to make a low ball offer for RKH, an all paper offer no doubt!

LTT

But i believe they have to let Navitas know by end of September if they are going ahead/keeping Navitas involved. They can't string them out much longer that's for sure, a yay or nay is required.

LTT

We we should know the result of the arbitration by then and if Navitas gets the nod from Harbour or is shown the door!

"Sea Lion project review underway ahead of a decision regarding the re-start of project activity"

Thats what they said back in June, and we know that Harbour have been in communication with FIG since the change over from PMO to Harbour so they must be close to deciding with their self imposted deadline of end of Sept for letting Navitas know.

Interesting reading the other day; Pemex hasn't got the funds to develop Zama, so that is looking more and more like a dead duck, surely Harbour should walk away before it gets any deeper into bed with Pemex. Put it down to experience and knock the Zama and further exploration in Mexico on the head. IMHO

LTT

Even just the $29m after fees would be fantastic for sure, but closer to $100m would be fabulous! Is would underpin the share price can mean any buyout/paper offer would have to be above 25p a share. 40p worth of paper from Harbour would suit me fine. Of course I’d rather RKH survive to first oil and be worth £2+ a share but just cannot see that happening now, can see no benefit to Harbour keeping RKH, Sam and all in play. What actually would RKH and team actually bring to the party!

LTT