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.

Below the 450p now 447p

cynic,

The problem is often when anyone sells, they get slated as a de-ramper. Funny how if someone posts that they have bought, without any other comment, they don't get slated as a ramper.
As yet I have not sold 1 single share, but I take my hat of to anyone who makes a profit. Cash in the hand is worth 2 birds in a bush (depending on the birds, but I won't go there). A profit is a profit is a etc.

marky,

Agreed, as long as that chance plays out. There are some chances, that have too much risk for me to take, but I do admire those who sometime go all out for a win all, loose all chance. As to putting that all out risk into finance, thats not my style.

Marky : there is no reason why you could not at some stage take profits on say 50% of your holding....not now...!....next time...after a future good drilling result...wait the 30 days if it is not in a sipp and come back in perhaps at a lower stage .....maximising your profit...it takes a cool head and you need a plan in your head....if it goes the wrong way....forget the 30 day rule and jump back in...you might lose 10 or 20p of profits but so what.....do it with a small amount to start off with....it's up to you...timing is essential needless to say....

I also suggest that you guys check out Faroe Petroleum (FPM) on Aim...if one of the current wells planned comes in big time : expect a jump from 200p to 300p and that's with 25% ownership only(varies from well to well)....with very little downside due the number of wells.

Funny how papal power is no where to be seen now adays....wish I'd sold half at 5....to slow must take more tablets.,.

delete

I was feeling quite smug the other day when the sp dropped to 450p & I managed to buy at 454p, followed by a nice rise to 480+. Not feeling quite so good now as all that particular profit been eaten away! Am starting to get a bit heavy in RKH stock, so will wait for the DES drill results. However I still think that anything under 450p has got to be a good buy for a long term hold.

AGM presentation now available.

http://www.rockhopperexploration.co.uk/pdf/AGM_2010.pdf

.

On slide 4 of the presentation you can see there is a big chunk missing of sea lion from 3D....but how much of a chunk....am getting that warm feeling again.

maybe you pissed your pant's .......

lol.

Sunday Times is reporting a 200 million US$ rights issue will be done by RKH, the process starting in around 6 weeks. Going to be done by Bank of Amercia / Merrill Lynch it says.

Good timing IMO, let the Rachel result be out, let the new RPS report to be out with, all being well, an upgrade for Sea Lion and do a rights issue to reward the current share holders by allowing them to purchase more in a rights offering.

I shall be selling a few of my FTSE-100 stock holdings and taking up my full quota in this coming rights issue if the Sunday Times report is correct.

And do not forget, you have to be a holder in order to take place in a rights issue, as the rights to buy shares are only offered to existing RKH shareholders :) !! Shorters and non-RKH shareholders excluded....... ;)

A Rights Issue now will likely see Sea Lion appraisal starting in Q1 2011 (I am sure DES will not want 4 wells back to back, they will want a pause during which they can review data and reprocess).

I can see RKH taking the remaining 2 slots of the rig and some reshuffling of the provisional plans for Q1 and Q2 2011.

A Rights Issue will also reward all the shareholders, something that the directors have said they will do, and will then allow a major institutional fund raising and move to FTSE main market to be later in 2011 after Sea Lion has two appraisal wells and the recoverable barrels total will be circa 600 millon to 700 millon barrels and confirmed as well.

Therefore an RI now, with a move to FTSE main market and institutional placing in 2011 once the appraisals are done and at a very much higher price than today.

Thats what it looks like to me. I am looking forward to the Rights Issue now, the higher the price the better but on the flip side whatever price it is, I will get the new shares at that price :)

If Rachel comes in then I would see no reason in why the RI could not be at 500p to 550p levels, and if not and if not having a new CPR then 450p to 500p range.

Come on DES, strike oil at Rachel !! :)

i'ld hazard a guess at 1:5 @ 400 .... 425 would be pushing their luck without something more of significance on the table

6 to 8 weeks time.

Rachel news.

New RPS report along with Sea Lion upgrade and prospects updates.

Share Price around 550p to 600p at that time, with Rights Issue at 500p to give the discount to loyal shareholders who hold shares.


Perfect for me !! I will take up the full quota at 450p or 500p or whatever it is.

And as is said, if you sell your shares you cannot buy the Rights.

Only share holders get to participate :) Thats why a Rights Issue is right for RKH at this time :) !!

doh! .... that's rather stating the more than obvious

This information, if correct should push the sp up tomorrow morning......only problem is that the sp until christmas is rather dependent upon DES coming up with the goods which is doubtful.....might be oil down there, but will the well be commercial ?....and also long wait till RKH get the rig again....so looks like the sp will do well for perhaps a couple of weeks before pulling back again.....as far as the upgrade in reserves, haven't they already done that ....242 million barrels.....so far ....not bad.....perhaps more down there but let's not get carried away here...that is not a huge amount of oil......

Stolen from iii


This post captures thoughts on the AGM and concludes by looking forward to approaches that could be taken in the revised CPR. Note paragraphs in parentheses [ ] attempt to take the discussion further than at the AGM.

The Slide show with inspirational music Dont Stop Believing by Journey was a perfect introduction to the AGM and marked what a great achievement has been accomplished by the many people featured in the pictures.

INTRO PIERRE JUNGELS
Only 1 shareholder attended the AGM 2 years ago, 4 last year and 200 400 this year. The exponential growth in attendance matching that in the share price!

It was really positive to hear Pierre Jungels announce the appointment of a new Non Exec, David McManus, a Petroleum Engineer with a substantial background in Project Management with Shell, Ultramar, ARCO and BG group. IMO they are really short of development experience in house at present and he should provide the required oversight.

PJs reference to the other co-founder, Richard Visick, being present was interesting. He and his family owned 20MM shares back in 2006 when they were worth about 6MM and he still retains 11.3MM shares or 6.4% of the company which are now worth around 52MM!!! Was he the happiest person in the room?

SAM MOODY PRESENTATION
He pointed out how the fan as currently mapped is cut off arbitrarily at the southern edge of the 3-D seismic. The horizontal truncation is not a natural phenomenon... we ran out of time/money for the seismic! (lol) SM said the high amplitude area north of the 3-D seismic cut off is 50 km2.

He said again the (Main) Fan is likely to extend south of seismic. RPS used 2 D seismic lines south of the 3D seismic to estimate an absolute maximum (i.e. P1) area of 100km2. Dont know how much is charged with oil, it could be the whole thing.

[I agree; measured and calculated the same area. RPS however used 55 km2 for the P10 so evidently factored in about 5km2 to the south of the seismic. Though not technically rigorous, it is interesting to compare the current best estimate RPS contingent resources with those calculated using the P1 area of 100km2 and P50 estimates for the other parameters. This yields 790 MM bbl for the Main Fan alone assuming the P50 R.F. of 30%. Throw in another 50 MM bbl for the Lower Fan excluding a mapped fan to the north and the upside is hugely material over and above the current 240 MM bbl best estimate Contingent Resources.

It is also worth noting that slide 5, the map showing the amplitude anomaly does not terminate at the licence boundary which is 2km south of the lowermost portion of the map. The licence area to the south and west of the nose protruding south of the 3D southern boundary comprises a strip 11km x 5 km i.e. 55 km2. In other words the P1 estimate appears to assume Sea Lion extends to the licence boundary.

This obviously raises the question as to whether it spills over into the adjacent licence and what remit RPS had to examine fan development in Desires PLO 4 licence. (More on this later.)]

The only way to determine(if it is full) is to drill. However the lowest physically mapped point of the Main fan is above the Oil Down To (ODT)/Lowest Known Oil (LKO) in Lower Fan in the well.

[This was a theme that was revisited more than once in the presentations and Q&As. If the Man Fan and Lower Fan are on the same pressure gradient line it would be a very powerful argument in favour of the Main Fan being full of oil (i.e. the P10 case is the new P50) because you could deduce that the two fans were in contact elsewhere.

However they are not on the same pressure gradient, ref Fig 10 RPS Volumetric Assessment and as the report says they are not in communication and hence likely to form separate accumulations. In this case the fans could have separate OWCs, if they are not filled with oil.

In the huddle (more of which later) DB said that they had tried to work out an OWC from the RFT pressure data and that the calcs indicated the OWC to be above the top sand, hence the pressure data was **** and only another well deeper in the fan would show if there is an OWC. I agree with the well comment but disagree about the RFT data; it looks good to me.

The pressure of the lowermost RFT point in the Main Fan is about 3558 psia or about 3543 psig which is equivalent to a pressure of 0.438 psi/ft of burial below sea level. This is in close agreement with the pressure gradient of 0.433 psi/ft that you would expect to be exerted by a column of fresh water from the surface. This is supportive of good data; SM explained yesterday that Sea Lion has been formed by the deposition of sand into a fresh water lake. Therefore you would expect the porous sands in the area outside the boundary of the field to be filled with fresh water. The Main Fan pressure data indicates it is not in total pressure isolation and overpressured; it is in pressure communication with the surface. In addition the slope of the line fitting the Main Fan points equates to a pressure gradient of 0.36 psi/ft which is very much what you would expect for a crude of Sea Lion API gravity and GOR.

The pressure difference between the two fans is about 21 psi at an equivalent depth (the lower fan is displaced 21 psi to the right in RPS report Fig 10.) This is far in excess of the gauge resolution which is better than 0.1 psi. The pressure difference is real but small, again suggesting some kind of pressure communication of the Lower Fan with the surface.

There are at least two possible explanations for the pressure difference.

A) The 21 psi differential could be produced by two accumulations separately in contact with sandstone aquifers with the Main Fan having an OWC about 15m shallower than the Lower Fan. In this scenario you would look at the deepest sand with oil in the Lower Fan and deduce that the OWC in the Main Fan must be at a depth at least as deep as 15m above LKO in the Lower Fan. However based on slide 5 of the AGM presentation, 15m above LKO in the Lower Fan would apparently be lower than the lowest part of the Main Fan.

By reference to slide 4, any East West line in the vicinity of Sea Lion and 14/10-1 will go through the deepest part of Sea Lion. However it is dangerous draw a line straight across a seismic slide. The slide vertical scale is in time (milliseconds) and not depth. You will also note that a horizontal line drawn between the 14/10-1 and SL-1 wells would not correspond to the same depths in each well.

So whilst this explanation is possible, DB said to expect lots of sands in this part of the basin and some of these would be aquifer sands, it would appear to suggest any Main Fan OWC is lower than the lowest part of the Main Fan as currently mapped. That is possible if the main is thicker than recognised by the seismic and would be great news. However it will require a well to prove.

B) The sands are isolated within the Barremian shale. The pressure differential simply reflects how the pressure varies within the shale sequence. I think it has to do with centroid theory (but may be wrong). The centroids of the two accumulations are at different depths and the pressure difference reflects the difference in pressure within the shale between those two centroid depths. Unfortunately that does not tell us if the sands are full of oil!

So to summarise we have valid pressure data which may be providing a clue to whether the Main Fan is full but the data is insufficient. I take comfort in the fact that the source rock is so prolific. If the catchment area is a reasonable size then more than sufficient oil will have been generated to fill the Fan. (Catchment area is the area of the source rock from which expelled oil would migrate into the Fan structure.) It is possible to model the catchment area and the volumes expelled. I suspect they will update any modelling that has been done once the source rock samples from the well have been analysed.]

SM went through the current resource numbers and made the point that they were in disagreement with RPS over the P90 figure. P90 390 mm bbl OIP translates to 57 mm bbl recoverable using a 15% RF which RKH believes is probably unrealistic.

[The P90 is important to RKH. It is what underpins serious investment in RKH and Sea Lion. By definition there should be a 90% probability of there being at least the P90 oil resource. So of course RKH would like the P90 figure to comfortably exceed the economic limit reserves size. A larger company with a wide portfolio of development opportunities can afford to invest and would attract development expenditure backing if the economic limit were the P70 reserves estimate or even up to a P50 figure. RKH however currently only has Sea Lion so it wants the P90 estimate to exceed the economic limit.

RPS has used a rather conservative estimate of 15% as the P90 recovery factor input to the Monte Carlo model used to estimate a distribution of possible reserves sizes. The 15% estimate assumes a poor drive mechanism to produce the oil. The report says it is possible no aquifer support is present and little is known of any solution gas drive.

These comments are reasonable but miss the point. Provision will be made to waterflood this field with sea water injection into water injection wells because it is the best way to achieve the upside recovery factor. The P90 estimate should therefore reflect the recovery from a poorly performing waterflood; one in which pressure support is only modestly effective and there is a poor sweep efficiency that leaves large areas partially by the water flood. IMO this scenario is nearer to 20 - 25% RF and therefore I understand why RKH would be in disagreement with RPS. Also they must be frustrated that the P50 reserve case has increased by over 40% from 170 to 242 mm bbl whereas the P90 remains essentially unchanged (CPR = 58 mm bbl and post well Vol Assessment = 57 mm bbl).

Whilst the P90 case may just about generate a positive NPV10 at $80/bbl with the RPS economic inputs, the bankers will want to see a much greater safety margin with positive economics at a low case oil price. A P90 of 100 mm bbl would put RKH in a strong position to obtain development funding. This will come once an appraisal well has been drilled.

It is important to note however that the RF itself is entered as a distribution. The P50 estimate is 30% and the P10 estimate is 40%. An upward revision of the P90 RF would have a minimal impact on the upside P10 or maximum P1 reserves estimate.]

PIERRE JUNGELS PRESENTATION
I thought the generic graph on how an oil company creates value was a brilliantly simple way of conveying the upstream value creation process.

My favourite comment, The appraisal process increases value considerably more than the value created by the first well!

A number of funding options will be considered. In doing so we will be very conscious of the rights of existing shareholders.

Q&A SESSION
These have been very well covered by SmicerVlad et al and many of you will have heard Bogdens audio so I will only comment on a couple of the questions.

The response to the question about what is the long term aim of RKH was telling. Does RKH plan to stay in or sell out? You have seen the graph which shows how the value is created and we fully intend to create the maximum value.

My questions about seismic modelling and whether the oil is undersaturated were framed to try to find out whether RKH has any indications about changes in the fluid content within the Main Fan. DBs responses are approximated as follows:

It seems to me that all the sands are full of oil. Until we find water or an oil water contact we cant answer the question. No there are changing amplitudes across the fan. There is a publicized AVO effect where oil is found which sometimes you get and sometimes you dont. This is essentially an oil play and it seems that every sand is full of oil.

[From DBs response it does not suggest that the seismic will be able to discriminate between oil and water so we are back to the universal answer an appraisal well is required.]

Is the oil undersaturated? The GOR is 260 scf/bbl which is typical of many oils in a lacustrine environment.

[The well was drilled in an updip location so the updip attic volume for a gas cap is relatively small and there would not be a big reduction in OIP if a gas cap exits. However it would be nice to know there is no gas cap as it would also reduce gas cap risk on comparable prospects elsewhere in the basin. If the oil is undersaturated there will not be one. The response did not address whether PVT analysis has been conducted to determine whether the oil is undersaturated with gas. The GOR is sufficiently low to suggest it may be undersaturated but without temperature data it is difficult to know.

Thanks to Admiral Guns for the Big Dave at the Lions den post on 1/10/2010 as the PESGB flyer indicates the crest of the fan is oil charged.... Seismic amplitude effects identified on near and far stacks at the top of the fan were interpreted (based on simple seismic models) as being consistent with the presence of oil in reasonably thick porous sands.]

POST MEETING HUDDLE WITH DAVE BODECOTT
This supplements Rockafellaskanks So I chatted to Big Dave post and clarifies a couple of misunderstandings that have arisen.

Earnest came in almost as prognosed. It had a very good sand but NO shows of any sort. DB thinks there was a good closure. It did have positive CSEM response however CSEM is not a standard industry technique. He commented that CSEM can mean a lot of different things and there are problems with the depth resolution. RKH havent yet analysed the samples for source rock quality from Earnest. They are still making their way back by boat though the depths may be too shallow in the well for source rocks to be mature.

I raised the issue of the 2m sand at 2490m MD which has been attributed to the top of the Lower Fan but which lies on the Main Fan pressure profile.
(Discussed at greater length in my earlier post of 7th June)
http://www.iii.co.uk/investment/detail/?display=discussion&code=cotn%3ARKH.L&fromdate=07%2F06%2F2010&threshold=0&todate=07%2F06%2F2010&pageno=21&it=le

DB said that the 2m sand attributed to the Lower Fan probably IS part of the Main Fan. He said however that it is difficult to extrapolate (the upside that this could represent) from one well. They are looking v strongly at the upside and it will depend on other wells.

[IMO this is very strong support for the Main Fan net sand thickening elsewhere in the field downdip of the well because the gross section is already significantly thicker at the well than has been given credit for in the RPS Vol Assessment.

Note this is NOT the 2m sand that was the deepest pay found in the well referred to in the Vol Assessment as Further thin layers of pay of 2m was seen deeper down to 2617.]

DB believes Rachel has nothing to do with Sea Lion. It is a different reservoir sequence; younger and shallower in the section although Rachel is deeper in the basin. It is generally the same play. However some fans will work and some will not.

[IMO this is a blow to the theory that Rachel will be the first appraisal well of Sea Lion. But Big Daves intro to the Rachel discussion was very interesting. He was very conscious that Rachel is in the PLO4 block and is the operators prospect and it is really for them to comment on. It makes you wonder if a similar philosophy has been applied to any extension of Sea Lion into the Desire block. It would seem highly coincidental that the P1 area seems to infer the field southern limit is at the RKH block boundary]

FYI DB said the basin in India that is analogous to the northern NFB is the Bhama basin.

CONCLUSIONS
IMO the confidence expressed by the RKH Board is very well founded. The field will deliver some surprises going forward but I agree that fundamentally it should not be a difficult field to develop. The logistics chain will be one of the main challenges and there is a risk that service company costs will be outrageously high so procurement management will be extremely important.

The revised report is eagerly awaited. IMO they have limited scope forP10, P50, P90 resource upgrades at this stage and the focus will be on revised value estimates.
They must leave scope for reserve upgrades from appraisal wells to guarantee good returns from funds raised and invested in the appraisal program.
The key information from the well affecting OIP was known and built in to the Vol Assessment
The well test will not have a significant impact on RF estimates since the earlier estimates were based on commercial rates being achievable. The test importantly underpinned the assumption of commerciality.

PJ mentioned the $2.5BN value estimate in the previous CPR. This was an unrisked value for the P50 resource estimate of 170 MM bbl. There is significant scope for revising value upwards.

Firstly there needs to be more emphasis on the Mean resource not the P50 as there is no statistical basis for using a P50 and more importantly the Mean captures more of the upside than the P50. The Mean Resource in the original CPR was 220 MM bbl but its importance was lost because RPS focused on a more complicated approach and calculated a risked expected value based on 30% of the P10 value, 40% of the P50 and 30% of the P10. The value of the Mean success case was not even evaluated in the CPR and the market focused on the P50 170 MM bbl and assigning a $/bbl value to that.

So come on RPS, lets see as a minimum in the new CPR a revised Mean and value associated with that. 300+ MM bbl is likely given the P50 is now 242 MM bbl and the P10 has increased from 470 MM bbl to 669 MM bbl. The new Mean should be good for a 75+ % increase in value to $4Bn+.

RPS could issue a revised value range by modifying the development scenario production profiles based on the new P90, P50, P10 and Mean resource estimates and projections of well rates from the test. PIs also invested in XEL will know that RPS used Michael Levitans (BP) PIF (Productivity Improvement Factor) to estimate the multi-fold rate increase from horizontal production wells versus vertical wells. The PIF is 5.7 in XELs case and that would lead to 10,000+ bbl/d estimates for the Main Fan without factoring in thicker sands in the main channels. At the AGM SM mentioned that development scoping studies are starting and the new RPS report would benefit from input from RKH on conceptual ideas for high angle/horizontal wells.

If RPS remains wedded to the 30-40-30 approach to calculate Expected Monetary Value we will still see some hefty value numbers. The old EMV was $810MM after risking at 23% COS which would imply the unrisked value was ~$3.5Bn. Applying the $PV10/bbl values associated with each of the old P90, P50, P10 estimates to the new estimates and risking the economic COS at 90% would lead to a value of about $4.5Bn or about 16/share at the current share count of 192.5MM.

There is so much more value to come from appraisal of the field.

KEEP ON BELIEVIN... I will

GLA and enjoy the rest of the weekend,
Regards,

Gramacho

i'm sure the above will have great meaning to some of you guys, but i find the lack of caution disturbing ..... it should never be forgotten that no one but one knows what lies ahead .... while it is fair to claim that there are more oil reserves to be confirmed in Sealion, beyond that is pretty much the great unknown until proven otherwise