RE: Someone’s keen!8 Jul 2025 22:50
Ralph,
It’s difficult to say exactly what the market cap should be now, and there are various different calculation methods but I think the most obvious thing to do is look at the recent CPR which has been carried out by independent experts. NSAI have provided an NPV of $1.85bn (discounted at 10%) for Rockhopper’s share of Sea Lion.
That’s £1.36bn. With the current shares in issue that’s a share price of £2.11.
If we assume that Rockhopper need to raise $60m (£44m) to reach FID, that’s 88 million shares assuming a placing price of 50p. I think I’ve slightly overestimated the amount required and hopefully underestimated the strike price (I’m still wondering if they could raise at a premium rather than a discount if it’s contingent on FID).
That (hopefully pessimistic scenario) would leave a total of circa 735 million shares in issue. An NPV10 valuation would then be equivalent to £1.85 per share.
61p/share is a third of that figure which I think is too big a discount if FID goes ahead. I think a 50% discount at FID (92.5p) seems more reasonable to me but that still leaves nothing in the price for Isobel/Elaine or the rest of the license areas. Sea Lion development would open an entire oil province - that should not be underestimated. So whilst I think the current share price and market cap undervalues Sea Lion alone, it massively undervalues the follow-on potential and the importance of FID (if it goes ahead).
With regards to price-sensitive news, we are not in the 2010-2012 era where everybody was waiting on RKH for the outcome of each well. In the current scenario there are plenty of people behind the scenes who know things. Insurers know about payouts, bankers know about finance, industry workers know about contracts - and people talk. They tell friends and colleagues who then do the same. Yes first oil at Shenandoah is important, as is the insurance payout and final lending agreements etc, but I don’t think the company is reliant on RNS announcements now - the important stuff is known in the background because you can’t hide it.
There are reasons why the share price has shown such strength over the past couple of weeks, and hopefully reasons why that should continue.
Will there be a 2010 style frenzy again? Maybe not quite as mad - it’s a different world now. But I would expect interest to increase dramatically. If you were a shareholder back in those days wouldn’t you want a piece of the pie again if the show was finally going ahead?
Having said all that I take nothing for granted and there are still risks. It’s never been a share for the faint hearted, but it’s definitely closer than ever to coming good.
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