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.

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

Broker recommendations : BP, Cairn Energy, Rockhopper Exploration
11/08/2011 by ukcitymedia.co.uk about : Broker Recommendations
http://www.ukcitymedia.co.uk/news/fullstory.php?id=2061


In a round-up of recent oil sector broker ratings Credit Suisse rates BP 'outperform' with target price 610p. The broker expects positive news from BP's Gulf of Mexico assets. Credit Suisse also rates BP's long-term exploration prospects, though the 'new strategy will take time to implement' says Credit Suisse.

Goldman Sachs reiterates a 'conviction buy' rating on Falklands oil and gas exploration firm Rockhopper Exploration at target price 728p. 'Significant exploration potential is also being ignored' says Goldman Sachs valuing a 50% upside. The current share price underestimates Sea Lion, says the broker.

Deutsche Bank rates Cairn Energy a 'buy' but cuts its target price from 480p to 450p in light of the firms failure to find oil in Greenland which the broker believes contributed 34p to NAV, net asset value. Deutsche Bank rates the current share price slump as a buying opportunity, particularly below 345p.

In oil and gas, closely followed Falkland oil explorer Rockhopper Exploration (LON:RKH) told investors that the Government of Singapore Investment Corporation has increased its stake in the company.

A regulatory statement on Londons AIM market confirmed that the investor acquired 250,000 Rockhopper shares, taking its total holding to 7.825 million shares or 3.031 per cent.

This transaction came on a particularly volatile trading session, last Thursday, amid a market-wide sell off.

Resources update + Future drilling plans:
http://moneyam.uk-wire.com/cgi-bin/articles/201108150700103301M.html

Looking great.
Lowest projection is higher that the previous highest projection, and yet still the sp is around 50% of its highest.
Managed at 3rd try to top up. Was in auction first and second attempt.

A climb up to 300p this late summer ?......way overdue....

http://www.rockhopperexploration.co.uk/pdf/aug-update-2011-post-10-6.pdf

Several posters on a competitors site are surprised at the small effect the latest RNS is having on the sp.

What is not helping is this.
I still think many people look at shares like Rockhopper and see AIM in big bold print.
They tend then not to see that a very few companies trading via AIM are well run and above board.
A bit like seeing a name with MP after it. Most people think quite rightly fiddling git, and yet like the RKH's of the AIM world there a few (OK probably a only a couple) of MPs who are honest and above board.

Strange analogy I admit, but it works for me.

The sooner they leave the seriously tainted AIM for one of the main FTSE platforms the better.
We can all put our share holdings into an ISA.
Also some tracker funds would come on board.
That on its own would boost the sp.

RF - yes that would be nice, but it does presuppose that the markets resume stability ..... today's rise is a good start, but it feels as if there is some very understandable general selling into the rally

Fox Davies Update

Rockhopper Exploration (BUY, 5.00) (LON:RKP, 217.75p, ▲ 4.44%) provided an update on the interpretation of the fast track seismic data over acreage on licences PL032 and PL033. Highlights: Initial interpretation of fast track new seismic data in PL032 and PL033 completed; Seismic shows Sea Lion Main Complex ("SLMC") to extend to the south and new high case area to extend over 90km2; Two new fan prospects identified within new seismic, Casper and Kermit; and management interpretation for SLMC potential size is low case of 608 MMbbl STOIIP, mid case of 1,086 MMbbl STOIIP and high case of 1,279 MMbbl STOIIP. This initial interpretation, combined with well data from 14/10-2, 14/10-3, 14/10-4, 14/10-5 and 14/10-6, indicates that the SLMC comprises two fan lobes sourced from the same main feeder channel just to the east of the 14/10-5 and 14/10-2 wells. The two lobes, represented as sand packages within the wells, are identified as the SL20 and SL10 units, and, from the formation pressure data acquired in the wells, are shown to be in pressure communication. The two packages together comprise the SLMC and are interpreted to comprise of mass flow turbidite sand sequences prograding from the sand input point to the east and extending beyond the southern boundary of licence PL032 into licence PL004, where Rockhopper has a non-operated 7. 5% working interest. The Company believes that recovery rates of 30% to 40% could be achievable using industry standard production techniques including water injection, artificial lift, deviated or horizontal wells and /or other enhanced oil recovery techniques. Should a recovery factor of 30% be achieved, based upon the Company's mid case area, the SLMC would contain approximately 325mmbbls recoverable oil. Should a recovery factor of 40% be achieved, the mid case number would increase to 434mmbbls recoverable oil

She going to blow at some point to many postives

Rockhopper Exploration (LON:RKH) now estimates that the Sea Lion oil discovery contains between 608 million and 1.279 billion barrels of in-place oil following the interpretation of fast track 3D seismic data.

Great. However Moody's drilling plans seem to exclude a third party / partnership.
Does this mean that they will sell to a global player for production once reserves are better known or take it further themselves?

Avsec who knows but BHP had two blokes on rig watching last flow test maybe Chav can confirm this.

They did indeed marky and I would be very surprised if RKH get no offers from 3rd parties with developing Sealion...whether the deals would be acceptable to RKH is another thing.

meanwhile, sp is performing OK but not exactly fizzing, so some clearly taking a chance to bail out on the rally

Canaccord conclusion (with much optimism):
Impact
Rockhoppers resource update is very encouraging and we expect the market to react positively to the materially increased scope of the Sea Lion project. Using an oil price of US$87.50/barrel alongside a 12% discount rate, we estimate Rockhoppers NAV to be 871p/share. Our NAV hinges on our estimate of the groups current cash position plus our estimate of the value of the Sea Lion Main Complex, using the updated mid-case recoverable resources of 325 mmbbls, risked at 75% ahead of a formal CPR audit.

Action/Valuation
We maintain our BUY rating and have increased our NAV-derived target price from 593p/share to 871p/share

A few more brokers updates

Our current target price of 400p is based on 155mmbls for the Sea Lion discovery. This mornings announcement is very positive, and we will be reviewing our valuation to incorporate new volume estimates, said analyst Charlie Sharp.

For now, the target price stands at 400p.
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Evolution Securities analyst Keith Morris highlighted that the mid-case estimate for recoverable oil is around 60 per cent higher than the 200 million barrels assumed in his model. Our core plus risked upside for Rockhopper is 671p per share, Morris said in a note to clients. Assuming recoverable resource of 326 million barrels oil equivalent this would increase to 882p. The analyst did however say that his valuation includes theoretical upside and until more drilling has been done, he is maintaining a 450p target.

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While repeating a buy and putting his 510p target under review, Westhouse Securities analyst Andrew Matharu said: The Sea Lion Main Complex (SLMC) is, in our view, now a viable stand-alone project with additional upside still remaining. Similarly Matrix Capitals Charlie Sharp also kept a buy and put his 400p target price which is based on 155 million barrels of oil under review

http://en.mercopress.com/2011/08/15/rockhopper-raises-its-estimate-of-oil-in-north-falkland-basin-to-608-million-barrels

Rockhopper raises its estimate of oil in North Falkland basin to 608 million barrels
Rockhopper Exploration PLC upgraded its estimates of how much oil it could find off the Falkland Islands, boosting hopes that the remote territory in the South Atlantic could become a new oil province.

Holding up in a bad market dare i say.....you still holding cynic after your top up