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.

The Rockhopper find is commercial.....I'd say there is a 90% chance that it is....trawling through the rns's released : they seem pretty certain of it...with perhaps oil to the value of somewhere between 1 to 1.5 billion worth in the ground....that's big...by any standard....perhaps not as big as the Shaikan well in Iraq but this is only the start....the proplem is DES has found not much....so to me saying that you prefer such and such oilie to another one...best to go with the bird in hand....if DES come up dry once more...hello 50p again....

Evolution valuation on Rockhopper

Valuation
Rockhopper is unique among the Falkland Islands E&Ps because of the Sea Lion oil discovery, which provides a much more tangible basis for valuation than for the other companies initiated on in this document. Commercial flow-test results should encourage confidence that Sea Lion will be developed and give the market a better steer on the productive capabilities of the reservoir.
Our Core + Risked NAV for Rockhopper is 513p/share. Of this, 490p/share is
attributable to the Sea Lion discovery which we have risked at 50% reflecting the lack of a commercial flow test, successful appraisal well and development risk. The remaining 23p/share is a result of Rockhoppers 7.5% interest in the Rachel and Anna wells to be drilled by Desire. As previously noted in this report, we currently attribute no value to gas discoveries and so ignore the impact of Rockhoppers interest in the Johnson and Liz gas discoveries. Nor do we attribute any value to Rockhoppers 7.5% interest in the Ann well, as we do not believe this will be drilled in the current campaign (see Desire company section for further detail).
At present, Rockhopper trades at a 36% discount to Core + Risked NAV, which is not far different from the average of other exploration orientated companies that we have under coverage (ie a c30% discount). We therefore do not see Rockhopper as significantly undervalued vis-vis other E&Ps, and initiate with a Neutral recommendation and 359p share price target.
We believe investors have already taken a positive view on the outcome of the flowtest result and with only a 7.5% interest in the upcoming Desire wells, in our view there is only limited upcoming newsflow. Like the share prices of many other companies which have made transformational discoveries, we believe there is a good chance that Rockhopper shares will trade sideways until more detail is released on the companys plans.

I just cannot take that seriously when they then attempt to portray Argos and Desire as "good value" based purely on hope and hype and no oil........ They do not assign any value to RKH for its other exploration assets, but then Argos and Desire get value for theirs.


ML write up is far superior, as you would expect from someone as big as Merrill.


This is of course the Merrill Lynch write up :

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).

I always thought that BG. would make a good partner.....involved with Petrobas just further up the coast in Brazil....

IMO to show how piss poor researched, IMO, the Evo note was you can see they said they attribute no value to RKH's 7.5% of the Ann well as they think it will not be drilled (as DES talk about Elaine and not Ann).

How the hell did the writer miss that actually RKH have 7.5% of the license, not just 2 leads, and therefore with Elaine slap band in the middle of the license, even if they do not drill Ann and drill Elaine instead, then RKH still have 7.5% of this.

RKH will have 7.5% of Rachel, Ann, Elaine or any other prosects in that LICENSE AREA !!!!

Its the license they have 7.5% off !!

FFS.

Appears a lot of people are getting quite excited about zone 1 having flow tested fine and now moving to test zone 2 for the first time.

However, these kind of rumours should be taken with a very large pinch of salt, just keep on waiting for the official results in a couple of weeks time.

well am up beat at what i have been told Pro!!! news should be leaking out hence price rise today.

Sp lift off......sharp increase....

Small increase really, given how low the price is in comparison to what they have. Just need good flows thats all :)

Re-rating only just starting, if the news is good.

StockMarketWire.com
Shares in both Rockhopper Exploration plc (LON:RKH) and Desire Petroleum plc (LON:DES) surged today on un-substantiated rumours that the Ocean Guardian drilling rig which is flow testing the lower fans of Rockhopper's Sea Lion14/10-2 discovery well is proving positive.

The companies own recent statements point to a 30 day operation commencing on the 6th September and the company will announce its findings at the end of these operations.

During the morning Rockhopper's share price rose as high as 352p and Desire was up as high as 127.50p. "

That snippet would indicate they have done 1st test on the lower fan and now moving to the Main (upper) fan for testing of that the 1st time.

Anyway, its all rumours......

I still think we will get good news before AGM on the 30th, Am happy holding RKH at this present time on what i have been told.

Got some coverage on CNBC for RKH today, mainstream news.

To quote someone who saw it, below, could "double" on good flow test :)


..........They had Niel Shar the Director of Research from Edison Research (a company who I invest in often from their working outs and research. eg, sxx, byot and a few others)

He said that providing the well test can prove that its commercial then the sp could double. He also stressed how he was impressed that after Ernie was dry, that the sp held its ground. He then said those that know the story here will know that that just shows how undervalued RKH is right now.

What i took from him talking about the well test was not so much about flow rates etc etc but more to the point wether or not RKH can prove it to be commercial. Which is what i said earlier about not worrying that the first well test isnt amazing but that proof of it being commercial with artifical lift would be enough to please the markets.

Buy..buy..buy..

Why is DES rising.....?....in tandem.........? might as well have shares in the local sandwich shop but the takeover is for the burger bar next door....

Or in a brothel with an Ann Summers shop next door.............

Not a bad week for the markets I would say.....there are a couple of threats for next week...bombers.(mental cases) and 2 massive hurricanes .....

were are the massive hurricanes going to hit

rf you are beginning to sound more and more like fraser.....doom.... buy a sandwich board...the end is nigh!

skegness! ... and certainly not FI