Member Info for rpoodle

Very nice update today. The Bahariya formation is proving to be a substantial bonus for Rockhopper.
On an unrelated matter, though, I just found an article in Upstream that intrigues. Unfortunately I don’t have a subscription, but the story relates to Petrobras selling off acreage. It appears that Rockhopper bid (but did not win) any acreage. The snippet I can find reads as follows:
“....understands that one of the rival bids came from a partnership between Australia’s Karoon Gas, Norwegian company DBO Energy and UK-based Rockhopper Exploration.”

The article is from May 9th
https://www.upstreamonline.com/hardcopy/1773713/petrobras-divestment-drive-fuels-brazilian-manda-push

Hi GreySquirrel. As I recall Chrisoil (banned from multiple boards on multiple occasions over the years) used to do much the same thing. Nigoil....Chrisoil....hmmmmm....

Bit worrying, I admit. He’s rarely positive to be fair about Sea Lion, but when he says there’s still a lot of work to do and that they are still working on “cost optimization” it’s hard to feel upbeat about any big decisions in the near term. Makes what the hell they’ve been doing for the past seven years (since the farm-in). Mostly running round in circles is my impression (we’ve now had three FPSO FEEDs for God’s sake).
I kinda feel that FIG may have to do something dramatic to get this over the line—notably reducing or eliminating the royalty. Otherwise we are probably gonna have wait for a farm-in, and there are no noises about that being close at all. Here’s hoping for pleasant surprises...

SubSe& are no longer a part of the project are they? Didn't Dril-Quip take their place?

The KPIs (page 17) are, at best, modest in their ambition. To achieve their KPIs, they in reality need to do nothing more than:
a) attend a few meetings with the operator ("working closely with the operator to deliver a financing solution to enable the joint venture to advance to project sanction"--note, actual project sanction is not a target),
b) sit on their backsides and drink lots of cups of own-brand Tesco tea ("Preservation of the Company’s cash position").

Nice work, if you can get it....

"3rd Question: how will they raise funds for any exploration drilling, to be carried outduring the Sea Lion development drilling and how much do they need?"

There are no funds available of course (barring any pleasant surprises from the OM case). However, keep in mind that Premier at this point are only proposing to carry Rockhopper for the equity (cash) portion of the project--which is a total of $300m-400m, and of which rockhopper's share would be $120m-160m (reflecting its 40% share of Sea Lion phase 1).
Given that rockhopper have a $337m development carry for phase 1 in the contract, that leaves around $200m left over. Perhaps Premier could convert some of this remaining development carry into an exporation carry? Just a thought (and apologies if that makes no sense)

Nice

https://www.talosenergy.com/news/press-release-details/2019/Talos-Energy-Provides-Additional-Update-On-Zama-Appraisal-Program/default.aspx

I’d guess the spike reflects the sudden upturn in M&A interest, after Chevron just announced its takeover of US independent Anadarko. Could well be the biggest takeover in the oil and gas sector since Shell bought BG five or so years ago...

Well, it looks like the Ocean Guardian won’t be off on another glorious crusade in the Falklands. According to press reports, it is being bought by Well Safe for decommissioning work.

Apologies if already posted:

https://rockhopperexploration.co.uk/wp-content/uploads/2019/04/Investor-Presentation-4-April-2019.pdf

Key quote seems to be “Project sanction within next 12 months (subject to securing funding)”.

The wait goes on...

One major burden for rockhopper is staff costs—not Rockhopper’s but Premier’s. Because Rockhopper are still funding 40% of the development costs, that includes 40% of the 60 people currently working at Premier on the project (a fact I’ve had confirmed by Rockhopper). On balance, I still think today was positive (it’s great that they are not expecting to have to extend the license—definitely a good sign), but the risk profile has definitely risen.
I’ll be following Premier’s next update very closely to see if the PIM has been submitted.

That’s quite the sting in the tail. For those who have followed this share for so long, it’s not an enormous surprise but it’s still unpleasant to see it in black and white that Rockhopper could face cash shortages in 2020. Obviously other events may reduce these concerns (OM, Sea Lion sanction, even perhaps a farm out), but it is infuriating that they have somehow managed to burn through almost $250m since 2012 (plus a further $48m exploration carry). It’s gonna be a gripping year at least...

By that argument why would Britain have spent so much blood and treasure defending some remote islands where sheep outnumber people?
The reality is that the ECA will probably approve the loan because:
a) Sea Lion will be fantastic for the economy of the overseas U.K. territory of the Falklands.
b) the main beneficiaries will be U.K. companies (notably Premier and oil services and logistics companies), with firms from other countries also benefiting (which is why Norway’s ECA, among others, is also part of the talks).

Many thanks Fibonacci; really appreciate your input on legal matters (an area that I am not familiar). My focus on the OM case rests on the fact that Rockhopper are running down their cash. It was $35m at end-2018 in effect, and there will be some more FEED payments to cover. After then outgoings on the Falklands should decline, but Rockhopper are still on the hook for 40% or the costs of the 60 people on the development project currently at Premier (a fact confirmed by Rockhopper to me). The Med revenue covers Rockhopper’s own G&A but Falklands costs will continue to cut into that cash holding substantially. As such, even an extra $20m-30m from the OM case could be vital in ensuring that Rockhopper don’t need to do another cash call. Just my opinion, but that cash burn does need to be watched very closely....

Hi Citizen; apologies for the misattribution. In keeping with your comment about BW’s involvement in Catcher derisking Sea Lion, I just noticed that Dril-Quip were also involved in Catcher (which helps explain their participation too).

Agreed GS. Given the extended timeline to sanction, the importance of the OM case has grown exponentially.

The FEED element here is intriguing as it is frustrating. Back in 2016 SBM Offshore was awarded the FEED for the FPSO and Subsea7 the FEED for the subsea installation. Then in 2018 Premier changed its mind and went with BW Offshore to do another FPSO FEED and Dril-Quip another subsea FEED. All very expensive, and of course Rockhopper footing 40% of the bill.
The reason for the change in contractors can be speculated, but there was a post on here (Greysquirrel?) saying that the decision to go with BW was in part to reassure the lenders that sounds very feasible to me. I spoke to Premier about BW and they said it was a sensible low-cost approach that could also help increase competition (and in turn drive costs lower again). I don’t entirely buy it though, and am frustrated that Premier wouldn’t explain what was wrong with the first FEED with SBM.
Anyhow, as an aside, for tax reasons, I sold half of my shares yesterday (I can buy back in after 30 days), so you can now all expect to see the share price rocket to the stars as I watch helplessly on the sidelines....

Norway’s sovereign wealth fund pulling out of energy stocks. Bad news for PMO (turns out that Norway holds 1.8% of its shares)
https://www.google.com/amp/s/mobile.reuters.com/article/amp/idUSL5N20V2CT
https://www.google.com/amp/s/www.proactiveinvestors.co.uk/companies/amp/news/216032

“The Sea Lion project to develop the Falkland Islands’ first oil had been expected to start in 2017 but has made slow progress. Premier was forced to downgrade its reserves yesterday after a change of industry rules meant it could no longer count the Falklands oil as “proven and probable” pending approval of the $1.5 billion development.

Premier is seeking export credit finance for the up to $900 million it needs in senior debt and said that it intended to submit a formal loan application in the second quarter. Mr Durrant, 60, said that a decision could take six months to arrive. Once debt is lined up Premier hopes to bring in another equity partner.”

https://www.thetimes.co.uk/edition/business/premier-oil-back-in-flow-after-profits-boost-7hgx5nb5z

“Slow progress” sums it up....

Checked again: yep, Q1 2021 it is. Plausible unfortunately, given Premier’s many delays, but let’s see. Someone was mentioning Ocean Valiant on here months ago and nothing came of it. It’s equally worth nothing that Ocean Guardian is now off contract and stacked. I’d say that’s also a fair bet as well.