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So often I have heard mention of the Falkland basin and it being written off. With much promise over many years, but little tangible return so far, I can understand much of the negativity. Many oil assets takes far long than hoped to see projects move forward to production, and that has certainly been the case for Rockhopper Exploration’s (RKH) Sealion project as Gary Newman noted last December, but I can see light at the end of the tunnel.
Rockhopper discovered the Sealion field in 2010 and subsequently farmed out 60% to Premier Oil (PMO) in a cash and carry agreement back in 2012. Rockhopper used some of that cash to buy Mediterranean Oil and Gas (MOG), which has not proved to be a great deal in my view – but what should one expect as it was an ex-Dave Lenigas company? A further deal to buy Egyptian assets from Beech Energy has however seen production from the Mediterranean area at least covering G&A costs.
Ombrina Mare in Italy was one of those assets purchased. Development has been frustrated by the Italian government changing its laws, to the extent an international arbitration is ongoing seeking not just recovery of costs incurred, but loss of profit also. Rockhopper has funded this action via a “no win no fee” litigation funder, which would indicate others can see a material prospect of success. Little guidance on the claim quantum has been provided and to me it will be a bonus if this action is successful. It is not an “asset” I can ascribe much value to at the current time.
Rockhopper is really all about the Falklands and in particular the Sealion oil field and getting this to FID and into production. The deal with Premier included a capex carry but with Rockhopper paying 40% of the pre-FID costs – Rockhopper has every reason to see this move forward.
It appears to me that Rockhopper’s future is very dependent on Premier moving the project forward, so it is Premier I will focus on first.
Premier undertook a difficult debt for equity re-financing a few years back, but to me negotiated their way through this far better than most companies in similar positons in recent years. They even managed to execute the purchase of Eon’s North Sea assets when clearly funding was under discussion with the lenders. To me that was a brave move, but subsequent asset sales have proven the merits of the deal and credit has to be given to Premier.
The project partners have completed Sealion Front End Engineering and Design at long last – I would have to say one of the longest FEED’s I can recall in recent years and is now moving into project finance stage. A combination of export credits and vendor finance, together with equity funding is the current route being communicated by both Premier and Rockhopper.
If I had £1 for every time I have read on social media how Premier should just sell Sealion and develop their other major appraisal asset in Zama, Mexico, I would not be sat writing in my office today - I would be on a beach in Tahiti d
THE FALKLAND ISLANDS
During 2018, the focus has been on securing LOIs (Letters of Intent) with key contractors and progressing the financing structure for the first phase of the development of the Sea Lion field in the North Falklands Basin ahead of a final investment decision.
The Sea Lion project represents a material opportunity for the Group with around 400 mmboe (net to Premier) to be developed over several phases. Sea Lion Phase 1 (Premier 60 per cent operated interest) will develop over 220 mmbbls of gross resources in PL032, using a conventional FPSO based scheme, similar to Premier's successful Catcher development.
During 2018, Premier completed the selection of its key contractors and put in place LOIs for the provision of key services, including an FPSO, the drilling rig, well services, SURF, subsea production systems and installation services, as well as vendor financing. Premier is now working with its selected contractors to complete FEED and to convert the LOIs into fully termed contracts.
Premier has also continued to progress discussions with senior debt providers, including export credit finance agencies, around the funding structure of the project. In particular, Premier is preparing to submit an application for project funding once FEED has been completed, scheduled for the second quarter of 2019. In addition, it remains the Group's preference to optimise its level of participation in the project by bringing in an additional equity partner once the funding structure has been finalised.
Can somebody tell me what's going on I was a shareholder in Xcite and lost thousands.
Thank You
https://www.epmag.com/rockhopper-premier-progress-toward-sea-lion-fid-1696931#p=full Bit of light reading from April who knows may cheer you up. On another note some advise please my wife and I have used iii for years in all capacities. The recent joining of TD********** has been nothing but a disaster. I wont bore you all with the detail but I am looking to move all our investments to another ISA & SIPP provider, the whole pricing structure in the industry is so confusing any recommendations on who is the cheapest? Thank You