Member Info for lsetown

I didn't mention the 5 times profit figure 'B' I used. This would imply a share price of £1.45 which I think fair if this was going ahead.

I was wondering what people thought of the possible downside here?

Say there was no Sea Lion FID (at least in 2019), $40 oil and no Ombrina Mare award. What would the share price be then? Something under 10p, say 5p?

What though if FID went ahead at $65 oil? I would guess after it should head towards a £1 (which would be only just over a year's revenue during production).

If you assume that there is a 25% chance of FID success, and a chance of 80% share loss then using the Kelly Criterion on investment stake.

https://blogs.cfainstitute.org/investor/2018/06/14/the-kelly-criterion-you-dont-know-the-half-of-it/

Kelly % = W/A – (1 – W)/B
where W is the win probability, B is the profit in the event of a win, and A is the potential loss .

Wager portion = .25/.8 - (1-0.25)/5 = 0.1625

or 16.25% of investment portfolio

Of course a 25% chance for FID and an 80% loss in share price may be completely wrong. There is also the long-shot Ombrina Mare to think about.

Any comments on the above?

I wonder if we are going to get any news about their licence?

Good article Brightside. If true and coupled with the lack of conventional exploration over the last few years, we could see a significant price spike in coming years.

I always imagine this share as an ideal one to ignore for ten years. Look after 10 years and what is the return?

The problem is us humans can't help fiddling!

They are subsidiaries of Rockhopper. I read it as just Rockhopper declaring their companies involved.

I didn't realise that PMO had $4 billion in tax credits for the North Sea. Wow - how did they get those?
Something must have gone very wrong for them in the past!

That is very valuable and must make them a target from larger North Sea producers.

Selling their Zama stake and buying suitable North Sea assets seems a very sensible path to me.

I tried to sell around 13.5p then but they wouldn't take any from me.

There's also significant exploration upside around Sea Lion - Isobel some have said may be bigger.

The debt is PMO's issue I reckon.

Can PMO sell some things?

If the oil price continues up into the late $60s then everything could fall into place for Rockhopper.

I wonder how much PMO would be prepared to sell their Sea Lion stake (with the RKH carry obligations) for? At this stage I'm guessing at something like previous sunk costs?

How much would RKH be prepared to sell their assets for? A similar amount?

This may come good but it is a bit depressing that PMO have so much debt.

I can't see them going for Sea Lion FID unless the oil price rises significantly.

tonynorstrom1

What you are saying sounds to me like the Efficient Market Hypothesis - which I think has been disproved - at least some of the time.

I like the Benjamin Graham quote "In the short run, the market is a voting machine but in the long run it is a weighing machine"

From what I can gather by reading Google for ECT related stuff, Rockhopper may well be awarded a substantial amount, but the problem may then be how they are paid.

For instance Spain is currently withholding payments on previously lost ECT cases. This is linked with the EU Court of Justice saying that ECT awards go against their rules on State Aid. The EU is trying to get all Member States to relinquish their bilateral ECT agreements so that the EU can be the sole ECT party going forward.

Interestingly a post-Brexit UK may offer differences and opportunities. Have a read of this:

https://www.kwm.com/en/uk/knowledge/insights/intra-eu-investment-arbitration-in-2028-will-there-be-any-bits-at-all-20181119

I've read the two documents posted by others - thanks.

It was mentioned in there that an Energy Charter Treaty awardee can claim assets in other jurisdictions. Anyone know how in practical terms payment is enforced?

I'm wondering what happens if the POO keeps dropping and PMO decide they can't or won't finance Sea Lion.

Are Rockhopper tied to PMO forever regardless?

What if Rockhopper's development carry from PMO never materialises - is the 60% sale still wholly valid?

In the unlikely event that PMO was wound-up, what happens if their development carry obligations to Rockhopper make the Sea Lion operatorship impossible to sell-on?

Also, does anyone know if there are any Brexit 'Deal' or 'No Deal' implications for the Ombrina Mare litigation?

This is a great price if you believe that the Falklands will be developed.
There could even be a small 'margin of safety' if Ombrina Mare litigation is successful.
How many people thought we'd see near 20p again!?

I don't know what Rockhopper will do from here, but knowing the stock market I think 'thoroughly disillusioned' could be
a good buy indicator.

Current prices are an opportunity if you believe in Rockhopper's future.

Waiting for a 15p - 20p range is risky I reckon.

I was wondering whether Noble and Edison were going to pay for a notice period. November 2019 you say Tuggy - have you heard that from Argos?

Good post redon.

Has anyone got any details about similar arbitration cases that have succeeded?

For them to be awarded lost profits would be amazing, but how likely on past cases would that be??