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-The sell note in this weeks IC says nothing that we do not already know ie that RKH will not produce any oil in the near term, if ever.
- Interestingly, It mentions, as most of us know, that oil is now being produced in the North Sea for around $15 per barrel as opposed to the $25+ allowed in SL estimates.
-That does make me think that the theoretic OM cost of producing oil in the Adriatic in the case of OM should be even less than 15$ bbl. At $15 costs one has a gross value net of production costs with an op of 60$ of say $900 million!
-OM compensation could surprise very much to the upside although I would have expected that to have leaked into RKH sp by now! Clearly that would have meant someone using insider information and breaking the law but how tightly held is the info?
-OM decision expected by end April next.
-Focus of the oil treaty is to ensure contractual rights of oil companies fully respected by host states. In default full compensation becomes due.
-Claim for loss of profits on approx 20 million BOO at say 60$ $1,200 million less costs of say $25 BOO $500 million makes gross profit of $700 million. Obviously a moving target but one can imagine initial gross claim would have been around $700 million.
-One imagines that Italy would be able to reduce the bill by the amount of any corporation tax etc but the award should still be substantial. At this stage anything around $200 million would be a game changer for RKH.
-The defence claim that RKH bought MOG and should or would have been aware of the problem is probably largely irrelevant.
-My worry is that there must be quite a few people 'in the know' but RKH sp is telling us not to expect much!
-The project stacks up but the weak sp suggests FID or finance uncertain.
-If there are financing problems it could be down to :
1) There is little or no appetite to finance new oil projects.
2) Lenders are concerned at PMO debt.
-The 2 are interlinked. If PMO did not have $2 billion 'short term' debt the appetite to finance SL would certainly be there. -PMO are working on refinancing their debt and apparently expecting to do so in first quarter 2020. Also they are hoping to sell Zama. At the same time PMO are supposedly looking for another oil company to buy into SL.
-Lets not forget HK hedge fund with its 25% short on PMO. I find it difficult to believe that the short was taken simply to cover the fund's potential downside on its loan. It looks like that fund could well be hoping to take out PMO on the cheap?
-Brent today at around $69 - nice?
-What if RKH is being shorted?
-The relentless grind lower defies logic. Leave aside delays and problems, the sp is incredibly low.
-Does the HK Fund have a short on RKH as well as PMO?
-Maybe the objective of the Fund is to take out PMO on the cheap and by extension RKH?
-SL project stacks up with a fair margin of safety for the lenders. It provides employment etc for the UK. Any green objections would be misplaced - UK will depend on oil for at least the next 20 years and it is better to have our own supply.
-From a banking perspective it may be a worry that PMO is perhaps over borrowed and in the event of a weak op en extremis could even go under. Hence the search for a farm out who would baulk up both the technical side as well as reducing financial stress.
-As the HK hedge fund has observed PMO is vulnerable and has taken a short of 25% on PMO shares. PMO has debts of around $2 billion which it is negotiating to refinance. But not yet done and dusted!
-One can imagine that perhaps the hedge fund has extended its short to RKH shares which might explain partially at least the weakness in RKH sp.
-On the other hand a confirmed sale of ZAMA and/or refinancing of PMO debt and/or farm in and/or FID could put a rocket under RKH sp!
Auson you may be right but I suspect the main shorter would be PMO's hedge fund financier. They have $1.5 billion out to PMO falling due 4/21 and might be hoping to take out PMO. Hence PMO are planning on getting the financing done a year earlier to remove the threat. By extension the shares of RKH are perhaps getting shorted to discredit PMO?
-I was in RKH almost from float and sold out at 200p+. Ducks are lining up nicely and have been buying back in.
-It takes different points of view to make a market but at 15p the shares are gifted.
-90+% chance of FID in next quarter and if that happens we will be looking at 75p + with further large upside.
Cubane, I share your sentiments. One can feel that the sp is being manipulated. That the short on PMO was not declared properly suggests to me that the same thing may well be happening with RKH shares. Nobody in the right mind is going to be selling the shares when the go ahead on the finance is just around the corner!
-The short on PMO makes me wonder if there is also a linked short on RKH shares. As far as I am aware no shorts have been declared but then the PMO short was not declared on time.
-I do not buy the story that the hedge fund lent $1.5 billion expecting repayment by 4/21. Perhaps the lender was always expecting/hoping to be able to take out PMO?
-The current RKH sp defies logic. Ok we know it can all go t..s up but the market cap of £70 million puts no value on the Falklands assets. But if you were planning a coup you would not want any PMO assets looking pretty.
-The disclosure of the hedge fund short in PMO shares suggests that the same hedge fund or a connected party may also be shorting RKH shares? The clue might be that the sales appear to be happening at the market close meaning that the weak sp lasts til the next open day at least. That RKH shares are so weak implies that all is not well with SL etc perhaps damaging PMO sp in turn?
- There are now quite a number of positive pointers to the sp and the ducks could quickly fall into line!
- (Shares not right for widows and orphans but looking a real good punt!)
-Comments that BOD dishonest etc seem ott. As Yanbu-Arabia there was a bad struck with PMO. At the time though markets were souring and I suspect nothing else was on offer. The rest is just history.
-OP outlook looks fair to good and much work has gone to getting the project very close to execution. Over the next
At present RKH is the one share most effected by politics. Hunt around for all sorts of explanations but should Corbyn get elected the sp goes to zero or at least as far as FI is concerned. If Boris gets a working majority the sp recovers strongly.
-Sp keeps heading south. The old adage about not trying to catch a falling knife is playing out here big time.
-On the known facts why should anyone sell at these levels?
-I worried the problem might have been related to PMO and their lenders undeclared short being known to management. However that does not appear to be worrying the market - at least their sp is relatively firm.
-Could be that seeing no news imminent from rkh, market is using the shares to cover the elections tomorrow? If Boris fails to get an overall majority the chances of SL getting the finance would start to look slim indeed?
-In the meanwhile a statement from SM, even if it is only to say they do not know of any reason for what is a collapse in the sp. would seem necessary.
-Totally agree with your analysis. Normally when I see sp dropping like this I bail out pronto. But it seems that there are no significant shorts and sp is down simply due to weight of sales from stale small holders!
-This week's MoneyWeek has an article suggesting oil demand likely to remain relatively strong for the next decade or so. Short term op expected to rise moderately due to overall world demand, low investment in new projects and a drop off in US shale.
OK nobody sings the praises of SM and his team. It would appear that small shareholders make up 90% of share register? The asset potential is evident. Why shouldn't PMO make an all share takeover in the low 20's? It might well pass like a letter in the post?
-SL is a world class asset that is taking for ever to get to production. (Main reason for which was the collapse in OP.)
-OP now at an ok level - RKH annual report from april last shows basic opex of $25 bbl.
-SL phase 1 funding application submitted around 5 months ago seeking $750 million export credit/bank finance- (balance to be financed 25% by suppliers and 25% by PMO including RKH carry.
-At present PMO may be seen as good for their commitment.
-As I see the problem, if problem there is, is with Bank/ Export Credit. It looks a bit of a no brainer to me but politics are probably in play and nothing can be expected until after 12th december!
-If the finance, one way or another can be cobbled together sp will move up in multiples. At the moment virtually nothing is in the sp!
-If I remember correctly PMO bought into SL valuing it well in excess of $1 billion. Since then huge amounts have been invested in progressing and refining the project.
-I estimate 80%+ chance of in going ahead in DUE COURSE.
-Substantial funds are also expected from Italy in DUE COURSE. These alone should be well in excess of 20p per share.
-Strong buy but not for widows and orphans!
Life is a gamble. Nothing but nothing is certain.
That said RKH looks to have a much better than evens chance of romping home while the odds on offer are perhaps around 10 to 1!
Would not bet the ranch but worth a punt!
Wait and see!