The next focusIR Investor Webinar takes places on 14th May with guest speakers from Blue Whale Growth Fund, Taseko Mines, Kavango Resources and CQS Natural Resources fund. Please register here.
If Navitas can find investors willing to pay $800m for 30% of sealion phase 1 could RKH do the same?
RKH could issue shares in a new sub-company that had 30% interest in sealion. This would mean existing holders are diluted for phase 1 but not the remaining acreage. Does this idea have any merit?
Interim up from 24.4p to 25.3p
Looking back through the RNSs, PMO did actually pay RKH £230m in 2012 as part of the farm in. Are HBR just going to write that off and give the acreage back to RKH? On the other hand they (PMO) entered an agreement to develop Sea Lion which they are now going back on so presumably they are now in default? Like many on here I have no clue what the position is but I hope RKH and HBR can sort it out without resorting to lawyers.
For those who can't find it.
https://www.londonstockexchange.com/news-article/RKH/sea-lion-update/15145836
23 September 2021
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Sea Lion Update
Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and production company with key interests in the North Falkland Basin, notes the announcement this morning by Harbour Energy plc ("Harbour") regarding its decision not to proceed with the Sea Lion project.
The Sea Lion project (with independently audited 2C resources in excess of 500 million barrels) was discovered and appraised by Rockhopper as Operator with 100%. The Company has unrivalled knowledge of Sea Lion and the North Falkland Basin having held the acreage since 2004, and plans to continue to pursue the development of Sea Lion.
Rockhopper confirms that it is in discussions with Navitas Petroleum LP ("Navitas") around its potential entry to the Sea Lion project following Harbour's decision not to proceed. Rockhopper notes that Navitas and partners have recently raised project financing in excess of $900 million and taken final investment decision on the 330 million barrel deep water Shenandoah project in the US Gulf of Mexico.
The previously announced Heads of Terms with Premier Oil and Navitas will expire on 30 September 2021 (unless extended by mutual consent before that date). If the Heads of Terms expire, Harbour will have an initial 90 days to elect how to proceed with their exit. Rockhopper will continue to be funded (excluding licence fees, taxes and project wind down costs) by Harbour during that period under the terms announced on 7 January 2020 and 30 April 2020.
Rockhopper will now work with Harbour and the Falkland Islands Government to ensure an orderly exit by Harbour from the Falkland Islands.
A further update will be provided in due course.
Sam Moody, CEO of Rockhopper, commented:
"This represents both a difficult moment for Rockhopper and a huge opportunity. Whilst we are disappointed that Harbour has decided to not to proceed with Sea Lion, we remain committed to unlocking its development.
"Navitas' recent financing on its Shenandoah project demonstrates that funding remains available to independent E&Ps in the international markets for large-scale offshore oil developments and we very much look forward to working with them to progress Sea Lion."
Any sniff of Sea Lion going ahead will see the RKH price rocket. Why would HBR offer to buy RKH if not to develop Sea Lion? HBR are in a catch 22 here, they can't get RKH on the cheap as long as RKH are solvent (which they will be if they win the award). They could try an be sneaky and say that they are ditching Sea Lion, RKH share price would plummet, but all the licences etc would also revert to RKH. I can't see any way for HBR to do to RKH what they did to PMO. RKH is not distressed (yet).
RHK are possibly about to get up to $350m from the Italians. HBR won't be able to buy them out for less than the award++.
With rising energy prices the government should be looking to secure supply IMO. They should back Sea Lion. Not sure if the oil would be considered GB or FI.
Just for info:
EUROPE GAS-Prices soar on supply fears, UK-France power link fire
https://www.lse.co.uk/news/europe-gas-prices-soar-on-supply-fears-uk-france-power-link-fire-ew5yx5fi1vxiyka.html
From my back of the fag packet calculations (I'm no expert) they are selling 25% of the company for £0.9B which values the whole company at £3.6B or about £7.70 a share. (They are splitting half the company and retaining 50% of the sold half).
They are giving a special dividend of about £1 a share (possibly more, I'm not sure if it will be divided by the number of shares in issue before or after the sale). (Dividend may be taxed if not in a ISA/SIPP)
So after the sale the remainder should be worth £5.77 a share + about another £1 in retained cash (+ £1 special divi).
It's not clear to me if current holders will be issued shares in the new company or just indirectly through T&L's 50% stake. If we only have shares in the remaining 50% then I guess they are worth £7.70 / 2 = £3.85 a share + shared income from the new company + (retained cash + special divi).
I'm sure I've made lots of mistakes or wrong assumptions. Anyone?
"Provisional arrangements have been made to host the meeting at 2.00 pm on Thursday, 30 September 2021 at the Clubhouse, Skew Bridge, Wilton Road, Salisbury, Wiltshire SP2 9NY. However, in order to maximise the benefit of the event for shareholders, the investor meeting was originally scheduled on the expectation that progress related to the Sea Lion project and/or the Ombrina Mare arbitration would be known by that date. As such, a decision to proceed with, or delay, the investor meeting will be taken and communicated to shareholders on Friday, 24 September 2021."
I wonder if it has anything to do with this:
Britain announces biggest auction round in renewable energy scheme
https://www.lse.co.uk/news/update-1-britain-announces-biggest-auction-round-in-renewable-energy-scheme-96lw3i9z3288919.html
The decision to the agreement with Navitas was deferred until the end of September. I'm expecting that can to get kicked down the road again.
I personally think Sea Lion is a no brainer and would be taking a punt at these levels if I hadn't already put in as much as I dare risk. Not many trading days to go until Harbour have to say something, even if it is that they are again deferring the decision.