http://www.falklands-oil.com/

http://www.rockhopperexploration.co.uk

http://www.argosresources.com/




Rockhopper was established in 2004 with a strategy to invest in and undertake an offshore oil exploration programme in the North Falkland Basin. It was floated on AIM in August 2005. Rockhopper was the first company to make a commercial oil discovery in the Falklands. Today Rockhopper is the largest acreage holder in the North Falkland Basin, with interests in the Greater Mediterranean region.

http://www.rockhopperexploration.co.uk/pdf/RKH_Prelims_Final.pdf

FOR THE YEAR ENDED 31 MARCH 2010

The discovery on the Sea Lion prospect has transformed the value proposition represented by the group. A pure
exploration play, such as Rockhopper when it began, creates value through a number of discrete steps, each with its
own set of risks and rewards, as it goes through the process of proving reserves then moving forward to production.
In chronological order, we see the key value points for the group as being:
The winning of the exploration licences,
The making of the first discovery on those licences,
The testing of the discovery well to give an indication of its commercial potential,
Confirmation of the size of the discovery for scoping development plans as well as the full exploration of the
acreage,
Completion of the field development plan, and
First oil and subsequent production.
The first value point, the winning of the exploration licences, was achieved in the earliest days of the group. In 2004 we
were awarded licences PL023 & PL024, in the south of the basin, and in 2005 we farmed into Desire Petroleum
(Desire) licences PL003 and PL004 and were awarded PL032 & PL033, the former Shell acreage in the north of the
basin that contains the Sea Lion discovery.

The second value point, the making of the first discovery, took until 6 May 2010 when we announced the results of well
14/10-2 on the Sea Lion prospect. This discovery was the result of a great deal of rigorous technical work undertaken
over the years since 2004 which enabled us to be drill ready by the start of the year under review and in a position to
act on the opportunity to be part of the 2010 drilling programme initiated by Desire, our neighbouring licence holder
and partner in PL003 & PL004.
Prior to drilling, RPS Energy (RPS) had provided an independent review of the possible size of the Sea Lion prospect,
attributing it with a best estimate of 170 million barrels recoverable. At 170 million barrels recoverable, RPS had
calculated a net present value, at $80 per barrel and applying a 10% discount rate, for the prospect of $2.5 billion.
Following the drilling, the best estimate was increased by RPS to 242 million barrels recoverable, indicating that there
could be significant upside still to be realised.
We spudded well 26/6-1 on the Ernest prospect on 23 July 2010 and declared it to be a dry hole on 17 August 2010.
The well was drilled approximately 120 kilometres from the Sea Lion discovery in a previously undrilled part of
the basin to test a different play type from that of Sea Lion. The well encountered good quality sands with high
porosity and permeability and we intend to undertake detailed studies of all the data gathered.
We are fully funded to complete the well on the Ernest prospect, the initial flow test on the Sea Lion prospect, which we
believe will help move the discovery forward towards being declared as commercial, and pay our 15% contribution to
two further wells on PL003 & PL004, where Desire is the operator.
With the current programme funded and underway, we have therefore turned our planning focus to the fourth value
point, confirmation of the size of the Sea Lion Field. This will require appraisal of the discovery on Sea Lion and to
deliver this we see three distinct work streams, being technical, corporate and financial.
In technical terms, we need to establish the number and location of appraisal wells required on the Sea Lion prospect.
We also need to revisit our prospect inventory in light of the new data from the recent wells to establish where we
would like to drill further exploration wells and whether, and if so where, additional 3D seismic should be shot.
In corporate terms, I am delighted to report that at the executive level Dave Bodecott, our exploration director,
and Peter Dixon-Clarke, our finance director, are both now full time employees. At the non-executive level we
will look for two additional non-executives thereby bringing the total number of directors to eight and creating
the balance between executive and non-executive that the Combined Code requires for good governance.
In financial terms, once we have an agreed work programme for the next phase, we will be in a position to cost it and
consider how best to finance it. As part of this planning, we are undertaking a review of our advisers and considering
whether we should remain on the Alternative Investment Market (AIM) or move up to the Main Market of the London
Stock Exchange, a decision we will take when it is right for the group.
The fifth value point, the completion of a field development plan, cannot be concluded until the discovery is appraised
and confirmed as to its size, but the research and planning as to how best to deliver this has already been started.
CONCLUSION
In conclusion, the group has been transformed by the discovery on the Sea Lion prospect and is now working
through the steps required to ensure that you, as shareholders, get the best possible value from it.
The discovery has been the result of over six years of hard work and I would like to thank my board, the
consultants we have engaged, the Falkland Islands Government and you, as shareholders, for investing both
time and money in this success.
DR PIERRE JUNGELS CBE
CHAIRMAN
17 August 2010

Thanks Markymar - do agree with price of c 7.50 per share if 242 estimate left as is assuming flow test doesn't throw a spanner in the works?

marky you are right in saying the size of the field is important but surely what can be recovered is far more important and at what cost? Say one compares AFR with RKH ....AFR has a market cap of around 900m and we are led to believe should be producing 40000 bopd by year end 2010, whereas RKH has a market cap of 600m approx and is unlikely to produce any oil before 2012 and you estimate even then it might be only 5000 bopd, they have to produce at least 20000 bopd to make extraction worthwhile in this location. Either AFR is grossly undervalued or RKH has to produce a flow test much greater than you suggest.

Proselenes,

I never take much notice of Brokers. How can I when on a broker recommendation list that I receive daily, I often see a Buy/Sell/Hold recommendations from different brokers for the same company. Today 1 broker recommends buy Rockhopper the other recommends sell.

Marky,

I agree the size of the field matters, IE same amount of oil in a widely spread field would be worth less than a concentrated field, also on the ease of production flow, plus many more factors. But I agree with Halifax that the main value factor is mainly put on bopd.

It's not just bopd. It's when the field can be brought into production and then it's cost per barrel to extract, and the margin per barrel (which depends on the oil price).

Barrels of oil per day does matter the higher the better and there are many methods to accelerate the flow of oil.

Desire has medium grade oil and it should flow well.

What I was pointing out was that at this stage when the brokers try to put a price on what RKH are worth they go by the field sizes at the moment not how many barrels it will flow as they dont know that, one of the reason you have a flow test.

After a flow test they have more figures to play with and only then can they re rate RKH.

Its all about how much you have and then after that how quickly you can get it out.

If "A" has 2 million pounds but can take out 10K per day, they still have 2 million pounds and their value is 2 millions pounds.

If "B" has 1 million pounds but can take out 50K per day, they still have a 1 million pounds value.


Some people on here seem to be saying B is worth more even though it actually has less...........

At this point I will let you decide, some of these same people thinking B is better and worth more were also saying sell RKH at 90p.

Do I need to say more........ ? ;)

You maybe able to get a flow rate of 10,000 barrels a day and if you have 5 wells extracting oil from sea lion then you 50,000 barrels a day but for that to happen you need major money or a very good and wealthy partner.

Its all hot air but its also very early days in a exploration company that has hit it big timeits the tip of the ice burg full of whats and ifs.

Exciting times!!!

pros .... change your name to gibber, and then you may make better sense

cynic, what people forget (do they actually forget or just being plain stupid ?) is that


1/ Initial valuation is made on an "in the ground basis". That is how much proven/probable and possible reserves you have.

2/ Secondary valuation is made on how quick you are extracting, how quick you are generating cash.


How can people look at secondary ways of valuing (production output) when RKH is being valued on Initial valuation only at the moment.

Plain nonsense or are they plain stupid ? or just having a deramp as they sold out "wrongly" ? ;)

Markymar,

Now you have made it clear, "What I was pointing out was that at this stage when the brokers try to put a price on what RKH are worth they go by the field sizes at the moment not how many barrels it will flow as they dont know that, one of the reason you have a flow test".
I do agree.

dunno guv; i'm just a thicko holder who also went short FOGL ..... i don't need to try to second-guess the market in this one, for i think marky has it right that RKH is a winner .... how much the short term or even longer term sp price will be, i really have no idea, but my guess is that 450 is certainly realistic

thank god for a bit of sence cyners.,.

Going long on this......hope that there are no problems with the testing because the name will change otherwise to : "Rockflopper" !

Nice recovery from the disappointing news. Happy to continue holding, though buying at 275 would have been nice. Even at 308p surely it's worth having prior to sealion testing? Not sure this result bodes well for Jacinta & Alpha though

She has started to move, double the buy orders on level 2 could be a good sign.

I sold a few at 336p to lock in profit then bought a few at 180 on the dip, but glad i didn't sell any more this week.

Aldwick what dip? they have been round the 3 mark since they hit the oil.

Your wrong Markymar , look at the chart it dipped below 180p on 2/6/2010

The main thing to concentrate on with the flow tests is in fact :

THE RECOVERY RATE !!!

242M is based on a 30% recovery rate.

If that recovery rate were to be increased after flow tests to 40% then you would see a big increase in the 242M recoverable barrels, and therefore the share price target.