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An interesting RNS.

The Lower Fan was not expected to be there, but it was and also 14.5M of net pay in it.

The Main Fan was 79M of net pay, far in excess of the wildest expectations of many.

Porosity and permeability are good.


So now we have two key events ahead. Full flow test of the Main Fan where we want to see circa 4000bopd. This will go towards a proper "commercial" tab being applied.

Then a westerly appraisal outside of P90 area but in P50 area.


A good flow test can send this back to 350p levels easy.

More P50 becoming P90 will send this back upwards of 400p.


And so we patient RKH INVESTORS continue to wait for the company to do the work, and I still have not sold a single share :) Looking good !

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I am expecting no interim update.

......The Company now intends to test the well. Tests will comprise both mini DST (downhole dual packer MDT) and a fully engineered drill stem test (DST). The Company intends to perform mini DST tests on both the upper and lower fans and to perform the fully engineered DST on the upper fan only. Testing operations are anticipated to take approximately a month and a further announcement will be issued once all testing operations have been completed......


Which is good news, what we want next of the full flow test results, defined and unarguable. No interim update now. Just hopefully some share price exploding good full flow test results for the main fan.

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Mirabaud have always been VERY anti-Falklands IMV.

They have been promoting Africa and Kurdistan and being anti RKH and all FI stocks.


I ignore anything they have to say, they have nothing positive to say about anything Falklands related and soon I hope they are eating large doses of humble pie !!!!!!


Just IMO.

Good day yesterday, buyers starting to move back into the market.

All we need now is a good flow test, if its market pleasing then this should be back over 350p in no time.

Lets look at what is not being said, which may explain share price strength (they have had 3 successful drills so far and the share price has risen strongly after two of them, the other one the share price fell but this is simply due to an overhang that was ongoing at the time).


First up, Main Fan Net Pay.

In the last CPR it was based on Maximum thickness would be 65M of net pay in the Main Fan. Well, here we are with 79M of net pay. Well in excess of the Max figure used in the CPR. P50 average figure for the main fan was 34.5M in the CPR. P10 average thickness of the main fan was 51.3M of net pay. This suggests the Main Fan is going to be rather bigger than was previously thought. This pushes up estimates IMO to the realms of 250MMBO recoverable from the Main Fan)


Second up, Lower Fan Net Pay.

It was expected that no lower fan net pay would be present at this location, but we have over 14M of lower fan net pay here. This suggests the lower fan may be in the realms of its P10 size (or circa 150MMBO recoverable on its own from the Lower Fan).


Now its Main Fan Flow Test - expectation is circa 4000bopd or more - figures well in excess of that will certainly light things up and we could see the use of "commercial" by even the most bearish of anti-Falklands brokers as they gulp down their humble pie.


IMV, all being well, at the end of the flow test Sea Lion can be firmed up with 250MMBO recoverable and then the next well appraises both Main and Lower, Lower being the optimal target. All being well there this will allow, after a lower flow test at the next well, for the addition of perhaps another 100MMBO recoverable of the lower fans possible 150 on to the 250MMBO recoverable of the Main Fan, leading to a large jump in recoverable barrels figures.


So three key events ahead.


Flow test results of Main Fan in 3 to 4 weeks.

Release of fast tracked 3D seismic results and updates on Sea Lion and new leads in 6 to 8 weeks.

Next drill results in 8 to 10 weeks along with, all being well, Lower Fan flow test.


If, and its always a big if, those three go well there is certainly no reason to not expect the share price back to the circa 450p or more levels, even in the summer lulls of the market.


I remain solidly invested in RKH as I have been since 38p and look forward to more success, if nothing else there is going to be lots of news with ARG/RKH (and DES but the less said the better with them) all due to release 3D seismic results in later July and RKH with another 3 wells to drill back to back.

You've told us ad nauseam about your investment strategy re RKH. Are you trying to convince us or yourself?

I'm not sure about the lower fan but the main fan is a big discovery and at a guess 90% certainly commercial.....sp starting to rise and plenty of room for it to go up....

very strange - L2 shows 2 blocks totalling 50 million(!!!) on offer at 263.5

now removed!

Just a little example of where we are :

Using 8.5US$ per barrel for oil in the ground.

Excluding - cash in the bank.
Excluding - other prospects.
Excluding - yet more Sea Lion upside.
Excluding - new prospects coming in July.
Excluding - %'ge ownership of other license areas


The present 155MMBO recoverable of just Sea Lion as is is worth 3.19 per share

The expected 225MMBO of where we are now of just Sea Lion is 4.63 per share

The potential 350MMBO proven by Autumn from just Sea Lion is 7.20 per share.


Flow test of 14-10/5 good, 14-10/6 good results and we could easily be circa 500p in Autumn time.

Goldman Sachs recent Oil Sector Note which highlights just how much upside on RKH, one of the very best !!

http://www.mediafire.com/?2kdabr40ck5qkl6

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Fridays close of play stock on loan chart is now updated. 300K less shorts on now, so it looks like shorters are starting to close off positions ahead of flow test news.

Should keep adding to the underlying buying.

I find it difficult to believe anybody in the right mind would be shorting this now !....nuts....

Decent day so far.

To think, this was 367p at the start of the year and not in as good a position as now.

Really could zoom past 400p levels now with a very good flow test.


Enjoy the ride.

Provisional updates for Monday close show shorts had a go yesterday and ended up pushing the stock on loan figure back up to basically where it was at open on Friday.

They failed, and nice to say they have running losses now - when they close the price will rise again :) !



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http://www.ft.com/cms/s/0/5ed0da58-911b-11e0-9668-00144feab49a.html#ixzz1OcKQhC1J


.............................. for rival Falklands explorer Rockhopper Exploration, which rose 2.9 per cent to 276p following a positive meeting at Canaccord Genuity on Tuesday afternoon.

The Falkland stocks have taken a beating in recent months, partially because of the endless stream of dry holes that Desire Petroleum drilled, and partially because of the largely negative sentiment against the E&P sector. The way I see it, Rockhopper now has a very clear road map to commercialising the Sea Lion discovery, and I can easily see scope for a doubling in the share price before year-end, said Canaccord................

From FT Alphaville, a snippet :

http://ftalphaville.ft.com/blog/2011/06/08/588292/markets-live/


NH talking of the Falklands
NH the sector watcher saw yesterday
NH and boy was he impressed

BE Go on.

NH .....................We had a very upbeat sales-desk lunch yesterday with Sam Moody (CEO) and Peter Dixon-Clarke (FD) of RKH, convincing me even more that this is a core holding in any E&P portfolio. Recent appraisal well results on the Sea Lion oilfield in the North Falklands basin have been extremely encouraging, with the group now assuming a P90 reserves case of 155m barrels recoverable. As recently as last week the group announced that the 14/10-5 well, admittedly a very low-risk 600 metre stepout, had encountered 79m of net pay in the main upper fan and 14m of pay in the lower.

The upper result was around 10% better than the group had prognosed, i.e. a very encouraging result. This well is now being prepared for a testing programme, with results expected by the end of the month. The group is using Electrical Submersible Pumps (ESP) to aid the flow rate, and Id bet that Sams target of 4,000 b/d will easily be met as a result. Anything less than this would be disappointing. Following the 14/10-5 well, around mid-July the group will drill a 4 km stepout to the west called 14/10-6 which will address the mid-case reserves, although the company would not be drawn on what this means my guess would be back up towards the 242m barrels they originally carried for the field. Thereafter the group plans to drill two wells to the south, both targeting the low-case reserves the location of these should be helped by the fast-tracking of a 3D seismic survey just completed

Following these wells, which should take until Q4, it is likely the group will undertake a second CPR for release in Q1 next year. The group is well-financed for at least the next 12 months with $300m of cash. Our current NAV of 593p/share is based on P50 reserves of 170m barrels. Clearly this could end up on the light side if any of the 14/10-6 or the two wells to the south are successful. At 242m barrels our NAV is c800p/share vs a current price of 277p/share. The Falkland stocks have taken a beating in recent months, partially because of the endless stream of dry holes that Desire Petroleum drilled, and partially because of the largely negative sentiment against the E&P sector. The way I see it, RKH now has a very clear roadmap to commercialisng the Sea Lion discovery, and I can easily see scope for a doubling in the share price before year-end......................

The fact there is no present commitment past the 2 southern appraisal wells
(but they have lots of cash) suggests to me that RKH are saving the cash and will attempt to farm into DES new leads Shona and Beverly should the new 3D, once fast tracked by DES and RKH, appear to suggest they are good prospects.

A farm in where RKH takes a big slice of ownership of say the Shona prospect in return for paying a big slice of costs of the drill/s is a real win win win win win win for RKH and DES.

For DES they have to raise perhaps no money in the short term and can pay a small amount of the drill costs whilst relinquishing a big slice of ownership of Shona to RKH.

Any strike would mean DES would then be raising on the back of an oil find and at much higher prices.

RKH meanwhile get to explore without paying full costs, and any strike will not only bring a second FI discovery, but will also bring a second company into payment of development - hence cutting the funds required for RKH to get hold of in the development plan.

So a RKH farm in to the Shona lead might be a win-win for DES and RKH.


It is also possible that if ARG struggle to raise a big lump of cash for their drilling that they too could farm out their Lead 1 and Lead to RKH, again allowing ARG to raise less money with less dilution - whilst allowing RKH to get some low cost exploration done and bring more players to the party.


Late July and August will be very interesting, with ARG and DES and RKH all getting their fast tracked 3D back then - lots of decisions to be made.