.

they liked paying that so much, they did it twice!

I think we will end up, with the southern extension where the new 3D is being shot and with Sea Lion Lower being appraised soon, with 600MMBO to 1BillionBO recoverable from just Sea Lion.

Whilst many think that, everyone is playing "conservative now", and that makes a super buying/accumulation chance.


From FTalphaville today:


Relief for beleaguered RKH shareholders as the latest appraisal well on the Sea Lion discovery is successful. The 14-10/4 well, drilled 2.3 kilometres from the original discovery well, encountered 33 metres of net oil pay and successfully flowed oil in a Drill Stem Test (DST). The group says that flow rates and producibility could be significantly better than the 2,000 b/d that the discovery well tested at. Following the failure of the previous well (14-10/3), the share price had taken a battering as equity markets appeared to give up on the groups Falklands aspirations.

However todays news should go some way to reversing that ill-advised pessimism. RKH says that there will likely be a sighnificant increase in P90 reserves (from the curent level of 57 million barrels). Id expect confirmation of the competent persons estimate of P50 recoverable oil reserves of 170m barrels, indeed RKHs higher case of 242m barrels may well ultimately prove to be more accurate. Based on the lower reserves estimate we reach a NAV of 593p/share, whilst the higher case gets us in excess of 800p.

The rig will now move to the c90m barrel Ninky prospect (Desire 92.5%, RKH 7.5%) before returning to drill three further wells on RKHs acreage. The Rock is back in business get involved.

Critically, the sands at this location appear (1) connected to the upper SeaLion fan and (2) better developed than in the original reservoir with the stem test pointing to significantly better flow potential and no water produced. Management indicate that the result significantly increases the P90 resources of the field we estimate to c.100mmboe (from 60mmboe). Whilst there is no indication on P50-P10 volumes, we believe that they have been materially de-risked albeit remain unchanged. Reflecting the derisking of the P50 (170mmboe) resources, we increase our NAV/PO by 30p to
515p. We re-iterate our Buy rating.

We see this result as key to continue moving SeaLion towards commercial stage,
effectively proving recent market concerns overdone. We believe that the P90
volumes fully underpin a stand alone development using an FPSO. The indication
of increased flow potential in the well is critical to limit the number of development
wells required and, hence, reduce the potential total cost of the project.

Goldman Sachs update:

RKH reiterated "conviction buy", target price raised to 684 from 640

We regard the result as very positive news. The company has stated that contingent P90 volumes will go up significantly and that as a result, confidence in commerciality will also rise significantly. We concur with this assessment, estimating that 100 mn bls is sufficient to make the development comfortably commercial at US$100/bl assuming an FPSO development a threshold that we believe should be close to the revised P90 volumes following this result. To reflect this increased confidence in the commerciality of Sea Lion, we increase our assumed chances of success on the field from 60% to 70%; as a result, our 12-month target price rises to 684p (from 640p). We believe the stock is trading at almost a 30% discount to the risked value of Sea Lion (assuming a P50 volume of 205 mn bls) and cash net of appraisal costs alone, and believe there is compelling additional potential from: (1) a potential extension of Sea Lion to the south from new seismic coverage; (2) a further de-risking of Sea Lion; and (3) additional exploration drilling in Rockhoppers substantial acreage around the Sea Lion discovery.

Valuation

Our SOTP-based 12-month price target is calculated using US$100/bl oil. We assume a 12% discount rate, higher than the 10% we normally use for OECD countries to reflect the higher political risk we assume in the Falklands.

Key risks

Failure in the future appraisal is the key risk, although we believe that todays result has removed some of this downside risk.

--------------------------------------------------------------------------------

http://www.rigzone.com/news/article.asp?a_id=105284&hmpn=1

Rockhopper Roars at Falklands Oil Find

by SubseaIQ|Rockhopper Exploration plc|Monday, March 21, 2011


............

As of close yesterday 1m stock on loan (Shorts) for RKH.

100K were closed off on Wednesday but 100K more were put on yesterday to put the level back to 1m of shorts.

DES spudded Ninky well.

RKH 7.5% interest.

Should be news around 20th April.

MasterShanus's interpretation of the 14-10/4 results, will be interesting how accurate it is when more data is released.

http://mastershanusinterps.zxq.net/14104_4interp.htm

.

Edison 22nd March update (easy to download link).

http://www.mediafire.com/?n87015xwwq4wphy


.

.

perhaps i've missed something herman, but the only RNS i have come across is just about Des prelim trading results ..... as far as i can see, the only bit of any interest to RKH is as below, and even this is pretty peripheral .....

"The past twelve months have been extremely energetic for Desire Petroleum. We have drilled five wells on prospects and have commissioned 3D seismic over previously uncovered acreage. The geological information gathered from these wells combined with the new seismic data is expected to have a significant impact on the prospect portfolio. It is our belief that the East Flank Play Fairway has a great deal of potential, and it is with this in mind that we are currently drilling the Ninky exploration well."

.

Update today on the last well and also Sea Lion. Very good, new P90 is considerably higher.

The next well will have a major impact as 14-10/4 did not target Sea Lion lower, but the next well will and will also flow test Sea Lion Upper and Lower and move more of the mid case into the low case.

Given that much of South (unmapped as yet but ongoing fast track in place) is going to be above the OWC and full to spill I can see the P90 being around 450MMBO by Q3 for Sea Lion, IMO.

http://www.rockhopperexploration.co.uk/pdf/14-10_4_further-tech-FINAL.pdf

Rockhopper Exploration plc
(the Company)

14/10-4 Appraisal well further technical update

Rockhopper Exploration plc (AIM: RKH), the North Falkland Basin oil and gas exploration company, is pleased to provide the following technical update on its Sea Lion Discovery after further interpretation of the results of well 14/10-4:

Porosity in 14/10-4 in the range 15%-27%, average 20%

Net to gross within the pay zone of 88%

Dual packer modular formation dynamic tester (MDT) results indicated well had the potential to flow at 2,700 bbls per day, compared to c.2,000 bbls per day seen in 14/10-2

Management interprets new low case area of 22km2 with stock tank oil initially in place (STOIIP) of 516 mmbbls giving 155 mmbbls recoverable at 30% recovery factor

New seismic depth conversion confirms upper fan full to spill, oil water contact within the upper fan package at 2,477m true vertical depth subsea (TVDSS)

Analysis of MDT results and logging indicates 14/10-2 and 14/10-4 are in communication.

New presentation too, link below :

http://www.rockhopperexploration.co.uk/pdf/apr_2011_update.pdf

.

http://ftalphaville.ft.com/marketslive/?inprogress=1

On to the small caps then
and some more good news
from the Falklands

Rockhopper Exploration Plc (RKH:LSE): Last: 255.25, up 17.25 (+7.25%), High: 266.25, Low: 245.25, Volume: 6.44m

the Rock
has revised upwards is P90 estimate I think
p90 reserves now of 155m barrels
that's based on a recovery factor of 30%
says the sector watcher
all very good news
and further evidence that they really do have a commercial well
in Sea Lion


A technical update from RKH, which looks pretty positive. The group says that based on the most recent Sea Lion well (14-10/4) it is raising its low case estimates of Oil In Place to 516m barrels - Ryder Scott currently carries 382m barrels on a P90 basis. RKH says that assuming a 30% recovery factor, this indicates recoverable reserves of 155m barrels. Previously the group was carrying 57m barrels on a P90 basis, although this was based on a recovery factor of only 15%.

The group also says that the result of an MDT flow-test indicated the well had the potential to flow at 2,700 b/d, compared to 2,000 b/d in 14/10-2. Not sure today's news really fundamentally changes anything, it's more a case of RKH becoming more comfortable with the commercial case for Sea Lion. Following the current Desire-operated Ninky-1 well, the rig will return to RKH to drill the next three appraisal wells on Sea Lion, and this should really tie down reserves estimates. Our NAV on RKH is 593p/share compared to a Friday close of 238p/share - ship them in.

and a bit more from
Canaccord

Although the Sea Lion discovery offshore the Falkland Islands requires further appraisal, the latest press release from Rockhopper increases our confidence that it will prove to be commercial. In its low case, the companys updated estimate of the oil in-place at the field is 35% ahead of the last published assessment by independent consultants RPS Energy. Of course, the recovery factor assumed by RPS in its low case in mid-2010 was only half that alluded to by Rockhopper today. However, we note it also used 30% in its best estimate and as much as 40% in its high case.

Key features

In its low case, Rockhopper now believes Sea Lion covers an area of 22km and contains oil in-place of 516 mmbbl. It points out that this would translate into contingent resources of 155 mmbbl if a recovery factor of 30% is assumed.

Valuation
If it contains reserves of 170 mmbbl, we estimate the Sea Lion oil field is worth equivalent of 515p per Rockhopper share when allied to an oil price of US$87.50/barrel flat real and a 12% discount rate. Adding an estimated 78p/share of net cash increases the total to 593p which is our target. We reiterate our BUY rating.

wow
look at that for a price target
593p

IMO, a DES Ninky failure is already in the price. This is why the price is where it is. A lot of people have sold, locking in their gains for tax year end, hoping that 30 days later they can buy back cheaper as Ninky has failed for DES.

However, when everyone sells in advance it leaves nobody left to sell the actual news, so IMO Ninky failure is already in the price of RKH, but Ninky success will see a very large move up for RKH.

Ninky only needs to be 50MMBO recoverable in size to be commercial on the back of Sea Lion.

You will also see that RKH say they are getting much better at working with the seismics and data to pick out sweet spots. Now they have 7.5% of Ninky and will have been part of the prospect selection and confirmation team, so really Ninky, fingers crossed, should hit oil.

With Ninky failure already priced in to RKH, just think of what Ninky success will do.......

.

New rig contract news is possible, but not today IMO.

http://www.telegraph.co.uk/finance/newsbysector/energy/8426204/Rockhopper-shares-jump-after-raising-Falklands-oil-estimate.html

.

.

.

The next well, 14-10/5 should be westerly and intersect Sea Lion Main and Sea Lion lower.

All going well there, with good flow tests of Main and Lower fans and the "low case" size should pass the magical 200MMBO at which point only a fool would try to say that this is not commercial.

Late April (pending Ninky success) and late May/June will be exciting times.

All we need early June is the "14-10/5 is in communication with 14-10/4 and 14-10/2" and off we go laughing.

Once the low case is past 200MMBO then you should see more and more funds flood into RKH as the risk is basically eliminated.