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.

Harry that was a good artical.....

A big step for RKH going from explore to a producer, would like a bit more meat on the bone to chew over with Africa interests.
Wish I had a crystal ball to see in the future of RKH in 5 years time as it looks bloody interesting.
Now PMO has joined the boys down there it will open the gates for others to follow at lot easier.

looks cheap at todays price


Premier Oil’s (LON:PMO) US$1 billion Falklands foray has prompted one City house to downgrade, though others are much more optimistic about the potential of the deal with Rockhopper Exploration (LON:RKH).

Premier announced yesterday it is acquiring a 60 per cent stake and operatorship of Rockhopper’s Sea Lion field with an initial down-payment of US$231 million.

It has also agreed to pay exploration and development costs running to US$770 million.

“[The] assets change Premier's risk-reward profile, reducing leverage to exploration, pushing positive free cash flow out to 2017 and increasing exposure to one Falklands field development,” said Liberum Capital’s Andrew Whittock, as he moved Premier to ‘hold’ from ‘buy’.

A better reflection of opinion in the Square Mile came from Will Arnstein, oil and gas analyst at FinnCap who raised his target price by 30 pence to 410 pence and repeated his ‘buy’ advice.
He described the acquisition as “highly attractive”, saying it added significant discovered resources at a very low up-front cost.

“While geographically distant from its existing operations, the assets complement the strategy, adding future production growth at a time when the existing portfolio is forecast to go into decline – thereby removing reinvestment risk without stretching the balance sheet today,” Arnstein said.

Elsewhere, RBC Capital Markets said the Sea Lion development segued well with the Premier’s cash flow profile.

The field is expected to be on-stream 2017 (and will produce 80,000 barrels at its peak), which means the majority of the estimated US$2 billion capex required for development will be needed from 2015 onwards.

“This fits with Premier's maximum cashflow generation with production at 100,000 barrels of oil a day from the existing portfolio,” said RBC’s Nathan Piper.

He rates the stock a ‘buy’ and has raised his price target to 750 pence a share from 680 pence previously after adjusting his net asset valuation of the company in the wake of the deal.

Barclays note:
"Rockhopper’s farm-out to Premier, in our view, is a major step forward in the progression to first oil of the company’s key assets, the Sea Lion field in the North Falkland basin. With US$722m of carried development capex, plus US$231m in cash and a stand-by financing facility also provided by Premier, Rockhopper is fully funded to first oil and beyond. Premier, which is taking over operatorship, also brings much needed technical expertise. Despite this, the terms were below what we had assumed in our model and, as a result, we reduce our NAV by 175p to 415p. This is primarily driven by a lower residual interest that Rockhopper has retained in the basin at 40% instead of 60% (-100p). In line with Premier’s estimates, we are also factoring a delayed first oil (-40p), and a revised resource estimate (-35p). In addition, given a lack of catalysts over the next 12 months that could lead to a re-rating of the shares, we have applied a 15% discount to our NAV, reducing our price target to 350p from 590p. This also reflects a deteriorating political risk outlook in the near term that we believe is likely to follow this transaction. With 41% potential upside vs 46% average upside for our European E&P coverage, we downgrade the shares to 2-EW from 1-OW.
New NAV: Although we did not expect an over-crowded dataroom due to the political tensions between the Falklands and Argentina, Rockhopper’s 60% sale looks to be a reflection of few companies being willing or capable of taking on such a development, equivalent to a distressed sale. In our NAV, we reduce our resource estimate from 420MMbl (gross) to 370MMbl. Our number was ahead of the CPR (381MMbl), as we had assumed better recovery factors (RFs) at 33%. We believe the RFs are still valid, but Premier carries a lower volume in-place than the CPR, hence the reduction in resources. Finally, our NAV excludes any exploration upside in region of ca 300MMbl, based on Premier’s estimates."

SP has been knocked down by 70p....even EK has been caught out.....he bought some at 300p......graph does not look good.....might drop into the 190's before rebounding....

Ain't people strange.

An oft post we see now, is that Rockhopper is years away from real oil, IE oil out of the ground and that the excitement has moved to other oilies drilling the southern fields.

What is clear, is that Rockhopper 'HAVE' oil and that if/when oil is found in the southern fields, that oil will not suddenly appear above ground, but like Rockhoppers oil, will be years away from reaching the surface.
Thats what oil exploration is about.

No wonder traders and shorters are having a field day!

greek you are right do you remember what happened to SEY and their "stupendous" find Chingueti offshore Mauratania.

Hi Halifax,

Sorry, but no. I have never followed SEY, but by your post, I presume the same thing happened that is happening with Rockhopper.

That was with Hardman oil and gas. and Tullow oil......flowed 75000 barrels per day...ony to slump to 13000 barrels per day after a few weeks production......it was weird .....unlucky really....RKH like many others should rebound but once a share dives like it has : probably has to find a bottom before a climb can begin.....way overdone .....but there you go......so many good companies have had their sp slaughtered in this global downturn...too many to mention......if I had some spare funds I'd be looking to buy in at some stage but at the moment too tied up in FOGL.....and I'm hoping for a positive outcome for a change for that one....

http://en.mercopress.com/2012/07/17/argentina-warns-uk-company-over-involvement-in-falklands-oil-production

Argentina warns UK company over involvement in Falklands’ oil production


Argentina will take legal actions against Britain's Premier Oil after the company agreed to invest 1 billion dollars to help develop an oil field off the disputed Falkland Islands, Argentina's Foreign Ministry said on Monday.


-----------------------------------------------------------------------------------
last deadline was May and which court are they going to take it to where micky mouse lives.

sp being hammered this morning, but i think (hope) that is really just on the back of forced sales following the BOR debacle

Hi Cynic,

The problem is, 'panic selling' and as with such things, panic breeds panic.
If I was younger and had the money, I would be buying more Rockhopper for the long term.
The FI oilies appear to be like a roulette game, with punters going from a black odds bet to a red evens.

i think you're right, but as above, i suspect also a lot of forced sales .... interestingly PMO is stronger

Agreed re forced sales.

Whilst I fully agree with most posters, that there will probably not be an agreed take over for Rockhopper, as with all companies when the sp get as far below value as Rockhoppers sp is at present, it has to be vulnerable to such a takeover.
Just watch for the institutions to grab shares at the current low price, which must be an absolute steal.
Most institutions buy for the mid to long term, so whilst investors like ourselves tend to look at the future in terms of months, the big boys think in terms of years.

my take is that any of the larger companies would actually target PMO which has a very interesting portfolio

Agree, but if they take Premier they would surely go for RKH as well.

Surely if any of the majors were interested in RKH they would have got in before PMO. I don't think PMO would be of interest to any of the big boys on the basis of their RKH holding.

correct Harry, but PMO's slice of RKH adds to that portfolio ...... all totally hypotheical and without any foundation, but if a major took out PMO - not that farfetched for obvious reasons - it might suit them to take out RKH at the same time (rather more farfetched!)

We needed cash and a partner and we got both ....I don’t think it’s a bad deal in this market.

Where money is to be made you will always have interested parties so watch this space

I think we have a few months if other parties want to show there hands,who knows it could be Shell after pulling out of Cove.

not an answer to the question raised lol

Muppet stock really - the rampers were saying the farm out was going to be so good, I said it was going to be low value.

It was low value and also no chance of oil before 2017 - so why is anyone still holding RKH ? Looks like many are agreeing now and selling.