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://proactiveinvestors.co.uk/companies/news/8568/aim-oil-gas-explorers-mixed-frontera-resources-europa-oil-gas-and-aurelian-lead-risers-8568.html

AIM Oil & Gas Explorers Mixed, Frontera Resources, Europa Oil & Gas and Aurelian Lead Risers

Falklands oil rumours swirl
By Neil Hume and Bryce Elder

Published: October 8 2009 03:00 | Last updated: October 8 2009 03:00

Desire Petroleum , up 0.2 per cent to 99p, and Rockhopper Exploration , down 4.5 per cent at 85p, were in focus yesterday amid talk that the exploration companies were attempting to raise about 100m to help finance their drilling programmes in the Falkland Islands.

Traders said Desire was looking to raise 50m via an issue of new shares at 75p a share and Rockhopper up to 50m at a price yet to be determined.

Desire recently struck a deal to take a drilling rig to the Falklands for the first time since 1998.

It is planning to drill a minimum of four wells, but has the option to drill a further four for itself or its partners, which include Rockhopper.

A chance for you long term holders to take a little profit & buy some more at a lower price?

I thought DES was in bed with BLT, so a bit surprised they need more cash. Or have I got that wrong?

FOGL in bed with BLT

Brokers report released today by Killik & Co

Although the share prices of both Desire Petroleum and Rockhopper Exploration are back to around the highs they made in early 2008, this time around the appreciation we have seen is based upon a degree of tangible activity, given the announcement of the procurement of a rig for use in the North Falkland Basin, and not just down to an influx of speculative money as we saw last year. This now gives short term scope for potentially company-defining news-flow, given drilling is anticipated in February 2010.

Both Desire and Rockhopper have indicated their intention to raise monies to fund the drilling programme in the south Atlantic: I have always been of the view that these prospects potentially represent Mrs Thatchers final economic legacy to the nation. Given below is oil and gas consultancy Senergys best estimate of the probability of success. You may well find those odds unappealing. It should be recalled that, whilst Tullow Oil has had unprecedented success this year, with 11 out of 12 wells hitting oil, the average hit rate for prospective wells in the broader E&P industry ranges from between 3 and 10 to 1.

However, the key point to make is that I believe our clients should have the scope to benefit from the much touted better to travel than arrive adage. In the meantime Killik is likely to have the scope to buy into these stories at a material discount to the prevailing price.

On balance we are inclined to favour the outlook for Rockhopper over Desire given that:
Rockhopper has in Sea Lion and Ernest two of the three lowest risk prospects in the entire North Falkand Basin, recognised in the CPRs and detailed in the table below.
Rockhopper also has the only block with proven live moveable oil; this was originally found by Shell and is near the proposed Sea Lion drilling area that has yet to be drilled but most of the prospect has been covered by 3D seismic.
Rockhopper also has a gas discovery to exploit: this is Johnson, a discovery made in 1998, again in the former Shell license area. The exploration update of the 22nd May 2009 revealed that RPS Energy had classified the Johnson structure as a Contingent Gas Resource with a best estimate of 1.6 Trillion Cubic Feet (Tcf). These were actually the first Contingent Resources declared in the Falkland Islands area.
Rockhopper also appears to have a share in Desires initially targeted, and therefore presumably most attractive, blocks (Liz, Ann and Ninky) whilst the converse is not true, given Sea Lion and Ernest are 100% owned by Rockhopper.
At the end of the day, who knows which company has the better acreage when they are drilling in the same basin. But if they both had a 150m barrel discovery it would be worth markedly more to Rockhopper, if only because their market cap is 68m or almost exactly one-third of Desires market cap of 212m


Background
The background to oil exploration in the Falkland Islands dates back to 1998, when Shell, Lasmo, Amerada and Lundin drilled to various depths in the North Falkland Basin (home to Desire and Rockhopper, with shallower water and in a different petroleum system to that of Borders & Southern and FOGL to the south of the island). Then, six wells were drilled and of these five had oil shows, with one well (Shell) flowing oil to the surface (27 API, a full spectrum crude) and another (also Shell) showing gas. Wells were discovered which had all of the elements in place to confirm an active petroleum system; good source rocks with traps, reservoirs and seals. The oil found here however was not classed as a discovery as no test wells were drilled; the oil price at the time (a multi-year low of just $10/barrel) made exploration of this kind uneconomic. Clearly, now at $70/barrel the proposition is completely different and highly attractive. It should also be noted that at the time Shell drilled to relatively shallow depths (as 3D seismic was not available), hence drilling was even more of an art than a science back then than it is today.

From a geological point of view, the petroleum system in the north Falkland Islands is similar to the Albertine Graben Basin in Uganda (where Tullow Oil has had unprecedented success) both in terms of size and source rock. The Ugandan basin has been heavily explored to date, and in excess of 600m barrels of contingent resources have been discovered there since 2005. The Falklands however have not been explored since 1998 and remains a frontier region for oil exploration.

The first major challenge faced by any relatively small company undertaking offshore drilling in a remote location is the cost of securing a rig, and mobilising it to the location. The added difficulty faced by companies prospecting in the Falkland Islands in this regard is political, coming from Argentina, who are putting pressure on other South American countries and therefore international players drilling in the locale (e.g. the Santos basin off the coast of Brazil) to be uncooperative. We expect vocal opposition rather than military intervention will be the extent of Argentinian opposition this time. However, this has meant that Desire have had to secure a rig from a great distance (with associated mob/demob costs for that journey). Interestingly, Rockhopper management have also mentioned this as an issue in relation to their previous attempts to secure a farm-out partner, although we believe they continue to talk with an interested party; Desire signed a farm-out agreement with Arcadia in August 2008.

The offshore rig market has been exceptionally tight of late, forcing daily rig rates outside the financial capacity for many small exploration companies part of the reason why Desire and Rockhopper were always likely to share the costs of the rig. However, with regards to the rig, recent news flow, has been positive, with the announcement in early September 2009 that Desire Petroleum had exchanged a letter of intent with an established rigger, Diamond Offshore Drilling, to secure the use of the Ocean Guardian rig, a third generation semi-submersible to undertake a four well minimum drilling campaign in the North Falklands; it is capable of operating in water depth up to 1500 ft (and a maximum drilling depth of 25,000 ft.) which is more than adequate to meet all the potential needs of operating in the North Falkland Basin, albeit inadequate for operators like Borders & Southern in the south. This rig is set to mobilise at the end of November to arrive in the south Atlantic and commence a five month drilling programme in early February 2010.

Under the terms of the rig contract with Diamond Offshore Drilling Desire, which has cash of c. $40m already, would like to raise monies to commit to drill two or three additional wells (to make four or five in total- likely to be Ann, Alpha, Liz and Dawn/Jacinta) whilst Rockhopper (which also has a 7.5% equity interest in two of Desires likely early well drills, Liz and Ann as well as a further 7.5% in a likely later drill, Ninky) would like to drill two of its own 100% ownded prospects: Sea Lion and Ernest; the costs per well are likely to be in the order of $25m.

If both companies can successfully raise money, the exploration wells can be drilled; there are many more potential wells to be drilled although if all of the wells in this five month drilling programme prove to be dry then we suspect that both businesses would struggle to secure additional equity funding to keep drilling.

If oil is found however, both the Desire and Rockhopper share prices will see significant appreciation, although to calculate the precise value of oil held in the acreage, further test wells will have to be drilled (at further cost). At this point it seems likely that both businesses would farm out parts of their shares in the assets (to fund further development of the assets), whilst reducing their equity stakes in the oil, or they will be takeover targets from medium/large E&P players. The upside potential is very considerable. A Competent Persons Report released by Desire, and conducted by industry experts Senergy, highlighted that the mean, gross, un-risked prospective recoverable resources across ten of its main prospects is over 3.0 bn barrels. Depending on the oil price assumptions and the ultimate amount of oil discovered (after being discounted back by 10%), Senergy, the CPR estimates that the NPV for acreage held by Desire ranges from $296m (at 50MMbo assuming $75 oil) to $6.2bn (assuming 400MMbo, again assuming $75 oil).

The upside potential at Rockhopper is similarly large. According to the Competent Persons Report (which assumed $80 oil), and on a P50 basis, the five wells earmarked for drilling at Rockhopper have been calculated as having an NPV of some $5.05bn, again discounted at 10% on an estimated 370 MMbo. As an aside, the directors have estimated upside on RKH acreage to be 4.3bn barrels recoverable on a P50 basis.
Prospect Desire Interest (%) Rockhopper Interest (%) P50 (MMbo) Chance of Success
Ann 57.5 7.5 89 18%
34 11%
Alpha 100 0 331 6%
Liz 100 7.5 260 17%
Dawn 100 0 97 8%
Jacinta 100 0 437 6%
Helen 100 0 57 9%
258 11%
Rachel 100 0 230 15%
Beth 100 0 166 9%
Ninky 100 7.5 29 27%
29 27%
28 27%
28 27%
Pam 100 0 73 11%
88 11%
Sea Lion 0 100 170 23%
Ernest 0 100 156 23%

Any more thoughts on RKH fund raising? Sp drifting to a level (78p) where buying in becomes ineteresting, though with cash call coming up, is that now factored in or more downside to come? Also possible that new shares will only be offered to existing shareholders, so having a stake now may be a good strategy.
Chart not much help, imo, as recent sp surge was mostly due to DES securing a rig.

as voiced elsewhere, i don't think there's any hurry to jump into these falklands stocks ..... thought they probably have long term potential, they all seem to need a further pot of dosh, and of course drilling doesn't even start until sometime next year ...... i still reckon that DES has to be the pick of the bunch, as where that sp goes, the others seemingly follow

Harry.......1 question where do you see RKH price in 6 months time?

I still think RKH are a bargain at this price of all the Falklands oilys

marky .... i know you are a great follower and researcher of these falklands oilies, but are you saying that you reckon RKH is the best of the bunch, given the info currently to hand, rather than what might be?

Marky, I want to be in all three, as I was quite a while back, but obviously I want to buy at the best possible price.
I have no idea where the sp will be in 6 months time. Depends on a huge number of factors (price of oil, political stability in South America, weather, rigs, cash, force majeure etc) but once the rig is on site the hype alone will take this (plus DES & FOGL) up 50%, imo. After that the drilling results are going to be the deciding factor.

at the end of the day, drilling results are about the ONLY deciding factor

Harry 50% is a very modest figure,when the first drill bit goes in to the the ground Desires share price will be between 3.00 to 5.00, now if they hit oil then that is another ball game and I have a figure of my own where I see the share price depending on how large the field is.

Oreil securities went in to it in a bit more detail and said for every billion barrels found would put 24 on the share price!!! but one thing for sure any oil found in commercial quantity will put a premium on all other undrilled prospects in the ground and at the moment your scratching the surface as the acreage Desire and RKH hold is huge.

Cynic I think Desire are the best of the lot but for value at this present time I go for RKH but a lot can change as we still don't know who RKH farm in is now if it was shell where would the share price be tomorrow?

on that basis, given that there is already sufficient "gamble" in everything, i would still plump for DES

just as well i bought in at 8p then!!

ah, but then you are a very clever chap!

Well done to the FT getting it total correct on the 20th October about Desire now are they correct about RKH!!!

http://www.ft.com/cms/s/0/fc5dfe7a-bea1-11de-b4ab-00144feab49a.html

Placing puts a hold on Desire
By Neil Hume and Bryce Elder

Published: October 22 2009 03:00 | Last updated: October 22 2009 03:00

Desire Petroleum was in focus yesterday as its shares eased 0.6 per cent to 84p after the Falklands oil explorer announced plans to raise up to 62m via a placing and open offer at 70p a share.

The funds will be used to fund Desire's drilling programme.

Traders believe Rockhopper Exploration , another Falklands explorer, is set to announce a 50m equity fundraising. Its shares added 1.4 per cent to 74p.

The money raised will have to be at a big discount to the actual sp because they are dependent on DES for the rig and will only be allowed to drill their wells after Desire Petroleum have spud at least 4 of their own : that will take some time....so at a guess a placing at 55p or so ?...and it might drag the sp lower afterwise.

"Rockhopper Exploration plc (AIM : RKH), announces that it has conditionally placed 92,592,593 new Ordinary Shares at 54p per share through Canaccord Adams with institutional investors and certain of the Company's shareholders to raise 50 million before expenses. The Placing Shares equal 115 per cent. of the Ordinary Shares currently in issue. The 54p placing price represents a discount of 16 per cent. to the closing middle market price for an Ordinary Share on Friday 23 October 2009. The Placing has not been underwritten.

The Placing is conditional on (i) the passing of a Resolution at a General Meeting of the Company authorising the allotment of the Placing Shares under the Placing, (ii) the admission of the Placing Shares to trading on AIM becoming effective by 9.00 a.m. on 13 November 2009 (or by such later date or time as the Company and Canaccord Adams may agree), and (iii) a placing agreement dated the date of this announcement between the Company and Canaccord Adams becoming unconditional in all other respects by the same time."

Blast it ! 1p out by my guess...

http://www.investorschronicle.co.uk/InvestmentGuides/Shares/article/20091106/a36a1bd4-c9f8-11de-8483-00144f2af8e8/Striking-new-oil.jsp

Striking new oil

A remote gas discovery needs to be even larger to make viable the costs of developing infrastructure or LNG facilities to commercialise it. For example, Rockhopper Exploration's Johnson structure in the Falklands is estimated to hold a contingent resource of 1.6 trillion cubic feet of gas, yet it is not yet considered commercial given its remote location. However, being able to combine it with any drilling successes in the Falklands next year could change all that.