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.

What a cracking day we have in Sunny Nothumberland, just seen 9 buzzards all riding the thermals, back to RKH...... I would think the OG should be putting down Anchors sometime today so we might get an RNS today or will be Tuesday......then its going to be a long 45 days waiting and knitting.....must get Cynic leg warmers ready for Xmas and chav a woolly hat for his DB 9!!!!

Merrill Lynch buy note out today with target price of 650p. Good news to see Merrill involved now, big names getting ready for the FTSE main market move later this year.

Basics of the note below :


Initiating with a Buy rating and 650p PO

We launch coverage of AIM-listed E&P Rockhopper (RKH) at Buy with a 650p PO,
in line with our risked NAV (356p core/devlp plus 294p expl). Its SeaLion find in the
North Falkland basin has made RKH a strong performer YTD but we still see
plenty of upside. The resource upside potential of the basin and its leverage to the
geological play make RKH a strong early-stage E&P similar to the experience of
Cairn and TLW and their initial India and Ghana/Uganda discoveries. We think the
market has yet to fully appreciate the value accretion of pushing SeaLion to
commerciality, of RKHs exploration upside, or RKHs M&A attraction.

Still plenty of upside in moving SeaLion to commerciality

On certified 242mmboe (P50 basis) resources for SeaLion (RKH 100%), RKH trades
on US$3.7/boe compared with US$10/boe (2P reserves) for peers and US$15/boe for recent deals. We believe this highlights the material upside of moving SeaLion to
commercial phase. We see the mid/late Sep flow test as a key catalyst.

Politically charged but technically manageable

In addition, RKH has identified a number of nearby prospects and we see the
potential to accelerate exploration/appraisal activity once additional funding is in
place. Whilst the sovereignty dispute between the UK/Argentina over the islands
still brings uncertainty, we believe that the field could technically be developed.
Free option on exploration in a potentially large basin

With the stock trading at a c.15% discount to our risked development NAV, we
think RKH offers a free option on the 60bn boe of unrisked exploration that the
British Geological Survey has identified in the basin. While the campaign has
been mixed so far, the islands remain largely unexplored. Through year-end, RKH
(and partners) are due to drill two further exploration wells (RKH 7.5% stake), with
the Rachel prospect (risked 2p; unrisked 15p) due to spud in Oct.

Strategy: appraise first; farm out next?

Since its inception, Rockhopper has been running a regional/geological focused
strategy. While this is a departure from the traditional E&P model of spreading
risk through a number of regional positions, this type of concentrated strategy is
something that has worked very well with the likes of Cairn.
The SeaLion discovery early on in the drilling programme has transformed the
company and has put management at a strategic crossroads, in our view. Clearly,
at present, the focus is on appraising the find as a way of increasing the value of
the assets. Given that it controls 100% of the project, we believe that it is likely
that management seeks to farm down a stake near term.
Although the company has proven its exploration skills, it appears to have limited
experience in project development. This is where management has to take some
early strategic decisions. We believe the organisation has to grow to cope with
what is a decent-size discovery, but at this point it is unclear to us whether RKH
has the desire to build some of those capabilities.

We believe that in order to fast track the project, RKH will likely need to bring in a
partner with experience in offshore developments and apart from BHP none of
the other players operating in the basin has much experience (or funding
capabilities) to develop such an asset.

Given the political situation of the Islands, the number of potential partners is
limited and probably excludes most companies already operating in Latin
America. That said, we believe that North American/Australian independents
could have the technical and financial capabilities to push the project into
development

Valuation

Compelling absolute and relative valuation

As with the rest of the E&Ps in our European coverage, we use net asset value
(NAV) as our primary valuation metric for Rockhopper. Our total estimated risked
NAV is 650p/sh (unrisked 2,463p/sh) and has three constituents:

􀂄 Core of 12p/sh: this segment typically reflects discounted cash flows
generated by producing fields. It is based on 2P production profiles and the
BofAML oil & gas price deck, and the cash/debt position. With no field in
production yet, our Core NAV reflects the estimated net debt position of the
company at end-FY10 (March year-end).

􀂄 Risked development of 343p/sh (686p/sh unrisked): we value fields under
development (or to be developed medium term) using a field-by-field DCF
and assign a probability risk to reflect our expectation of the likelihood of
project delivery and the timing of this delivery. The key element in this
category is the SeaLion find. Based on what we believe are conservative
assumptions (first oil in 2015, capex of US$4.1bn), a 50% chance of success
and applying a 12% discount for potentially higher political risk (typically we
use a 10% discount for OECD areas), we value the project at 343p. We also
include a nominal option value of the earlier Johnson gas discovery.

􀂄 Risked exploration upside of 294p/sh (1,765p/sh unrisked): we value the
exploration portfolio by taking indicative sizes of the drilling prospects and
assigning a risk weighting for our view on the potential success of each well.
We benchmark the prospects against discounted NPVs from similar fields to
reflect the time value of money of the required development of the asset. A
large part of this comes from the identified upside of the SeaLion field (P10 of
669mmboe), which we value at 204p risked (1,134p unrisked).

http://www.iii.co.uk/articles/articledisplay.jsp?section=Markets&article_id=10107848

UK explorers can turn it around in Falklands

OG on site marky...bit on the breezy side today and yesterday.

Good to here from you Chav thought i had lost you down my mine as i found a one clog, am busy knitting you a woolly hat in the sunshine.

Chav doesn't feel the cold after the places we have been. That was really cold!

Back on topic - a nice move today as the prospects encourage a gamble. Topped up again @ 303 this week so let's hope the weather settles down and lets OG get on with it.

And off to work they go!

Expect a flurry of deals on Tuesday, as a Merrill Lynch article appeared in the first column of todays Telegraph. It was quite a prominent article.
Brief details...
Shares in the Falkland Islands oil and gas explorer were on the move as heavyweight city broker Bank of Merrill Lynch took up coverage with a "buy" rating, a 650p price target and argued it may eventually be of interest to a potential predator.
Analysts at Bank of America Merrill Lynch said the resource upside potential of its North Falkland Basin and its "leverage to the geological play" makes Rockhopper a strong early-stage exploration and production company similar to the experience of Cairn Energy and Tullow Oil, and their initial India and Ghana/Uganda discoveries.
"We think the market has yet to fully appreciate the value accretion of pushing SeaLion [first oil discovery in the North Falkland Basin] to commerciality, of Rockhopper's exploration upside, or Rockhopper's M&A attraction," the analysts concluded. Rockhopper ticked up 7 to 318p.
Other papers also reported the article.

With the link :

http://www.telegraph.co.uk/finance/markets/marketreport/7968459/FTSE-100-finishes-the-week-on-a-positive-note.html


"...........Shares in the Falkland Islands oil and gas explorer were on the move as heavyweight city broker Bank of Merrill Lynch took up coverage with a "buy" rating, a 650p price target and argued it may eventually be of interest to a potential predator.

Analysts at Bank of America Merrill Lynch said the resource upside potential of its North Falkland Basin and its "leverage to the geological play" makes Rockhopper a strong early-stage exploration and production company similar to the experience of Cairn Energy and Tullow Oil, and their initial India and Ghana/Uganda discoveries.

"We think the market has yet to fully appreciate the value accretion of pushing SeaLion [first oil discovery in the North Falkland Basin] to commerciality, of Rockhopper's exploration upside, or Rockhopper's M&A attraction," the analysts concluded. Rockhopper ticked up 7 to 318p..........."

Thought we would of had an RNS this fine morning.

At a guess by mid-september....it will be nice to start spudding some new wells this autumn either by DES or themselves....

Just thought RKH would of issued an RNS saying rig was on site but they must be going to wait till they start flow test which will be in about 5 to 7 days as they will have to finish drilling out the plugs and ensure other tests before flow test begins.

Exciting times better get back to knitting chavs woolly hat and ear muffs!

RF it will be late October untill Desire get drilling Rachael.

Late august??? It's now the 31st!!!!

Quiet correct Harry mind else where today as have funeral to go to, have corrected mistake.

No action on the OG yesterday due to very high winds but should get the BOP sorted today ready for drilling the plugs out....snowing instead!

Lovely updates on the web site :


"SEA LION, the story so far" PDF is on the website, link below :

http://www.rockhopperexploration.co.uk/pdf/RKH_AR2010_SeaLionStory_final.pdf


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Also, the 2010 annual report is now on there, worth reading as well, link below :

http://www.rockhopperexploration.co.uk/pdf/RKH_AR2010_Accounts_LOW+RES_FINAL.pdf

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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 242million barrels recoverable,
indicating that there could be significant
upside still to be realised.

http://www.bgs.ac.uk/falklands-oil/download/news.pdf

Falkland Islands Government
Department of Mineral Resources
Newsletter: August 2010

Worth a read :

http://www.dailymail.co.uk/money/article-1308796/INVESTMENT-EXTRA.html

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