Member Info for mbingo

Nice to see the market cap amended by LSE now (£78m at current price). Is it US$2M or US$3M cash made since last cash position reported on 31/12? Cheap cheap cheap ...

Most of the large sellers are out post the £16m share buy back. Suggestion that one left with a few to sell - legal and general. Market makers will lift prices as soon as volume on sell side goes. Can’t be long now in my view. Tends to happen when one least expects... Fair value is obviously a lot more. Re-rate will happen. No chance of placing with US$68m unrestricted cash and more than US$50m set aside for decommissioning costs. Notice a couple of large buys from the 7th being reported now also. Buy and hold in my view. Fundamentals speak for themselves.

Remember that natural gas (particularly Dutch TTF gas - from DYAS acquisition (up 3% Friday) represent 50% + revenue, and nowhere near the drop in prices here. What is astounding is the cash generation in the last three months with the reduced Brent prices in play. Brent looks like it is heading back towards US$60, so margins back up here.

Assume a seller still around. Read something on twitter about legal and general selling down (with 150,000 shares to sell left) not sure if that is the case. Only marginally more than 12m shares in circulation so can see a steep move up once done. Impossible to predict when this will happen, but risk v reward for me is very much in favour of the investor here. Fair value will come out.

RRE are decommissioning the whole time. It’s a unique business model and one which works very well. Expect field life of assets to be extended, potential increase in reserves and further acquisitions. Arran to produce over 6000 boepd to RRE in due course. Capex on this will be circa USD 65m in 2019, but well within existing cash generation. Company directors buying at this level recently. AA with close to 30% - board aligned.

Decommissioning costs are an important consideration. Company address these by having a restricted cash pile - currently US$53.3m. This balance is determined by the operator. Andrew Austin confirmed that decommissioning costs represent 20-25% EBITDA (so well covered by operations). These costs are coming down. There are also company tax advantages connected to decommissioning, which I must admit that I haven’t quite got my head around. Given this, important to consider unrestricted cash (at US$68m) when thinking about free cash generation.

For me, AAOG was a great trade from about 7/8p to 12-13p in anticipation of the drill. I just don’t see the value at 16p. I did actually trade it, but not from the lows - from 9-12p before the drop. Markets are not being kind to speculative drills/risks generally, much better in my mind to stick to business with plenty of cash and no debt. RRE is a buy and hold for me.

Brent futures up 4% today aswell.

Still really cheap equity here. How can this business really be worth £75m including US$68m unrestricted cash, and be producing US$30m cash a quarter? We are talking late stage assets and capex of $65m to develop Arran in 2019, but guaranteed 10-12,000 boepd until 2025 and highly likely that this figure super conservative with all the pending news.

Love the “throwing off cash” bit. US$30m + cash build per quarter - quite an extraordinary opportunity at current market capitalisation. Minimal risk. Loads of upside to share price.

3 x 7,500 yesterday also. Someone loading - ad why not ..

Only just read this note on reduction in cost of decommissioning - for anyone interested: https://www.ogauthority.co.uk/news-publications/news/2018/cost-of-uk-oil-and-gas-decommissioning-is-reducing/

A bit of sanity returning here. 630p being paid now. Debt free Cash cow... capable of strong free cash flow in challenging oil /gas market. If challenging market remains, strong Balance sheet allows for acquisitions for minimal outlay. If not, free cash flow increases. Well positioned for success with board aligned to shareholders.

Let’s call it US$30m conservatively, so US$120m a year. Arran capex at US$60-70m for 2019. Plenty of surplus cash to acquire or give back to shareholders. In these uncertain times, a great core share for the portfolio I’d argue.

A $33m ($21m share buy back and $12.1m growth in unrestricted cash) cash build in Q4 when Brent has fallen significantly. Bodes well for 2019.

Thanks for your thoughts. And all for a market cap of £67m ish (which should be less current cash).

Great point around reduced decommissioning costs. Agree on Brent - think that it’s bottomed. Any thoughts on timeframe for the Arran initial production? Guessing late 2019. Will be extra 6,300 boepd on the 11,250-11,500 as of now. 11,000 until 2025 was supposed to be base case, but could get close to 20k by sounds of the latest Malcy interview in next 12/18 months.

Should be some news re both Tain FDP, and the Crondall Energy report re Ross and Blake extension update. Per interims, an extension from 2024 until 2029 for Ross and Blake could add 5.5m boe equivalent net to Rockrose.

Last note from me; shares outstanding actually 12.59m (not 15m odd). Market capitalisation thus 12.59m x share price = £67.35m, less than cash of about £70m), after the company bout back 2 m shares for £17m. This is the absurdity of it all! Happy New Year all !

Nice to see Brent up 3% today. Opex for oil is about US$30/barrel here so margin more than US$20/Barrel. Lot of cash generation even at US$50 brent. Gas prices high (whitman howard modeled gas prices 20% lower than current levels when they set their price target at 1460). Oil modeled about 20% lower. Whitman howards unrisked broker valuation at 2370 !!