Member Info for pauldrayton

Nice find. That is good news.

One other factor that might be in Sea Lion’s favour is the disastrous North Sea EPL (windfall tax). A lot of companies are now starting to look elsewhere. Whilst the Argentinian issue may have put companies off before, it may be less of an issue now and there is a real need for diversification (and increasing reserves).

PMO ‘originally’ agreed to pay $4.7/bbl and not at FID stage - that was with no FEED done at all.

$2/bbl is less than half that and would value RKH at 82p - for a FID-ready project with all the FEED done. Still seems cheap really.

I’m trying to be realistic and not ramp but it’s actually quite hard!

I do now seriously think that should FID go ahead then RKH should at least be 80p. Whether we wake up one morning and it jumps, or it’s a steady rise from here over the next few months I don’t know, but I just can’t see it less than that now.

The most important thing to RKH now is Shenandoah and getting hooked up for first oil successfully.

He sounds like a safe choice who will toe the line! Business as usual.

Https://en.mercopress.com/2025/01/14/falklands-government-appoints-new-director-of-natural-resources

Do you know when the results of the bid round are out?

“A partner joining BEFORE FID would be a significant driver of the sp and sentiment.”.

Indeed Marunam, and I think we may be about to find out exactly what RKH’s 35% is worth in the market today. I wouldn’t be surprised to see somebody come and pay $2/bbl ($367m) for 20% of a FID-ready project like this. That would value RKH’s 35% at $642 (£528) or 82p per share.

I’m beginning to wonder if I haven’t been a bit too conservative with fair value at FID.

As an aside, PMO paid RKH $279m (up front payment & exploration carry) for 213mmbls 2C back in 2012, plus a $722m development carry.

That equates to $4.7/bbl and if RKH got the same deal now their share of Sea Lion would be worth $1.5bn or £1.92/share.

Of course the development carry never happened in the end but PMO did pay the $279m ($1.3/bbl) which would equate to 53.8p/share for RKH’s 321mmbls now. Oil prices were a bit higher at the time but that was for a discovery with no FEED done at all.

I was thinking about forward-looking valuations last week that suggested a share price of 50-55p might be fair today, rising to 70-75p on sanction and 175-200p at first oil but I’m wondering now if that isn’t discounting it too much.

If we look backwards at sunk costs, we know that circa £1.1bn has already been spent on Sea Lion. That’s £385million for RKH’s 35% which is equal to 60p per share.

I realise that sunk costs don’t necessarily equal potential future profits but in this case they do.

Imagine setting out now with just a license area and no discovery. What would you pay to avoid all the time & risk in getting started for a fully appraised discovery of 321mmbbls of 2C recoverable reserves (net to RKH) with commercial flow rates and all FEED pretty much complete, in a safe and fiscally secure environment (not to mention the potential for the rest of the basin).

I just can’t see how that is worth less than the sunk costs (net to Rockhopper) of £385m (60p per share) at this stage. That’s still only $1.45 per barrel of 2C reserves. For a project ready for sanction and a breakeven price of $24/bbl!

It just seems insanely cheap at 35/36p on whatever metric I look at.

For anybody interested in a bit of geo discussion:

https://m.youtube.com/watch?v=AiZO7rJTS5c

Https://www.westwoodenergy.com/news/westwood-insight/westwood-insight-offshore-epc-contracting-activity-to-remain-buoyant-in-2025

Only a brief mention but still..:

“In the Americas, Shell’s Gato do Mato (Brazil), Repsol’s Polok & Chinwol project (Mexico), Pemex’s Zama project (Mexico), Navitas Petroleum’s Sea Lion project (Falkland Islands), as well as Petrobras’ continued investment in the pre-salt basin, will present EPC contracting opportunities”.

Pension funds have decided to/been forced to move funds out of the oil & gas industry in recent years.

I suspect we will see more institutions looking at Rockhopper if Sea Lion gets sanctioned but pension funds unlikely.

LTT I know you’re a BOR holder but I just can’t see any reason for Navitas to swoop in for BOR right now. I don’t think another partner is going to join BOR now because Navitas are going to have a rig drilling in the NFB for the foreseeable future and it’s unlikely the infrastructure in place for now can cope with 2 rigs.

So even if Navitas are interested in the SFB (which isn’t definite), there is zero pressure on them to do a deal now, as much as BOR would like it. Navitas can just wait and leave BOR to run out of money again - they can even wait 5-10 years if they want. I think they will be prioritising all the NFB acreage for a long time before even thinking about the SFB.

Just my opinion of course, but it if I were Gideon I’d be in absolutely no rush to do BOR any favours.

Still waiting on a Holdings RNS!

Yossi Gvura (the Sea Lion project CFO) makes a point on his LinkedIn profile of saying that $1.3bn has already been invested in Sea Lion. I’m sure this fact along with the DCF calculations are being used in any negotiations with potential partners. Yes it would be useful for Navitas to spread the risk a bit more and have another partner providing an element of funding, but they won’t want to give the acreage away in the same manner that they received it.

Much,

You might be right but I’m ‘trying’ to assess this on a relatively conservative basis.

I think it would be reasonable for the share price to settle at around 50-55p in the coming weeks. If Shenandoah comes on stream successfully that would derisk Sea Lion financing so I would expect another leg up at that stage to circa 60-65p, and eventually 70-75p (possibly a bit more for sentiment/excitement) on FID.

I’d then expect the share price to rise steadily from there to circa £1.75-2.00 at first oil. As they move through the phases and increase production I can see £3+ and I’d agree with your £4+ if Isobel is as big as I suspect it is.

There is a route back to all time highs (540p+) but that might be a number of years away. I was thinking though that we are now 5 years on since the pandemic lockdowns started so time goes quickly!

I don’t expect total plain sailing and there are bound to be challenges and setbacks along the way, but if Sea Lion does get sanctioned then there is lots to look forward to.

I’m trying to work out what ‘fair value’ is for Rockhopper shares right now, which is quite a difficult task.

Navitas’ DCF method (an average of multiple forecasts) puts a value of $1.4bn on RKH’s share of the first phase of Sea Lion. That’s a share price of circa £1.79.

But that’s a price that assumes it’s all going ahead, and until that happens there are risks. I would expect Rockhopper’s share price to be around that level at first oil because a lot of the technical and financial risk would have been removed. There would still be some ongoing technical risk (equipment failure) and macroeconomic risk (oil price crash etc) so perhaps that £1.79 should still be discounted to some extent, but once first oil arrives it also opens the door to follow-on phases for Sea Lion and also the potential for the rest of the NFB license areas so I would think that would cancel out the risk discount. I’d therefore guess at a share price of circa £1.75-£2 at first oil (to increase with appraisal of Isobel and follow-on phases for Sea Lion).

But what about before that? FID removes most of the additional risk that we have at this point (which is mostly financial), but there are still things that can go wrong between FID & first oil so there will definitely still be a discount on the £1.79 at FID stage. If we give it a generous 60% discount at FID based on risk and time to first oil, that’s a share price of circa 72p on FID which feels reasonable to me.

Then we are left with the financial risk between now & FID - how confident are we that Navitas can fund the project? There is clearly some risk until it’s signed but I’d personally only put a 20-25% discount on that basis. Even if we call it 30% that would equal a share price of 50p now.

I realise this is just me applying random risk percentages but I do think RKH is still considerably undervalued at 34.4p.

Guso I can assure you that I am not in any way concerned about legal action - a CEO ramping to a PI is likely to be far more worried than I am about that being exposed. I’m afraid you’re being manipulated big time.

Rookie, everybody who reads these boards should make their own decisions and form their own opinions.

If they disagree with me that’s absolutely fine. Also I’m not making any predictions on BOR’s share price - it’s done all sorts of weird things over the years.

What I am saying is that some people (especially those claiming to have the ear of the CEO) are posting misleading information on here - it could well be that the misleading information is even coming from the CEO himself, which would be even more worrying.

“One thing HB said to me was that he fully expects there to be a repeat of the Falkland fever that the markets experienced when the discoveries were made”.

Crikey guso how many red flags do you need? Harry Baker sounds like USOP’s Brian McDonnell. The bloke is giving you the runaround - when a CEO starts ramping like this it’s time to run for the hills.

I will also repeat - Navitas will NOT share a rig with BOR. You must realise that Navitas need the rig for a number of years - they’re not going to pay more for a overspecced rig just to suit BOR, no matter what spin HB is putting on it.

I’m afraid HB is feeding you a load of b*ll.