Member Info for pauldrayton

Whilst of course it’s nice for shareholders to see the share price racing northwards every day, I wouldn’t get ‘too’ hung up on daily movements. Eventually the share price direction will be determined by newsflow, be it good or bad (OM, Shenandoah, finance, partner, FID, rig contract etc).

In the meantime it’s just people taking positions and/or profits.

Https://m.youtube.com/watch?v=R9lwyD7abQc

ENQ expanding in Asia:

https://www.lse.co.uk/rns/ENQ/acquisition-of-harbour-energy8217s-vietnam-business-6hmqewbqn3mb6k9.html

No, you would never value a company on 100% of future profits. There will always be a discount even once in production.

Ovets, usually the proceedings are declared closed and noted as such on ICSID’s website in advance of the outcome being announced.

Breakeven is $24/bbl across Phases 1, 2 & 3 so you can roughly work out the profits depending on oil price but this will never form a valuation.

Otherwise RKH would be valued at £12/share already for the first 3 phases alone.

Strangely the proceedings haven’t even been declared as closed yet (assuming the ICSID website is up to date).

We can extrapolate the Zeus Capital valuation further and it seems like they’re valuing it at roughly £7 per barrel of recoverable oil.

They’re attributing a 30% risk factor to Phase 1:

319mmbls x 35% (net to RKH) = 111.65mmbls x 0.3 (risk factor) = 33.5mmbls

And a 20% risk factor to Phase 2:

213mmbls x 35% (net to RKH) = 74.55mmbls x 0.2 (risk factor) = 14.91mmbls

So they’ve given 48.41mmbls a valuation of 53p = £339.73m. That equates to £7 per barrel.

If at FID we assume that lower risk factors are applied, then for example.

A 50% risk factor to Phase 1 = 55.83mmbls

A 30% risk factor to Phase 2 = 22.37mmbls

78.2mmbls x £7 = £547.37m = 85.4p per share

Apply whatever risk factors you think are appropriate at each stage.

Fully unrisked for both phases = 186.2mmbls = £1,303bn = £2.03 per share. That excludes Phase 3.

Full recoverable value of Sea Lion net to Rockhopper = 320.95mmbls = £2,246bn = £3.50 per share.

That excludes any potential from the rest of the basin.

53p risking the resources for Phases 1 & 2 at 30% and Phase 3 at 20%.

In case this works:

https://www.staffettaonline.com/Allegato.aspx?doc=20250113175735_392259a.pdf

It’s from October last year so not new, and doesn’t seem related to the outcome of the annulment.

Also a bit of insight into the reasons they’ve requested annulment:

“Having regard to the note of the Attorney General of the State no. 105367 of 01.09.2022, relating to the arbitration

proceeding initiated by the companies Rockhopper Italia S.p.A., Rockhopper Mediterranean LdT and

Rockhopper Exploration Plc. against the Italian Republic before the International Centre for the

Settlement of Investment Disputes (ICSID), with which a copy of the

unfavorable award, Case no. ARB/17/14, of 08.23.2022 was transmitted, together with the separate opinion of the Arbitrator

designated by the Government of the Italian Republic, but which "appears flawed in terms of manifest

excess of jurisdictional power, serious violation of the rules of procedure and lack

of motivation regarding a decisive point of the dispute...";

Given that it was therefore deemed appropriate to request the annulment of the above-mentioned Award, which

awarded Rockhopper Italia S.p.A., Rockhopper Mediterranean LdT and Rockhopper

Exploration Plc. the total amount of 247,827,099.13 million Euros, including damages,

interest, costs and legal fees, and that this phase is still ongoing;

Given that at the current stage of the dispute the Award is enforceable and therefore the Appellant Company will be able

to request its enforcement in any and all States among those adhering to the ETC (Energy

Charter Treaty), with a high possibility of obtaining the requested compensation;

Given the communication acquired in the files with prot. no. 121786 of 07.25.2023 with which the counterparty Companies

communicated to the State Attorney's Office that they had set up a deposit account at

City Bank, in compliance with Procedural Order no. 2, which led to the cessation of the

suspension of the enforceability of the Award in question;

Considering that the Appellant Company may bring at any time and in any State, among those

members of ICSID (International Centre for the Settlement of Investment Disputes),

the enforcement of the Award in question, starting from the recognition phase thereof, with the need

for the Italian State to provide adequate legal defense, also to safeguard any

attackable assets, in the State or States where the enforcement phase for the recognition of the

compensation requested will be started, even pending the definition of the annulment of the Award currently

pending;

Having seen the notes of the State Attorney nos. 75695 of 10 May 2023 and 114683 of 13 July 2023,

with which the State Attorney General reports "the urgency of identifying a law firm for the defense of the Administration", given that, since these are foreign jurisdictions, the

Italian Republic cannot be defended by the State Attorney's Office…

I have the attachment but it’s 4 pages long.

Cont:

The company has also reached an agreement with a fund to which it has essentially transferred the credit deriving from the award in exchange for a commitment to pay in three installments, the first of which has already been paid in advance for 45 million, a figure that has allowed Rockhopper in the meantime to settle the bill of approximately 26 million with a specialized company that had advanced all the arbitration costs. The remaining installments will instead depend on the outcome of the judgment.

Jogger’s article link in full:

Rockhopper, Italian debt for Ombrina has reached 250 million

But the counter-appeal game is open. Meanwhile, Mase sent €500,000 to the law firm Withers Llp to protect Italy if the company requests the enforcement of the 2022 award

Hydrocarbon Research and Production

Today, the amount of compensation that Italy owes to the British oil company Rockhopper for the 2016 U-turn on offshore drilling, which caused the authorization of the "Ombrina Mare" company's project off the coast of Abruzzo, amounts to almost €250 million (see Staffetta 24/08/22).

This is what is written in a directorial decree (see attachment) with which in recent weeks Mase has given a mandate to the London and New York offices of the British law firm Withers Llp, specialized in international arbitration, to protect Italy's interests in case Rockhopper decides to request (which it has not yet done) the execution of the 2022 award in the UK or the USA - jurisdictions in which the company could obtain, for example, to attack Italian state assets.

The amount of the award is a maximum of 500 thousand euros, but the payment of the compensation will only occur if the company requests the execution of the arbitration decision.

The award, it should be remembered, had established that Italy had failed to fulfill its obligations based on the provisions established to protect foreign investors by the Energy Charter - a treaty from which our country and the EU have in the meantime withdrawn (see Staffetta 13/06/24). For this reason, it recognized the company's right to compensation of 190 million plus expenses and interest.

At the same time, the issue is not yet fully resolved since, a few months after the award of the World Bank Arbitration Chamber Icsid, in the autumn of 2022, Italy requested its annulment and the judgment, the outcome of which was expected perhaps by the end of 2024, is still ongoing, with an outcome that is not certain.

The same body to which Italy appealed, in 2023 asked the parties to agree on measures to guarantee the reversibility of any damages suffered by Italy in the event that the company requests the enforcement of the award before the conclusion of the dispute and this were to then be resolved in favor of Rome.

Furthermore, Rockhopper itself, although convinced of its own reasons, has protected itself in recent years in various ways from the possible negative outcomes of the appeal judgment, for example last year by taking out insurance for a cost of 4 million euros, which will guarantee it a minimum collection even in the event of an unfavorable judgment.

Whilst it’s entirely plausible that this run might run out of steam soon, it’s equally plausible that it won’t.

If (and it’s still an if) Sea Lion gets sanctioned at FID then the current share price is ludicrously undervalued. Obviously the opposite is true if for any reason Sea Lion doesn’t go ahead.

At the moment 35% of an enormous oil province sits mostly in the hands of probably tens of thousands of small private investors - that in itself is amazing and wouldn’t it be wonderful if it stayed that way, but I am not at all surprised by the demand.

Thanks again Mogger.

Very interesting and let’s hope it points towards a positive outcome for RKH. No updates on the ICSID website since 1st October. You’d think an outcome must be close because the hearing was last April and post-hearing briefs were submitted in June.

Thanks Mogger.

Piece by piece, the jigsaw seems to be coming together.

“I’m going to predict a random share price that’s higher than it is today and keep doing that daily, but ignore the wild rampers”.

Sigh.

With regards to a second development for Isobel should Sea Lion go ahead, I think it will take time to develop the infrastructure to support more than one rig.

Former PMO Development Director:

“Best wishes for the project. Prior two separate great Sea Lion FPSO engineering designs done by SBM Offshore and BW Offshore . Bluewater Energy Services will be able to do a great engineering job also. Location and reservoir design criteria and functional requirements are very feasible and straightforward.”

https://www.linkedin.com/feed/update/activity:7284598679666122752?

Gclark25 (no ‘e’) was his moniker. And his name wasn’t Giles. He had a mate on the rig - you’d be amazed at some of the documents that were passed around behind the scenes.

Offshore Hero started out by completely guessing (and getting it right!) - no joke. He later got a contact who had access to the geophysical data feed but he was based in the UK, not the Falklands or on the rig. I’m not sure he ever got over the DES oil-to-water fiasco - I remember getting a phone call on the Sunday evening telling me the bad news. Didn’t sleep well that night and Monday morning was brutal!

Exciting times - let’s hope there are more to come.

It can’t rise every day! Not much volume today and probably a bit of profit-taking.