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https://www.worldoil.com/news/2021/2/23/premier-oil-to-rejoin-uk-offshore-just-in-time-for-oil-price-surge

https://en.mercopress.com/2021/03/06/falklands-extends-rockhopper-s-offshore-licenses-until-november-2022

No doubt in my mind that Sealion is going to get sanctioned. Particularly like ‘The new vehicle’s emergence on the UK stock market also comes as multiple large oil producers start to scale back spending on fossil fuels in a transition toward low-carbon energy. That means there could be “increasing asset and project choice for a well-funded company if some other operators divert spending into more diverse energy sources,” Arden’s Slater said.

Enables Harbour to carve out a niche opportunity under the radar.

This has never had a better chance of getting sanctioned and with Ombrina Mare imminent, anyone selling now could be weeping into their cornflakes 6 months down the road.

Upside potential here off the scale. At the very least my advice is stay invested post sanction until at least they have had another poke at Isobel as part of the development as overnight you could see proven reserves double.

Marunam,

Forgive me..... just re read your message. Ignore my post.

I get your point now. My mistake.

Much

Marunam,

You’re getting confused. The Energy Charter claim is for the Ombrina Mare field off Italy. Rockhopper are suing for costs and loss of profits following the Italian government decision to change the rules and refuse to provide licenses after inviting companies to invest, drill and discover oil.

Sea lion is our oilfield in the Falklands which we are waiting to be sanctioned by Harbour later this year.

Have a read of this... https://rockhopperexploration.co.uk/wp-content/uploads/2019/09/Investor-Presentation-September-2019.pdf

For where it states Premier, read Harbour.

Page 11 shows phase 1 and phase 2 production peaking at just under 140k barrels a day https://rockhopperexploration.co.uk/wp-content/uploads/2020/01/Investor-Presentation-Navitas-HoT-7-Jan-2020v3-1.pdf

At 30% we are up for around 40k barrels a day once Phase 2 is in production. Agree ridiculously underpriced, however therein lays the opportunity.

Agree Hightrack. Let’s also not forget that Lloyds have cancelled all bonuses this year whilst Barclays are paying out £1.6bn to staff. They wouldn’t have done this unless they had a good reason.

Provides a perfect argument for a 2.5p dividend for this year ie we’re paying shareholders not staff and then there is last years unpaid dividend of 2p.

I still reckon we will see a 2.5por 3p dividend and £750m share buy back plus there may be something from the £700m of unused PPI.

As always an excellent summary of the kind of thinking and considerations that will seal our fate.

Can’t disagree with anything that you say LTT. 2021 promises to be quite a year if not THE year! Fingers crossed....

Much

Interesting to see people reading across Barclays results onto Lloyds which in my opinion isn’t sensible as they are very decent beasts.

Key reasons to stay positive include:

1. Barclays paid £1.6bn in staff bonuses whilst Lloyds won’t be paying a penny. That’s 2p a share in dividends that Lloyds can pay to shareholders rather than staff without breaking a sweat or annoying regulators.
2. The 2019 dividend is sitting in the coffers ready to be paid. Another 2p per share or £1.4bn that can be used for dividends or share buy backs
3. Lloyds apparently have £750m of unused PPI that is likely to be written back in t some point bolstering profits
4. Lloyds may well be over provisioned for future losses so there may not be any further money put aside this time around
5. It may well still have made a profit in 2020 of say £1.5bn

Given this I expect at least a 2.5p dividend and £750m share buy back.

I also expect the next interest rate change to be upwards as inflation from higher oil prices and all that pent up demand in the form of billions of pounds in bank accounts that couldn't be spent (circa £160bn) floods into the economy in the second half of 2021.

Much

Interesting to see people reading across Barclays results onto Lloyds which in my opinion isn’t sensible as they are very decent beasts.

Key reasons to stay positive include:

1. Barclays paid £1.5bn in staff bonuses whilst Lloyds won’t be paying a penny. That’s 2p a share in dividends that Lloyds can pay to shareholders without breaking a sweat or annoying regulators.
2. The 2019 dividend is sitting in the coffers ready to be paid. Another 2p per share or £1.4bn that can be used for dividends or share buy backs
3. Lloyds apparently have £750m of unused PPI that is likely to be written back in
4. Lloyds may well be over provisioned for future losses
5. It may well still have made a hefty profit in 2020

Given this I expect at least a 2.5p dividend and £750m share buy back.

Much

Interesting article. Will be fascinating to see which way they go.

Regardless I think they are in for the long haul and whilst these kinds of assets produce extra barrels and cash flow, the really big rewards will come from the likes of Sealion.

One way or another all will be revealed some time this year.

Much

Hey Surfit,

Very salient points none of which I would disagree with. I am 100% certain that Zama will be off the agenda as soon as they are able and if they are able to monetise it then even better.

Regardless interesting times ahead.

Much

Cairn was valued at £1.25bn a few years ago which in our language would equate to £3 a share.

With phase 2 pumping we would be producing twice what Cairn is and then there is Isobel.

Chuck in a higher oil price and my numbers start to work out.

Cairn’s challenge is getting the money out of India. I’d sooner try to extract €200m out of Italy than £1.2bn out of India.

The fact that the market cap of Cairn is £350m less than the award should tell you everything you need to know about the challenge of extracting the cash from India.

That said it’s nothing that the impounding of a few Air India planes by way of a court order can’t solve.

Much

Hey FECM,

450 m shares at £1 gives you market cap of £450m or the equivalent of two years earnings. Investors on average pay around 14 years earnings when buying a stock in the UK.

Add in Isobel and then phase 2 of Sealion which takes production to 40k barrels a day and you have the kind of numbers I am talking about.

Much

Hey Falkland,

I think you’re being somewhat conservative with your figures.

With 450m share in issue, are you really suggesting that Rockhopper will be worth just £120m to £450m on production of 30k barrels a day with Isobel as a follow on?

Let’s say oil is at $65 and cost of production is $35 per barrel, that’s a net profit of $30 per barrel per day or $900k per day at phase 1 with Phase 2 bringing even more daily output to the party.

That’s £250m net profit per annum or earnings per share of 56p!

So you honestly believe the market will have RKH in a PE of 1 to 1.5 v market average of 14 with no value on phase 2 or Isobel?

Trust me this will be north of £5 and even then on a very conservative pricing of 10 x earnings which is still a 40% discount to the market.

Add in phase 2 and Isobel you are looking at well north of £7.50 a share. Anyone that takes their profits at 30p to a £1 per if this all works out will be kicking themselves to the grave.

Massive potential here.

Hey Arfur,

I’m not talking about a technical short squeeze in the next couple of months despite the strong likelihood that it will indeed happen if the world economy starts to return to normal.

I’m talking about a structural oil supply deficit in the mid 2020s as a result of a lack of new fields sing available to replace a loss of supply the size of the North Sea that is happening every year as older fields start to see a reduction in yield.

As you say that is what Harbour will be looking at and aiming to take advantage of courtesy of Sealion.

Much

It’s clear that with the world going eco friendly and effectively shutting out oil exploration prematurely, there is going to be a serious shortfall come the mid 20’s.

Indeed the politicians are going to have some serious explaining to do come 2025 when oil demand is outpacing supply by upwards of 10% per day and oil is over $100 a barrel and there is no ability to bring additional supply online.

As one of you posted earlier, timing us everything. If Harbour are reading the tea leaves and market, they will see that there is a once in a lifetime opportunity coming down the tracks to get a free ride in the next super cycle and with Sealion prepped by Premier and ready to go, it becomes a no- brainer.

In terms of price RKH have insane potential. I see major catalysts as follows:

1. Ombrina Mare H1 2021
2. FID and financing confirmation Q3 2021
3. Commencement of drilling operations
4 Redrill of Isobel confirming bigger than Sealion as part of above
5. Production commencement 2025

All of the above have the potential to be supercharged by a rising oil price with RKH having the potential to be a £2bn (£5 a share +) company with limited debt and the profits pouring in whilst operating in a low tax and safe British protectorate offering numerous follow on opportunities in a well understood basin.

What’s not to like?

Much

Auson,
An ‘in principle’ decision is effectively a dry run of the application with all the required facts and figures included.

You affectively pull together your application with everything included. You just don’t formally submit it for a formal final yes or no decision.

Instead you submit what you have for a ‘round table’ discussion around which parts are acceptable and pass and which require further work or present a challenge.

UKEF aren’t some faceless group of cronies. They work with the organisation requiring the support and make recommendations and advise what they need to do to get it over the line.

Harbour will therefore be aware of exactly what they need to do to get it over the line.

Hi LTT all good thank you. Trust you are?

Yes absolutely agree with all your sentiments. If it’s going to happen it’s going to be this year imho.

Much

My recollection is that PMO submitted the application to UKEF as an ‘in principle’ application. In other words ‘here is what we are looking to submit, what are your thoughts and would a full application along these lines get your support?’

I recall Tony Durrant saying that it had been well received but that for it to get support, they needs to do do further work around their debt position.

With Harbour at the helm, that issue is gone so make no mistake an application from Harbour is going to sale through given their financial position and the break even price of Sealion.

With all the groundwork completed on Sealion, contracts drafted and it effectively ready to go the work is done.

Make no mistake, so far as Sealion was concerned Premier wanted to do it. It was the financials that stopped them, not the business case or a lack of appetite.

I think it’s important to remember that oil demand is expected to increase until 2030 and yet over the last few years we have seen fewer discoveries and less investment in new fields than at any time in history.

With the likes of Shell and BP turning away from oil and shale unlikely to proliferate under a Biden administration, there’s going to be a serious supply shortfall. I can only see oil going one way and strongly believe there is going to be an extraordinary window of opportunity between 2025 and 2035.

The development of Sealion could be the perfect project for such a scenario.

Auson,

Rest assured I hope you are right and of course any positive news will turn this around.

However in the short term and with no news forthcoming, the Head and Shoulders pattern is a horribly reliable indicator based on my experience. This is going back to 6 pence in the absence of any news and regardless of the oil price turning bullish again.

https://medium.com/@CryptoTutor/a-short-explanation-the-head-and-shoulders-chart-pattern-21f6817fba59

Much