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.

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.

delete

If the recovery rate is increased to 40% and there is no updgrade for underlying quantity are you saying the 242 estimate increases to c323 and your 7.50 has a similair increase (i.e. +33% to 10)?

I think I shall do an all in one post so anyone can keep on cut and pasting it, as the questions seem to keep being repeated.

Rockhopper

FLOW TESTS are expected to take 45 days.

The 45 days is due to the tests being extensive. Each of the two zones to be tested will be tested twice. 1st zone tested, then 2nd zone tested, then 1st again, then 2nd again.

This will give them strong data with which they can make further assessments and calculations with regard to the Sea Lion prospect.


The main thing with the flow tests is not the flow rate, its more of the calculations into the "RECOVERY FACTOR".

The present 242M barrels is based on a 30% recovery factor. The upside or downside from the flow test results will be to do with the calculation of the actual recovery factor.

242M barrels recoverable based on 30% = circa 720p a share in the ground basis.

If the recovery factor is lower, say 20% then the recoverable barrels falls to 161M barrels and its value therefore is 480p a share on an in the ground basis.

If the recovery factor is higher, say 40%, then the recoverable barrels rises from 242M to 322M.

322M is worth circa 958p a share on an in the ground basis.

So this is where there is downside and upside from the flow test results. However, all being well, even if the recovery factor is lowered down, the resultant in the ground basis for the share price is still well in advance of the current share price, which is why the share price remains strong even with Ernest failure.

Feel free to copy and paste as needed in future.

Proselenes,

Good post.

Thanks for the clarification Proselenes, much appreciated!

thanks prossy - very helpful indeed ... it follows that flowtest results won't be announced until very end september or even a little later

Next News i would think of Sea Lion flow test should be mid October so i better get my knitting out as we have quiet a wait.

Maybe knit Cynic some leg warmers!

you can sort out a nubile masseuse for me at the end of each day's cycling instead! ..... it's not that the massage will be needed, but the excuse will suffice - Beloved says i have her blessing!

Proselenes

Thanks for the explanation of the relationship between the recovery factor and the shareprice.
What I do not understand is how the shareprice itself is arrived at - I assume you are basing this on a comparason of the recovery factor and estimated total volume of the well with figures from other oil companies, but what are the relevant factors - the "formula" behind the valuation?
Perhaps you can expand on this point ?

Thanks,

try supply and demand in the market!
it is that at the end of the day that will determine same, though there is very occasionally some logic

I bet that half way through the testing that some update of a kind will come out....mid october seems too far away...

don't agree .... i think RKH have a pretty effective lockdown in place

What ?...no info until october 15th or so.....not sure about that....they could say such and such a flow with more to come from more testing....remember...they like giving out rns's on consecutive days....

mad hatter, I am basing this on an "in the ground" value of 8.5 US$ per barrel.

8.5 US$ per barrel I think is fair, based on the oil field being in British Waters, with no licensing issues and with a supportive government, and excellent fiscal terms (unlike lets say Kurdistan where most of the money will go to the government, perhaps even as high as 80% to 90%).

As more finds happen, and more oil is discovered and as therefore the economics of scale mean production costs fall, you could raise that to say 10 US$ a barrel, however for now 8.5US$ is fair IMO.

Therefore you take 8.5US$ a barrel and times by 242M barrels (as this is RKH 100% owned) and then divide this by the shares in issue to give your target price per share.

pp are the whole 242m barrels recoverable?

of course not, and i guess that's the real point you are making ..... i see above that ONLY 30% is currently reckoned as recoverable, the flowtest being to prove or amend that ..... using Pros's own calc, that means that Sealion as a stand alone field has a value of 285/300

however, i guess that improved technology could/should improve on that and of course there are a number of other targets in the immediate vicinity, which gives additional blue sky factor