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Nothing booked yet as far as I can tell. This was diamond talking about Sea Lion today:

Sean Meakim -- JP Morgan -- Analyst

That's helpful, thank you for that. And I was curious if we could get maybe an update on the current state of the LOI for Sea Lion, given FIDs continue to slip to the right, looks like 2020 now is the current target. Could you maybe give us a sense of how that fits into your strategy?

Ronald Woll -- Executive Vice President and Chief Commercial Officer

This is Ron. So, yeah. I'll defer to the client for kind of their commentary on kind of their own program, but broadly speaking, that program has been sort of known in the market for quite some time. It's been one of the few, what I would consider to be very sort of chunky development programs that are out there, there are few in number, easy to identify and name. I think this is a good case where I think there is operators who do have high hopes, I think for a market to recover. And so that's why that program I think continues to move on. It's a fairly complex program, I think as the operator would describe. So there's a lot of moving parts to get right, to get that one kind of off the ground.

So that's one that we are quite sort of keen on. We're very -- we have a good sort of view into it. We have good I think credentials with both that one operator but also I think the clients in general in the UK sector. And so that's a program that we certainly have an eye to. But I would say, it also speaks to Marc's earlier comment, there are headwinds. And so the program is well understood. But for a variety of reasons, it's not an easy go to get FID across the line. I think that's a pretty, a pretty common -- a common I think narrative that we're finding with clients. They've got good programs, proven fields, resource that they would like to develop and extract but candidly, if you look at the competing demands for capital that our customers have, it's not always an easy one to get across. And so I think we're fortunate with many of our operators and clients. They are relatively I think clear with us about how to think about expectations for programs and how to consider where they might fit into the schedule for us, but this is one that I think it is I think a good example of why there is both promise in the future, but also some strong headwinds that they keep good programs, keep good programs from coming to market easily.

If you look at kind of the big chunky programs that are out there, there's only a few to name, that's one of the bigger ones. And what I like about where we are is our credentials with that one client and with that class of work is quite strong, it's a great piece of work in the moored space and as Marc mentioned, that's an area we've invested quite a lot, but we have [indecipherable] technology differentiation. So I think we're in a good place for that program but we will just have to kind of watch and see how that plays out.

Got to remember that around 40-45% of Zama is not in Premier’s block .

There was a news report a while back that the Italian government had refused permission to drill. So, yeah, it's defunct basically.

This just popped into my inbox. Note the first of the "Brand new speakers"......

Set your sights on Europe as FPSO Europe Congress 2020 is heading for a bright decade of new opportunities! With 8 projects slated for development, project profitability is higher than before due to the unique characteristics of Europe’s oil reserves.

Yet, project teams are still striving to overcome challenges including manpower shortage, project financing, rising OPEX costs and a stringent regulatory environment.

How are you planning to overcome this?

At the 6th FPSO Europe Congress (London, 17-20 February 2020), industry leaders from oil companies and FPSO owners will be sharing how we can streamline processes and increase efficiency, and improve business value. View the full brochure here.

Our brand new speakers include:
Paul Culpin, Development Manager, Rockhopper Exploration Limited
William Cunningham, Research Analyst Oil & Gas, IHS Markit
David T. Walker, HSE Energy Division Operational Policy Team Lead, UK HSE
Tiger Govender, Director Terra Nova Operations, Suncor Energy

On the subject of an opportunistic take over of Rockhopper. I could be mistaken but I believe that any party that takes over Rockhopper would be required to pay immediately the £59.6m Rockhopper owes to FIG, which will be a deterrent for at least a few potential buyers. Note the below from the half-year report (and specifically the third point):

"the outstanding tax liability ... is payable on the earlier of: (i) the first royalty payment date on Sea Lion; (ii) the date of which Rockhopper disposes of all or a substantial part of the Group's remaining licence interests in the North Falkland Basin; or (iii) a change of control of Rockhopper Exploration plc."

On a related aside regarding Zama, I do wonder if there is some overoptimism regarding the amount that Premier are likely to garner. Sums north of $400m have been mentioned, but the reality is that some 40-50% of Zama's 810m barrels are not even on Premier Oil's license (a percentage that was told me by Premier FYI). So even in an optimistic case the actual share of Zama that Premier holds is only about 120m barrels or so (reflecting their 25% share of Block 7). Given where the market is, I struggle to see how a non-developed oilfield is going to attract much more than $2.5/barrel (resulting in Premier getting $300m at best for its share of Zama). Hopefully I'm being overly pessimistic though...

This is what really made me sit up. A month or so back Core Laboratories, which is a private sector firm and makes much of its money from oil shale reservoir optimization (and has no interest in talking down shale) said in its earnings call:
“the Eagle Ford play is in permanent decline as Bakken production will near its projected peak over the next year or so”.

Obviously others disagree, but these guys would know. With the WSJ also now reporting on problems in shale, this discussion is definitely becoming more mainstream.

thanks for sharing the article cyan.

"As of July, about $9 billion was set to mature throughout the remainder of 2019, but about $137 billion will be due between 2020 and 2022, according to S&P."

Wow....

I don’t want to get too much into the mercurial world of oil markets, but the oil rig data in the US is definitely intriguing. If oil shale really does not produce as forecast, we could end up with a major oil price spike a few years down the road that would have major consequences for Rockhopper’s share price. I’m posting some text below from the forex blog:
Weekly drilling data
Prior 742 was 754
Natural gas 162 vs 162 prior
904 total rigs vs 916 prior

The drop in US oil drilling isn't getting nearly enough attention. The consensus is that US oil production continues to rise dramatically from here but it don't look that way from this report.
The number of drills has fallen dramatically this year and is down 14% year-over-year and 16% year-to-date.
The baseline forcast is for the US to rise to 17 mbpd by 2023 from 12 mbpd now. Where is all that going to come from?

Oh, and another new source of uncertainty. Premier, in their results, say that Sea Lion has “around 330 mmbbls (net to Premier)”. But given that Premier only have 36% in license 4b, Rockhopper at least have long claimed that the field is basically a 50:50 split. And Rockhopper’s CPR said the field is 517m barrels. So either Premier are exaggerating their percentage share, or are saying that the field is in fact more like 660m barrels. I’m looking into some of these matters at the moment and will post any info I can get...

The number of know unknowns are frankly off the charts at the moment. Here’s a few more raised by Premier’s Thursday update:
1) now that the amount to be produced in phase 1 is 250m barrels, what’s the updated production profile? Higher peak production? Longer peak plateau?
2) will there need to be a tweak to the FEED for the updated plan (bloody well hope not)?
3) with a farm-in for Premier, what’s happening to Rockhopper’s $337m carry for phase 1 (let alone it’d $337m carry for phase 2)? Would a farm-in pay some of the carry? It seemed under the prior plan Rockhopper would only get $120m of its carry; what was planned for the rest?
4) is Rockhopper looking to farm down any share as well?
5) what’s the new equity/loan split for financing?
6) are FIG going to update the royalty/corporate tax regime?

And that’s all before we even start thinking about Ombrina Mare....

It’s relatively straightforward to come up with a possible share price for peak production (north of £5 a share, on an assumed PE ratio of 10ish, an oil price of $65/b and debts of under $400m) but, as was mentioned, the vast number of hugely important unknowns makes it no more than an academic exercise.

FWIW, I am probably insane but the risk:reward on this stock looks pretty tempting right now as far as I’m concerned. I sold half my holding ages ago at 23.5p but foolishly bought them back at 20.75p. Nonetheless, that left me with some surplus cash leftover, which I just used today to buy a few more shares. That’s it for me though...

A chunk of the cash is probably going on the costs of that development team at Premier—60 people or so, as we all recall. Rockhopper have to pay 40% of those costs (salaries etc). I had this confirmed by Rockhopper a while back...

TGF:
I’m enjoying your ranting. It’s genuine, coherent and well targeted. If it’s true that Stewart Macdonald said cash is king, then he’s obviously not been introduced to irony. For an AIM company to burn through so much (over $200m) for so little is mind blowing. I spent some time a long time ago going through their numbers and it mostly added up, but it left me having to estimate truly massive sums for the 2015 Eirik Raude campaign. Which is nuts. After all, Rockhopper had a $48m exploration carry, but they may have spent potentially double that on top. I asked Rockhopper for clarity on this (namely, the total cost of exploration campaign) and they refused, which is outrageous. Some accounting of this vast sum needed to be kept, and shared. My hunch is that they’re embarrassed, and especially so as a decent chunk of this money was probably monies owed by FOGL for the monstrous Humpback drill (which Rockhopper had to foot after they acquired the company).
And then there’s the FEEDs. Remember SBM
Offshore for the FPSO? And Subsea 7 for the SURF?And the FEED for the TLP? Other than the TLP again there’s been no explanation for what happened to these? In the end, all these were replaced by new FEEDs (with BW Offshore and Dril-Quip). All that money was flushed down the loo. Again, no acknowledgment. They don’t even pretend to say that the FEEDs were helpful.
For these reasons, and much much more, I would vote for Moody’s removal in a flash.

Ask them

For me, the reason for the sale of the Egypt assets is fairly clear. As it says in the annual report:

“Under the base case forecast and the downside scenarios run, the Group will have sufficient financial headroom to meet forecast cash requirements for at least the 12 months from the date of approval of the 2018 financial statements. However, beyond the 12 month going concern assessment depending on the timing of sanction for the Sea Lion development, in the absence of any mitigating actions, the Group may have insufficient funds to meet its forecast cash requirements.
Potential mitigating actions could include non-core asset disposals, collection of arbitration award proceeds, deferral of expenditure or raising additional equity.”

Note the “non-core asset disposals” as a possible mitigating action. Looks like Rockhopper were simply protecting their going concern status for 2020....

Fair point NigelH but it depends on how you view their near term risks. In my view, their annual report’s comment that the business could be in jeopardy next year—even with Abu Sennan of course—was the primary risk, and this has been ameliorated by this one-off cash infusion from the sale. In the longer term, though, I’d agree with you. Once that money has run down, RKH’s remaining cash holdings will dissipate at a much accelerated rate without the inflows from Egypt.

Definitely a surprising bit of news. Putting aside speculation, the sale of the Abu Sennan asset is both a reassuring and worrying development. On the one hand, concerns about Rockhopper as a going concern next year (as the company itself mentioned in its annual report) can be put to bed with this sale.
But, on the other, it's not like UOG made an offer Rockhopper couldn't refuse. Production at Abu Sennan is on the up at the moment, and the overall price, of $16m, is not especially compelling when you consider only $8m is guaranteed in cash, and Rockhopper paid Beach Energy $11.9m in cash. Equally, it's worth noting that Beach Energy maintained that Rockhopper actually paid $20.5m for Abu Sennan (although this figure included the receivables--delayed payments basically--of $8.6m....which Rockhopper only just paid off!).
https://www.hydrocarbons-technology.com/news/newsbeach-energy-sells-beach-petroleum-egypt-to-rockhopper-4981360/

Anyhow, my take is that Rockhopper were not quite forced sellers, but were getting close to that point. Assuming they get $16m (and I bloody hope they do), this should give them another two years I'd have thought. It also, crucially, means they're not over a barrel if Premier Oil seek to delay another year and wait for Rockhopper to run out of money (though Ombrina Mare could of course put paid to that dastardly plan in any case).

There are of course lots of other possible background explanations--are Rockhopper looking to use the funds for an acquisition themselves (Brazil?)?, are Rockhopper themselves up for sale? do they need monies for decommissioning Guendalina? is the decision on Sea Lion financing closer than thought?--but I'd rather view this purely on the known quantities. And the known quantities are that Rockhopper is now a slightly safer investment thanks to this sale, but some upside and newsflow is lost, and, of course, so is a handy chunk of persistent annual revenue....

Many thanks GS! Much appreciated.
I guess the key question then is how Rockhopper would pay for such an acquisition. My preference would be for an asset swap with Karoon or DNO (so part of Bauna for part of Sea Lion), as it would lessen dilution. However, if that does not happen, the other options would be debt and/or equity issuance. Given the current share price, the latter would be extremely dilutive....

Although I don't have full accces to the article, from the snippets I can see it looks like Petrobras's talks over selling some of its assets have "faltered", and that "a group consisting of Norway’s DNO, Karoon Gas and Rockhopper Exploration remain interested".

The article is here, if anyone has a subscription (article is from June 20th):
https://www.upstreamonline.com/focus_editions/1809596/petrobras-on-asset-sale-trail