Member Info for pauldrayton

In the post presentation chat Sam said they would look to do something “whizzy” with the funding. His word not mine.

If they can raise funds contingent on FID then investors would be buying into a project that is definitely going ahead - although some risks would remain in terms of executing the development, the financial and regulatory requirements would be entirely in place.

With an NPV of $1.8bn vs RKH’s current market cap of $430m, is it fanciful to think they could even raise funds at a premium to the current share price?

Daikihaku1,

Yes the funding needs to be in place for FID to take place, although as I’ve mentioned they are investigating whether than can raise funds ‘contingent on FID’.

They are going down the placing route rather than a rights issue because it’s cheaper and quicker. A placing can be organised pretty swiftly (days/weeks rather than months) and from my conversation with Sam I suspect it will be organised well in advance of FID (even if it is contingent on FID). So Rockhopper won’t hold things up.

I think the Open Offer to existing shareholders will be in addition to what they need for FID - they won’t rely on it.

Not sure if this article is jumping the gun but:

“Beacon Offshore’s Shenandoah FPS, now producing 140,000 barrels per day”.

https://www.ainvest.com/news/gulf-green-shift-built-vessels-securing-energy-independence-profits-2506/

Unless I missed something at the AGM, I don’t think warrants were mentioned. I think it’s likely to be an Open Offer on the same terms as the placing, and the placing might (hopefully) be contingent on FID.

Happy to be corrected if anybody heard differently.

ZYX, I’m not concerned about the license expiration dates - I’m sure the FIG will extend them again.

I’ve been of the opinion, however, that the SFB is a decade or more behind the NFB and Sam Moody’s comments yesterday didn’t change my mind. It sounded like Harry Baker is just hoping other companies might get interested in the Falklands in general once Sea Lion FID takes place. He might be right on that, but as things stand nothing is happening and it really is just hope rather than anything concrete.

Institutions buy at or post FID. Possibly even post first oil.

With hindsight I should have traded my own posts!

It was unintentional I promise!

Daikihaku1,

To be honest I was already pretty sure that FID would go ahead but I detected a real confidence in the post presentation chat that this was the final straight and there would be no further delays. Clearly they have to point out that risks remain but the noises from the lead bank are very positive. I got the sense they are overjoyed at the new finance package and how much better it is than what was previously considered.

The Ombrina Mare decision was obviously unexpected and a real pain and that means more money needs to be raised than anticipated but in terms of Rockhopper’s medium to long term prospects there is a lot to be excited about. FID (assuming it happens) will just be the start, not the end.

I think you’re right Tincan. Navitas likely to go it alone now. Very likely that RKH get to first oil with 35% of Sea Lion which is huge, and there will be options from there of what to do with subsequent phases and Isobel etc.

ZYX,

With regards to the SFB, there are no discussions at the moment. Sam said Harry Baker thinks doors will open up after Sea Lion FID and if that happens then they may be willing to join in on some action on their southern license areas but certainly nothing imminent and there are no current proposals/negotiations taking place. It really is a case of get Sea Lion FID done first and take things from there.

You’re very welcome. I might mind dump a bit today as I remember things so apologies.

Confirmation that the NPV10 for Rockhopper net of tax & royalties etc is $1.8bn excluding Isobel & Elaine (the southern development area). Isobel ‘could’ contain 700million barrels or more but needs appraising obviously. On this front they expect a lot of doors to open once FID has taken place. For example they may then farm out a portion of the southern area to get wells drilled on Isobel (they won’t be raising funds for appraisal wells in the FID package, that’s purely for development).

AGM is over. Some good and positive chat afterwards. We have to hope the insurance pays out, in which case any dilution will be (relatively) minimal and shareholders should get the opportunity to join in on the same terms. An equity raise contingent on FID would certainly be a bonus if they can arrange that as well.

I realise my posts earlier sounded negative but just trying to be open and honest. Sam VERY confident that FID will go ahead this year and I repeat that this finance package they are looking at now is much much better than what they were thinking before.

Overall they were extremely upbeat but just being realistic on what they need to take place prior to FID.

Likely to be a compromise scenario with FIG on the tax issue. Will post any more as I think of it - just heading home now but there was a lot of chat afterwards so I’m sure others will add to this as well.

Sam’s understanding is that Shenandoah first oil is imminent (days rather than weeks now).

Yes I suspect the share price drop is a bit of an overreaction. Project economics with the new finance package look better than ever and it’s worth the push back in time.

It’s possible (although not certain) that any equity raise would be contingent on FID. In other words it would be agreed in advance but only executed at FID.

The good news is the senior debt finance is much better for the economics of the project than a bond raise would have been.

It’s a requirement of the lending bank for additional finance to be in place for contingencies etc. It might not be needed but it still needs to be raised if that makes sense.

I should say, that’s assuming they get the insurance payout. If not, it would be more. The insurance broker and lawyer involved are positive that the insurance payout will be approved but you never know with insurance companies!

Sam very positive but warning that finance is required to take FID and it’s all required up front.

He is guessing FID more likely November than September but dependent on finance.

RKH probably need to raise circa $60m, and it’s likely to be equity rather than any kind of farm out.

No. I suspect the Navitas share price drop is because the price of oil dropped $12 in short order.