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.

Must be the best performing stock today? Must admit I am very surprised as thought the news would get swallowed up in negative market sentiment, but great performance for those brave enough to take the plunge.

Note from Matrix:
Sea Lion step out success well #6 finds oil outside the low case reservoir estimate. Well 14/10-6 drilled offshore the north Falkland Islands as a westerly step-out of the Sea Lion field found 36m net good quality reservoir (average porosity 22%) and filled to spill. Importantly, pressure information indicates that the reservoir (the Sea Lion Main Fan Complex) is in communication with wells 2, 4 and 5 on the field, which should enable a simpler, quicker and lower cost development. The well also encountered a lower sand package of similar quality, though water wet. Rockhopper believes that this sand has the potential to be water bearing elsewhere in the field.

The rig will soon move to the next drilling location, designated exploration well, about 3.3km to the northwest of the Sea Lion discovery well #2. Following that there will be at least two further wells in this programme. We estimate that Rockhopper, which is spending about $0.8m/day on the drilling programme, should have sufficient funds to last until late Q1 2012.
We see this as an excellent result for Rockhopper, increasing the overall size of the field, expanding the low-case reserves, and confirming reservoir communication. Although much work is still needed to integrate the results with the 3D seismic data, it seems reasonable to assume that the low case could now be some way north of 200 mmbbls. In the absence of this reserves/resources update we maintain, for now, our 400p price target and BUY rating.

Great result today in a gloomy market gets even better knowing Pro sold half his holding and bought char........one word sums up Pro.......Plonker!!!!!

Good result for you.

400 mill barrels +

This one to pile into and the sooner the better.....should carry on rising tomorrow...perhaps back to 230p....perhaps even higher by close of play tomorrow....

Rockhopper Exploration (LON:RKH) offers an excellent buying opportunity after its latest drilling success on the Sea Lion oil discovery, according to Merchant Securities analyst Brendan Long . The trouble is, however, that against the backdrop of the current market turmoil many investors may want to seize a profit when they can, Long suggested. And this may keep a lid on what the Citys experts believe should be a significant re-rating for the stock.

We believe Rockhopper is under severe margin call pressure and that certain investors may be keen to monetise any gains resulting from the success of 14/10-6. This has created an excellent opportunity, Long said. Indeed the analyst stressed that the fields commerciality is now absolutely obvious, even though he feels the market still has its doubts.

It is also important to consider that the increased scale gives the company more options, because it now has an asset that will attract the largest oil companies in the world as potential partners or acquirers, this reduces funding and operational risks,

Like Brendan Long, Oriel Securities analyst Richard Rose also stressed that Rockhopper shares have been hit hard with the recent market sell-off and in a note to clients he too repeated a buy recommendation for the stock. Importantly the Oriel analyst reckons todays result will in fact go a long way to addressing the markets concern over the size and commerciality of the Sea Lion discovery.

In valuation terms Rose said that this resource uplift equates to around 70p a share in his valuation of the company, and he now reckons that Rockhopper shares should be worth 540 pence each.

Similarly Matrix Capitals Charlie Sharp is waiting for a resource update before he ups his current 400p price target, but he was very positive about the result.

We see this as an excellent result for Rockhopper, increasing the overall size of the field, expanding the low-case reserves, and confirming reservoir communication, Sharp said in a note to clients. Although much work is still needed to integrate the results with the 3D seismic data, it seems reasonable to assume that the low case could now be some way north of 200 million barrels.

Westhouse Securities analyst Andrew Matharu said: This is clearly a positive result for Rockhoppers appraisal programme in the North Falkland basin. The analyst repeated a buy recommendation in a note to clients this morning. We have as a result increased our estimate of the Sea Lion resource to the 2010 RPS Energy best estimate of 242 million barrels. As such, we concur that the discovery is commercial, given the resource estimate and the result of the recent flow tests at sustained rates above 5,500 barrels of oil per day.

Based on this change to his model, Mathuru has increased his price target to 510p a share.

should fly tom as DOW up 4 %


09 Aug Rockhopper... RKH Canaccord Genuity Buy 593.00 593.00 Reiterates

Rockhopper... RKH Fox-Davies Buy 500.00 500.00 Retains

Rockhopper... RKH Evolution Securities Buy 450.00 450.00 Retains

Rockhopper... RKH Matrix Buy 400.00 400.00 Retains

Working late buy orders in........clip clop/ with a spark in the heels of them clogs...lightning fast tom good job am going down the mine tonight....clip clop clip clop

surprised to see offer book outnumbering bid by 2:1

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with some trepidation, i have just topped up at 211.25

U have jinksed the share Cynic its the only red on my watch list today.

.

When will their next fund raising occur, and how much do they need to raise to meet the field development cost?

As per post #5093 (part answer to your question):
"We estimate that Rockhopper, which is spending about $0.8m/day on the drilling programme, should have sufficient funds to last until late Q1 2012."

Harry thanks but what we are looking at is after completion of the Sealion drilling campaign they will move on to field development to bring it to production. This "ball park" number would give shareholders an idea of how much share dilution would be required in future either via farm in or share placing etc.

Hal it depends if they bring a partner on board or two who knows.

Harry agree but whatever they decide to do may result in dilution for existing shareholders, so it would be useful to know the estimated field development cost.

My own thought for what its worth is that they will indeed take on a partner if they do decide to go for production.
They could then give any partner a percentage of the fields discovery pre production flow, enabling them to enter production without raising further cash which in itself cheaper than raising money through existing shareholders or the market itself.
A production company would also have the infrastructure to transport the oil if it was decided that rig to shore via pipeline was not practical (which has been suggested).
I feel that we would then have the best of both worlds, IE shares in a proven oil explorer coupled with its partnership with a producer.
I am sure that for Rockhopper to become a producer would take a huge amount of the potential profits from Sealion.

Not in any way an oil expert, in fact the vast percentage of what I have learned about the oil industry has been gleaned from this and other similar sights, with a similar percentage from my own attempt at research, but the above scenario appears to be a sensible way to go.

Edit..........Just noticed the comment re dilution. As the share price (read NAV value) pre production would be worked out at profit per barrel sold in situ, any move toward post production NAV would be worked out at value per barrel produced against cost of production, hence no dilution

Would welcome views on the above.

Taken from iii....Gramacho.......Looks like about 400 mill barrels + by the time we are finished.


The superb result from 14/10-6 stirred me to work up a simple net pay model for Sea Lion Main Fan to get a better feel for what the forward looking P90 might be.

P90 VOLUME ESTIMATES
It is shown in the attached slide.

[IMG]http://i55.tinypic.com/34hxd14.jpg[/IMG]

The black grids (each mostly 1km2) are in the old P90 area. With the average net pay assumptions shown and using porosity and Sw assumptions from the wells and a 30% RF, which I believe is appropriate, the model shown gives 143 mmbbl for the old P90 area. This is within 10% of the RKH figure of 155 mmbbl. I suspect the distribution of net pay might be more variable according to channel locations and hence it could do with some geological input. Nevertheless its probably good enough for now.

The purple grids show the area and net pay values used for the additional P90 added by 14/10-6. In effect the old mid case/P50 area becomes the new P90 area. This adds a further 70 mmbbl taking the P90 up to 225 mmbbl. The beauty of 14/10-6 however is that it opens the way for an extension to the south west down to the block boundary, which could add a further 77 mmbbl in the red grids and raise the P90 to about 300 mmbbl.

One figure which caught my eye in the 14/10-6 RNS was the Sw = 21% which is the lowest average Sw in the field to date. I am not sure anyone would have put money on the 14/10-6 well having the highest oil saturations yet to be found in the field. It was very welcome, contributing to the OIP and hence reserves.

FUTURE WELLS
14/10-7 is at the northern limit of this model so the pay could be anything from 0 15m. Heres hoping the new 3D interpretation is sufficiently far advanced by mid Sept to locate 14/10-8 3km SW or SSW of 14/10-06 to prove up the southern tail.

If this well were successful I cant help wondering if DES and RKH would agree to drill a lease line well at the 14/10 southern boundary.

The costs could be split 50:50 saving RKH money and perhaps making it feasible for DES to raise the funds if their balance is insufficient
It could prove full extent of Sea Lion on RKH acreage
It would help DES to go on to prove up Shona/Sea Lion South
And it would be useful information for both operators in any field unitisation discussions should Sea Lion spill into the DES block.

LOWER FAN
The Lower Fan pressure comment is puzzling:
Formation pressure tests indicate B15 sand to be in pressure communication with the Sea Lion main fan complex giving significant updip exploration potential.

Unlike previous RNSs there was an almost complete absence of depth information in the 14/10-6 RNS. All we were told is that the B15 lower sand package was below the Main Fan OWC of -2477m SS.

The 14/10-6 prognosis was for the top Main Fan to be 14m updip of 14/10-4 which would place it at -2426m SS. Since the gross reservoir interval was 42m, the B15 Lower sand would have to be deeper than -2468m SS without accounting for non-reservoir sections (shale intervals etc.) that would result in it being significantly deeper.

So with the absence of information it is difficult to read anything into the pressure communication with the main fan complex other than it is interesting to note there was no form of qualification in the statement. Perhaps more insight can be gleaned at the AGM?

For example take the RNS of 11 Feb 2011 Post 14/10-3 also dealing with pressure info
MDT pressure readings taken over Sand 3 indicate that it appears to be lying on the same oil pressure gradient as the main Sea Lion fan in well 14/10-2, indicating the potential for good lateral communication. Further wells and technical work will be required to determine if this is the case.

Exactly 2 months later the 11 April Update post 14/10-4 stated:
Company does not believe 14/10-2 and 14/10-3 to be in communication

Given that there is nearly 30m of 20% porosity sand in the B15 sand at 14/10-6 there is potentially a large pore volume updip to accommodate a significant oil accumulation. A 14/10-8 well SE or SSE of 14/10-6 would shed light on this whilst confirming a further Main Fan P90 upgrade.

I took advantage of recent sp falls to get back into RKH prior to the 14/10-6 well results and believe it is now substantially derisked for most holders. Given time and 2/3 more wells to complete appraisal and grow volumes then there is only one way this sp can go. Looking forward to seeing the sp growth over the next few years as Sea Lion comes on stream.

Regards and GLA,

Gramacho