Member Info for longtermthinker

problem is, they need to think about the oil price in 4 years not now, they could just be starting to produce and the oil price is back around $50 and dropping (if you believe oil is in it's twilight years), so this is why there has to be some wiggle room with FIG otherwise Harbour will walk away, as they don't want to be lumbered with an oil field that is just breaking even and no longer viable for further development.

LTT

Morning SpaceHoppa,

need to bump though number up by 25%, Phase 1 was set to produce 80k per day! Still it's a lorry lorry cash!
I know we are talking $42 a barrel break even but I was sure it was high $30's rather than low $40's but can't find where I read it.

LTT

I suppose though you have to add in the prospectivity in the region. I am not sure of the numbers but Phase 1 break even at $42 but one you add in Phase 2 what does that bring the average cost down to as they are adding to extisting infrastructure, then there are nearby prospects that could be tied back, then there is Isobel, then the Johnson Gas discovery.

So if you look at Phase 1 250m barrels as a stand along project then of course it’s not viable at $42 a barrel. But if you are looking at a new oil province where you are operator with a 40% stake , then a little wiggle room from FIG might just do it.

It all depends on Harbours game plan, are they thinking to be out of oil in 10 years time or are they planning 25+ years down the line.

LTT

Problem is, playing poker you need other players to up the anti, there is nobody else in the game! If FIG let this chance slip, they will be out of luck, nobody is going to partner with RKH this late in the day if Harbour walk away. Any player coming in (if we were lucky) would need to do due diligence and then work through the numbers, then may come to the same conclusion and say "No we are not interested unless the royalty comes down". Lets face it, the world has changed in the past 16 years since discovery, if FIG cannot see that, then they will have to rely on squid quotas.

Also how would it look for Harbour, Zama up in the air and then walking away from SL, how else are they going to stem the decline in the NS assets? Yes they can do infill drilling so extend the life of the fields and maintain production but that will only kick the can down the road. For PMO a massive part of it's future production was tied to SL.

No, I see Harbour already in discussions with FIG about some TAX holiday or variable Royalty system, this needs to be in the bag prior to the decision on Navitas being let on board, which if FIG are flexible, I cannot see Navitas being allowed in on such a sweet deal! IMHO.

LTT

Have to agree cyan2, it's a different time now, with the twilight of oil upon us (not anytime soon though IMHO) who will invest in a project that takes 3/4 years to get to first oil, then invest in phase two 5 years later to maintain production above 80k a year for 10 years. So you are looking at 13+ years. Some would have you believe nobody will need oil by then or world usage will be down to 50% of what it is now by 2035!

Even so, investing in a long term project that over the timescale could see oil swing from $100 to $40 would need thinking about at $42 per barrel break-even. I feel there needs to be a sliding royalty scale, don't the Norwegians have something like that in place? Or at the very least a royalty holiday until capex is paid off! (probably a bit too hopeful there!).

I think HBR, IF they want to go ahead with SL, will play hard ball. They have the ball in their hands, they could walk away and invest in producing assets, I believe Brazil is selling off some producing assets, so HBR could offset the negative impact of walking away from the Falklands by investing in a large producing asset, instant returns on investment (although again an asset in decline). But still they are the sort of company to do just that, they will not chase after the Falklands, there will be many opportunities as Linda has said in presentations, that will be ripe for a cash rich company to take their pick, although no doubt at much higher prices than 6 months ago.

However Linda also mentioned having another producing hub, somewhere in the world like the North Sea, so if and it's a BIG IF, they can work on FIG and get the cost per barrel down somehow, then I have no doubt that SL will be a goer. Then the questions is, do HBR take out RKH in an all share offer?

LTT

I have just read that Pemex have had another third party look at the unitization of Zama have they have concluded "Talos holds 49.6 per cent of the gross interest in Zama and Pemex holds 50.4 per cent", which is a little different from Talos who commissioned Netherland, Sewell & Associates to prepare an independent evaluation, "which concluded that the Block 7 consortium holds 59.6 per cent and Pemex holds 40.4 per cent of the gross interest in Zama, respectively."

If alarm bells where not ringing previously, they must be now! Pemex haven't even drilled a well on their part of the Zama field and they are claiming to hold 50.4 percent. Obviously Talos are having non of it and are expecting to work it out over time using international best practice using the "re-determination process". There goes the alarm bells ringing again!

So surely this has to bump SL up the ladder a bit for sure! Getting in to bed with Pemex is doing everything they said they wouldn't do; non operated and beholden to 3rd party's one of which will possibly go against every decision along the way.

On another matter, I see Harbour are doing a 20 to 1 share consolidation, I thought this was a bit extreme, I was expecting 5 to 1 or 10 to 1, but the more I thinking about it, it could be a precursor to an all share offer for RKH. Just a thought!

LTT

Wonder why! On our way out of May and still no mention of a date.

LTT

I have to agreed with Cyan, I think Harbour will be strong arming FIG on the royalty or some other mechanism to cut the tax bill. Maybe a sliding scale that has a royalty of $9 when oil is above $60 a barrel but comes down a $1 for every $5 below $60 a barrel or something similar, it would make sense and protects the project viability in an uncertain future.

Harbour can say they will walk away if they don't get some flexibility as we are entering a new world where fossil fuel is demonised too far, we need plenty of oil to power the transition and Harbour are well aware of this, but if FIG really what SL to go ahead they need the press the green button soon and get FID sorted, otherwise a year or two passes and SL will be left behind as who else is going to fund a project as the twilight of oil races towards us.

LTT

Well even receiving $29m which I think was the original investment (after lawyer costs) would be a result, it puts us financially in a much better position with no need to dilute to keep the light on till first oil. But you would like to think if they are receiving a payout then they would have to include sometime for lost profits, even at an average oil price, ( pandemic will have saved them a few Bob there!).

So it’s all looking a lot more positive.

Roll on July!

LTT

Hi Mark, got to my messages in your HSBC account and request a confirmation of holding on letterheaded paper they sent mine the next day.

LTT

Benefit of doubt says they are waiting for the government to give some guidance on holding AGM's. So maybe they are planning a real AGM after 21st June where share holders can actually rub shoulders with the board and enjoy tea and hobnobs!

If the award comes in, we may event get chocolate hobnobs this year!!!!!!

LTT

Gosh we are so close, just did a quite tot up and we are just shy of 20m shares, anyone on ADVN or III to drum up some more share holders? Pity Godders didn't join in, but he probably doesn't have the shares anyway, so better off not relying on his 2.7m erm, 3.5m, erm, "I'm not sure millions!"

Well done to Glen and all for bringing shareholders together. Good luck.

LTT

Cheers Glen,

found I actually had a few more than I thought, so it's worth checking under the mattress and in the bottom drawer!
Have updated the list with my new holding and YES,YES to confirm my letter with attached shareholder details has gone off.

I am hoping to make it to the AGM this year if it goes ahead, should get an announcement any time as it was announced on the 7th May last year for 1st June. Suppose Sam and Co. will be hoping that there is a limit on gatherings again. At the very least they should do a webcast with a Q&A at the end, if the AGM cannot happen again.

LTT

Hi Glen,

just wondering which list i should add my shareholding to as I have sent the letter with proof of my holding , so both things done. I seem recall an post where we put our name, holding and yes.yes but can't seem to find it now.

Many thanks

LTT

If Harbour were to take out RKH, they would have to be on for SL development, can't see FIG allowing it without some guarantees that it's going to happen. Any sniff of that and the share price would double or triple over night. But anyway they must announce something by September this year as that's the extension date for deciding if Navitas are in our out!

I also don't see how Harbour are going to be taken over either. The size they are it would need to be a Major and what major would want to buy into declining assets in the NS that they have been getting rid of all these years!

There might be some assets Harbour might be sniffing around, but can't imagine they would want to plough more into the NS when they are talking up the global side of the business. They may look at some of the producing assets coming up for sale in Brazil, but the price would have to be right, the higher the oil price goes, those assets become more expensive and SL looks more inviting.

I still feel Zama is a none starter IMHO

LTT

Interesting Barclays have had a few shareholders requesting letters so all sorted. They also said that once the AGM is announced and resolutions published I would need to contact them so they can vote on my behalf.

Just thought i would add that, as we don't want to go to all this trouble and then our brokers don't vote as they have heard nothing from individual shareholders .

LTT

They are currently looking into it for my ISA account but talking about registering the votes for me!

LTT

Godders have you sent the email to RKH yet and requested you Letter of Representation yet?

LTT

Mexican government is trying to pass a law than brings back Pemex’s monopoly of the internal energy market, if it’s passed through the senate they it opens the gates to stopping international oil companies getting involved. No of course they could allow players like Talos and PMO to continue as they were in prior to any changes, but it goes against Harbours strategy of to not buy into a basin with stranded assets .

LTT

I am expecting a share consolidation announcement at the AGM in June, can see a 5 to 1 at least. Remember Cooke say there way a lot of share in issue and they would obviously be looking at that.

Have to say I am surprised at the share price has dropped so low, they are going to announce a bumper amount of cash with all the oil and gas hedged but also all of PMO 65k+ that is unhedged with oil above $60.

Wonder what they plan to do with all that cash?

LTT