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i don't suppose rkh or the investors are too fussed by the name of any partner, but more by the amount of dosh and expertise they bring to the table

http://www.no5.com/news-publications/news/david-holloway-talks-about-falklands-oil-exploration-on-bbc-radio

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is a farmin still on the cards as the price of oil drops?

I don't think oil will fall down to the lows of $20 of a few years ago! therefore, this blip in prices is only temporary while the global economies sort themselves out.
It might take a few months but we'll see $100+ again soon enough.
Any major wishing to acquire reserves would do well to exploit the current weakness in the market to drive a hard bargain and keep the future revenue share on their side.
As far as RKH is concerned they need a partner but not at any cost.
Interesting times ahead.
Anyone adding to their holdings while the price languishes at these lows?
TT

Well said, TT.
As for adding to my holdings, No as I have no available cash.

Business-as-Usual-for-Big-Oil-Despite-Falkland-Tensions.html

Business as Usual for Big Oil Despite Falkland Tensions

By Jen Alic | Thu, 05 July 2012 22:44 | 0

Benefit From the Latest Energy Trends and Investment Opportunities before the mainstream media and investing public are aware they even exist. The Free Oilprice.com Energy Intelligence Report gives you this and much more. Click here to find out more.

While tensions between Britain and Argentina have been rising as a natural response to the 30th anniversary of the Falkland War, oil is the primary driver of a renewed Falkland dispute that will determine the fate of tens of billions of dollars in black gold.

At the same time, while Argentine President Cristina Kirchner and British Prime Minister David Cameron are trading serious barbs over the sovereignty issue, big oil companies are largely ignoring the implications and conducting business as usual.

The Falkand Islands (Islas Malvinas) were reclaimed by the British in June 1982 after a 74-day war in response to an Argentine invasion. Argentina lost 649 troops in the war, while the UK lost 255 troops. The 30th anniversary of this war coincides with some major oil developments, which the UK is hoping to resolve by supporting the Falkland government’s holding of a referendum on its political status in 2013.

Argentina is on the losing end of this battle. Not only will the referendum favor the status quo, but Kirchner’s recent move to nationalize Argentina’s interests in Spain’s Repsol oil company has lost her any support she might have enjoyed (particularly from Spain, France and Italy) over the Falklands issue.

This is exactly what big oil is banking on, and recent months have seen some significant developments that seem to ignore the brewing tensions entirely. Two major discoveries are set to turn the Falklands into a key oil player almost overnight. The first, and less significant, is the 1.3 billion barrel discovery by Rockhopper’s Sea Lion (RKH) in the north Falklands Basin. The second is the 4.7 billion barrel prospect of Loligo, for which FOGL plans to start drilling its first well this month.

The Loligo prospect was boosted by news that came in the first week of June that Edison Spa, an Italian utility bought by France’s EDF in June, will acquire a 25% interest in northern licenses of Falkand Oil & Gas and another 12.5% interest in FOGL’s southern licenses. The significance of the Edison Spa deal is that it will provide FOGL with some much-needed financing to get things under way in Loligo. In return for the licenses, the utility company will fund FOGL’s drilling to the tune of $50 million and hand over another $40 million in cash.

The oil angle to the Falklands dispute gained momentum in 2010 when the UK authorized prospecting, provoking the ire of Argentina. The next major uptick in the ongoing crisis came in December last year, when Rockhopper revealed that its Sea Lion field held more oil than expected. This in turn led to an immediate increase in interest in the Falklands’ offshore oil prospects. The UK moved quickly to ensure the security of these discoveries by sending in naval units, prompting a harsh response from Argentina and escalating the crisis.

But the UK holds most of the cards. Not only will “Falklanders” vote to remain a self-governed overseas territory of the United Kingdom in a referendum, but Spain, Italy and France in particular have no sympathy for Argentina in the aftermath of its decision to nationalize its Repsol interests. Oil exploration is proceeding as if the dispute is resolved.

So with the oil momentum already picking up an irreversible pace, how will the sovereignty dispute be resolved? As far as the UK is concerned, it will not negotiate the issue before the United Nations unless it is asked to do so by the Falklands legislature, which is happy to hold a referendum. The results of the referendum will provide the UK with any ammunition it needs.

Argentina’s only real recourse here is military. We can expect a great deal of bluster on the issue and some high-minded rhetoric recalling British colonialism and the like in the coming weeks, particularly as plans proceed at a fast pace for exploration and drilling. But in the end, this will be toothless bluster designed largely to allow Kirchner to appease a public that has long been taught to view the Falkland Islands as an integral part of Argentina.

The UK might have been willing to decolonize the Falklands, and certainly, it has seriously entertained the notion in the past. But now that the Falkands are set to become a major oil player, the situation is very different. No one wants Argentina to step in and claim the islands with the fear of nationalization fresh on the heels of the Repsol debacle. The bottom line is that Argentina lost the Falklands over Repsol.

By. Jen Alic of Oilprice.com

Nice write up, and speculation Darwin will be commercial.

http://www.pennenergy.com/index/articles/newsdisplay/1698147026.html

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I said the farm out would end up with RKH between 280p and 320p and so it is. Also said it would not involve DESaster at all.

And so correct on both counts :)

must be a relief to get something right once in a while

PP sp currently 247p right or wrong?

Jeffries comment

Acquisition terms in line with forecasts: $4.70/bbl (undiscounted, $3.61/bbl
@ NPV10). We estimate the cash and carry consideration equates to $4.70/bbl on an undiscounted basis. Using Premier’s forecasted capex profile for the carry, we estimate the NPV10 value of the $770m development and exploration carry is $558m, implying a discounted value of $3.61/bbl.

Premier brings valuable expertise and experience. We believe Premier brings a
valuable development skill set to the Sea Lion development with experience not only with FPSO developments in similar operating environments (water depth and weather conditions) but also with waxy crude developments through their successful Chim Sao development in Vietnam.

Development: First oil pushed back to 2017, in line with our forecasts, E&A
program TBD. Premier will take over operatorship and lead the process through FEED. We believe it will likely take some time for Premier to take over the project and determine if additional pre-development E&A is appropriate. If pre-development E&A is pursued, we believe it is not likely until at least late 2013. While updated plans are still preliminary, current rough guidance is for FDP in 1H14 and first oil in 1H17. Rockhopper had previously expected 2015. We forecast mid-2017 first oil. Premier estimates $5bn capex, in-line with our estimate of $5.1bn.

Exploration: Falkland Islands plus AMI for South Africa, Namibia and Southern
Mozambique. Premier will carry $120m gross capex which both parties estimate will cover 3 wells in the North Falkland basin including most likely Berkeley (29mmb prospective), S2 (50mmb prospective) and one other. They will also have an area of mutual agreement in the South Atlantic conjugate margin of South Africa, Namibia and Southern Mozambique.

the punchline of target sp and/or recommendation is missing

Is markymar still ramping RKH saying it will be 7 pounds on farm in news ? LOL :) I gather he was and also ramping that DES would be farmed into at the same time as RKH........ LOL :)

My comments on why the RKH Sea Lion farm in price was so low :

Technically Sea Lion is a syncline, so it is bowl shaped instead of the usual anticline (dome) - which makes well counts high and water flood difficult.

Note the comment from GCA in the CPR......

"......."The effectiveness of a waterflood and the recovery efficiency that might be achieved with this depletion plan are affected by several factors, some of which are fairly unique to Sea Lion. In particular, the areal shape of the accumulation which is controlled by a structurally low area that partially separates the western part from eastern part and which dips below the oil-water contact and is therefore water bearing at the SL10 and SL20 reservoir levels poses an unusual challenge to implementing an effective waterflood. Due to the stratigraphic pinchout of the sands around the periphery of the reservoir, the potential locations for injection wells are largely restricted to a relatively small area in the structurally low part of the field. This limits the choices for injector-producer pairing and, in GCA’s view, results in a fairly large uncertainty in the areal sweep efficiency........."


This combined with the thin sands and high viscosity makes waterflood results rather "up in the air".

As someone else has pointed out they only appear to have done 2D reservoir simulation with water flood. Why ? Could it be that owing to it being a syncline and with thin sands then the 3D reservoir simulation with water flood might result in poor recovery results.

Personally I think that is why the price for Sea Lion is so low - because if you did a 3D reservoir simulation with water flood you might be looking at only 20% recovery factory and not 30%.

That would move the recoverable barrels for Sea Lion down from circa 400 million to around about 266 million recoverable barrels. Now put 266 million recoverable barrels into the price paid the US$ per barrel figure goes upwards significantly.

I think PMO have done their due diligence correctly (may have even done a 3D reservoir simulation with water flood), have noted the water flood problems and potential for only 266 million barrels recoverable and have priced their bid based on this.

but at least RKH have oil which clearly PMO also believe to be commercial as a stand alone, and of course better still in the resonable likelihood that the field will extend and/or others will be found in the near vicinity

From patvan on III


patvan 11:30

On reflection... The deal was below market expectations for sure ,

The reversal in the SP on Friday was made as Sam Moody was doing a presentation at BoA Merrli Lynch at lunchtime .He is gutted by the SP reaction but still thinks it bis the right deal .

The key here is that the market has taken the bearish and very conservative assumptions from the PO slides to value RKH . I make the NPV to RKH of the deal with cash to be a minimum of $ 1.45 bln on a 10% discount rate using PO figures which are 10 to 20% below those of RKH . Obviously, taking cairns as a benchmark , the market will choose to value the cash , the exploration wells potential at zero while also choosing to take the worst outcome on financing ( I doubt SM will go for PO financing ....already talking to banks). So ex the cash the valuation falls to circa 1.15 bln $ ie we should be underpinned at a level of 260p to 280p with upside on any better news (oil price, SFB drilling news etc) .

The hot money is flowing out in search of more exciting venues ( eg GLG) .What was learnt at the ML presentation is that there were 6 bidders , none of them Sovereigns and none with assets in Argentina . Crucially those that entered the data room CAN do a bid ! As the deal does not complete before early September there is a 2 months window for a hostile bidder to step in should the market be dumb enough to sell these shares down to silly levels !

At the present market cap , considering the cash on the balance sheet ex the PO deal at 100mln a bidder could walk away with RKH at a very cheap price : let's be simple : bid at a 50% premium or slightly above $5 an undevelopped barrel and you could walk away not bonly with RKH but the whole of the NFB and thus take advantage of disappointed short term hot money .You would only have a two months window ! Remember that PO is a sub £2 bln company and cannot do this ! This is why they won the farm in, taking more risk but with big rewards .Alternatively , if ther is no bid in the next two months I would not be surprised that one would come for PO in the next two years .

I personally feel that SM struck the best deal he could in the circumstances to minimise risks on financing but he might have put the company in play !

All this is my personal opinion .I still hold 1/3 of my initial holding but would be adding below NAV at circa 270p) .

The best new RKH I feel is FOGL and the FKL is now a blue chip with long term growth prospects !

Best to all . patvan

The RKH roadshow presentation.

http://www.rockhopperexploration.co.uk/pdf/2012-07-Rockhopper-Roadshow-Presentation.pdf

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http://www.falklandnews.com/public/story.cfm?get=6332&source=3

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Worth a listen to :

http://www.fool.co.uk/money-talk/where-next-for-oil-12698.aspx

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SP nearing our TP of 160p