http://www.investegate.co.uk/Article.aspx?id=201207120700024...Premier today announces that it has agreed to farm-in for 60 per cent. of Rockhopper's licence interests in the Falkland Islands, which includes the Sea Lion development (the "Acquisition"). The initial payment will be $231 million in cash plus an exploration carry of up to $48 million and, subject to field development plan approval, a development carry of up to $722 million. These will be funded from a combination of Premier's existing cash resources, facilities and cash flow from operations. Premier and Rockhopper have also agreed to pursue jointly exploration opportunities in the Falkland Islands and analogous plays in selected areas offshore Southern Africa.Trading Statementhttp://www.investegate.co.uk/Article.aspx?id=201207120700074...MT
Ohh **** now I am going to have to pay attention to pro banging on about the Falklands;-)A lot of my NPE winnings went into PMO.repo
seems cheapthe field dev carry can be discounted back to today's money. say half that.
So 60% Sealion (and any other prospects) could be worth, in eyes of PMO, up to $1B. So extrapolating I make it $1.7B implied valuation for whole Company. With 285M or so shares (don't know what total is fully diluted) then circa $6/share or £3.80. Probably less if you include outstanding warrants/options ..etc. Explains rise this morning.But where are the big boys? The might of PMO is hardly going to make Argie sabre rattlers quake in their boots? JPGH
I said the RKH farm out would value RKH at around 280p a share to 320p a share and there you go.As for "where are the big boys" perhaps you missed Edison farming in to FOGL.EDF is the parent company of Edison and EDF is a multi-billion entity, mostly French government owned, only a small part is listed, its probably worth over a hundred billion dollars is EDF - is that big enough for you ?The Falklands is in play, oil is going to be produced and the "jewel in the crown" - FOGL, start drilling next month.Perhaps we will also get a BOR oil find next week in some news as well.Enjoy, its going to be a very big few months ahead - Loligo results due in late September/early October - and Loligo is potentially far bigger than the punters favourite "Shaiken" of GKP.Loligo P50, if its oil, is nearly 16 billion barrels of OIP and potentially up to over 25 billion barrels of OIP - makes Shaiken look like a little puddle.
the field dev carry can be discounted back to today's money. say half thatAFAIAA FPSO contract (lease)has either been awarded or is about to be. Production should start in 2 years, with drilling rig contract to drill development wells also imminent. PMO will be reaching into their pockets very soon to pay their 60% share. Would apply discount of 1 year on the money, but not at project finance modelled "10%" rate (4 or 5% max).Good deal for Rockhopper and also for PMO here.JPGH
Jpgh all true but funding/dev risk for rhk largely removed and so potentially now have 40% of a 4bn dollar field. looking at it another way with the low tax 200m bbl with netbacks of $50 is a lot of future cashflow even at 40% share.
don't accept your discount factor or timescales. also how do you get 60% worth 1b and 40% 1.7b?
Loligo P50, if its oil, is nearly 16 billion barrels of OIP and potentially up to over 25 billion barrels of OIP - makes Shaiken look like a little puddle.Shaikan already had a mean (*) OIP of 10.5b bbls.* Which approximates to the P50, calculated by adding the 8b P90 & the 13.4b P10.This was before the test results of Shiakan-4, 5 & 6, which have shown that oil can be produced from previously ignored 'crappy' zones and that the OWC is ~150m lower than thought. It looks 'filled to spill'.GKP expect further upgrades in OIP from these to ~20b bbls.It is not a puddle.lsn
don't accept your discount factor or timescales. also how do you get 60% worth 1b and 40% 1.7b?Not asking you too accept anything. This is a public BB. Do what you will/want. 100% of Rockhopper is implied to be worth $1.7b, thats what Rockhopper curently have until PMO hand over or give over their cash/share of costs. Valuation is all subjective.JPGH
A good deal for RKH, although it's a little disappointing that no-one bigger than PMO could be attracted as a partner. In this region, it's important to have Big Oil on board, but they were probably offering less generous terms, I guess.From a PMO perspective, they will probably be okay as well but it looks like quite a risky deal to me for a firm of that size. Funding their own 60% as well that of RKH is going to require a lot of capital and , on balance, it looks like too much of a risk to me. PMO management have done well over the last few years, however, and probably deserve some leeway and they should know what they are doing.WShak
Hi WShak,If they get the RKP acreage up and running as expected they should get their production up to 150k bopd and that fifty perecent increase will probably nearly double what will already be a very nice cashflow given the generous terms. I think that is a lot better than ok.However the risks have significantly increased in terms of delivery on their projects, cash in the bank and the political risk in the Falklands given the very large cash commitments. They've definitely up the ante and I suspect their timing is spot on with regards to the current state of the markets and the timing/use of the cashflow from Catcher. Any slip ups and they might be vulnerable to a cheap takeout, which would be ironic.If the Falklands becomes more recognised as having major potential PMO will definitely be on the radars of bigger companies.It looks a good deal for RKH too giving them a financial path to first oil and more technical competence in delivering that. PMO have very wisely left the explo to RKH.According to an old report in the Times the underbidders were Cairn and Nobel Energy.repo
Talk about a turn of sentiment on the RKH deal....from up over 20% at open on the news this morning to down nearly 10% by 2pm:http://uk.finance.yahoo.com/echarts?s=RKH.L#symbol=rkh.l;ran...
Jeffries comment on FTAAcquisition 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 anundiscounted basis. Using Premier’s forecasted capex profile for the carry, we estimatethe NPV10 value of the $770m development and exploration carry is $558m, implying adiscounted value of $3.61/bbl.Premier brings valuable expertise and experience. We believe Premier brings avaluable development skill set to the Sea Lion development with experience not onlywith FPSO developments in similar operating environments (water depth and weatherconditions) but also with waxy crude developments through their successful Chim Saodevelopment in Vietnam.Development: First oil pushed back to 2017, in line with our forecasts, E&Aprogram 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 determineif additional pre-development E&A is appropriate. If pre-development E&A is pursued, webelieve it is not likely until at least late 2013. While updated plans are still preliminary, currentrough guidance is for FDP in 1H14 and first oil in 1H17. Rockhopper had previously expected2015. We forecast mid-2017 first oil. Premier estimates $5bn capex, in-line with our estimateof $5.1bn.Exploration: Falkland Islands plus AMI for South Africa, Namibia and SouthernMozambique. Premier will carry $120m gross capex which both parties estimate will cover3 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 inthe South Atlantic conjugate margin of South Africa, Namibia and Southern Mozambique.
Indeed Peally. Quite an extraordinary turnaround. Certainly wasn't expecting RKH to be down 13%. Still, I suppose the dreams of multi bagging have evaporated so most speculators are rushing for the exit, presumably to invest in companies offering spectacular prospects, such as TPl and WZR.Disclosure: I own none of the above,no RKH, no Tpl, no Wzr yet as the latter ran away from me much to my dismay.
----100% of Rockhopper is implied to be worth $1.7bno, 100% of SeaLion is implied to be worth that on an undiscounted basis. i see an analyst note out saying the same and 3.60/bbl valuation.also, i think first oil, if no hiccups projected for 2017not surprising then RKH fell. PMO might have bought cheap, and add in explo potential can say RKH worth $1b?
I seem to remember Goldman sacs had a price target of 550p for rhk a couple of months bavk. Just shows that either pmo got a bargain or goldman dont have a scooby about pricing Falkland oil stocks. I dont think sea lion is going to be a breeze to develop but equally pmo have bought it cheap if they pull it off. It is pretty high risk but at 200m bbls and good tax regime an appropriate size field with great cash generation potential.Rhk has got to be worth more today than yesterday so the fall can only be explained by unrealistic expectations. the long lead time yo first oil will also put off the hot money.
Looks like it was the only deal on the table.http://www.telegraph.co.uk/finance/newsbysector/energy/oilan...Its not surprising, Sea Lion is an accumulation of thin pay zones that makes up the net pay. Sea Lion Main Fan 35 meters of net pay is made up of 14 thin layers. Not easy to develop and not ideal for any EOR. Its no surprise to me that the value per barrel for Sea Lion is low. Its going to take around 40 wells and with poor chances for EOR (eg water injection could easily bleed or break into an upper or lower layer given the thin multiple layered sands).Which is why I am well in the South Falklands now, these are massively thick sandstones - no layering, just massively thick net pay if its there. Simple to develop, needs minimal wells to develop and great for EOR. Something of Sea Lion size in the South Falklands could probably be developed with 4 to 5 wells, whereas PMO/RKH will need perhaps near 40 wells in the North.
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