Rockhopper - A big 2011 coming (RKH)

Monday, Jan 03 2011 by
6

As RKH is my choice for the 2011 competition over at TMF I have done a very long write up, the link to it is here.

http://boards.fool.co.uk/nfsc-2011-rockhopper-write-up-rkh-12137962.aspx

In the meantime a shortened version will be put here for a new dedicated RKH thread to post on.

Rockhopper Exploration
Web Site:  http://www.rockhopperexploration.co.uk/
Epic: RKH
ISIN: GB00B0FVQX23
Shares in Issue: 258,039,606
Market Cap: £948.2m
Closing price on 31st Dec 2010 : 367.5 pence (£3.675)
Cash in the bank: circa £250,000,000 (thats a quarter of a billion pounds)
Cash value per share: 97p per share is cash.
RNS announcements:  http://www.investegate.co.uk/Index.aspx?searchtype=3&words=rkh

Company Description :

Rockhopper was established in February 2004 with a strategy to invest in and carry out an offshore oil exploration programme to the north of the Falkland Islands. The Company floated on AIM in August 2005 and holds a 100 per cent. interest in four offshore production licences: PL023, PL024, PL032 and PL033 which cover approximately 3,800 sq. km. Rockhopper has also farmed in (7.5% working interest) to licences PL003 and PL004, which are operated by Desire Petroleum. These licences have been granted by the Falkland Islands government.


An extensive work programme has been carried out over a number of years on the licences operated by Rockhopper. This has included 2D and 3D Seismic and Controlled Source Electromagnetic Mapping (CSEM). In February 2010, the Ocean Guardian drilling rig arrived in Falkland waters to carry out a multi-well drilling campaign. Rockhopper drilled an exploration well on its Sea Lion prospect during April and May 2010, the result of which was the first oil discovery and Contingent Oil Resource in the North Falkland Basin. The Sea Lion discovery was successfully tested during September 2010 and was the first oil to flow to surface in Falkland Islands waters. Rockhopper has contracted seismic vessels MV Polarcus Asima and Nadia to carry out a 3D seismic survey, beginning December 2010, over areas of licences PL024, PL032 and PL033 which were not previously defined by 3D, as well as adjacent areas.
PL 023 and PL 024 are in the Southern North Falklands Basin (South NFB) – 100% owned
PL 032 and PL 033 are in the North of the North Falklands Basin (North NFB) – 100% owned.

And so ...... ?
Rockhopper raised £206m in the last placing, to add to the £44m it…

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Rockhopper Exploration plc is an oil and gas exploration and production company. The Company is engaged in the exploration and exploitation of its oil and gas acreage. The Company operates through three segments, which include the oil and gas exploration activities in the geographical regions of the Falkland Islands, and the Greater Mediterranean region, as well as its corporate activities centered in the United Kingdom. The Company holds interests in North Falkland Basin and the Greater Mediterranean region. The Company's areas of operations include Falkland Islands, which is located in the South Atlantic Ocean, over 8,000 miles from the United Kingdom and approximately 300 miles from South America. Its licenses in Falkland Islands include Sea Lion phase 1 (PL032), Sea Lion phase 2 (PL032/PL004) and Phase 3-Isobel-Elaine (PL004). The Company's interests in Mediterranean region include Guendalina, Ombrina Mare and Monte Grosso in Italy; Area 3 in Malta, and Block 9 in Croatia. more »

LSE Price
17.72p
Change
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Mkt Cap (£m)
81.5
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n/a
Yield (fwd)
n/a


Argos Resources Ltd is a United Kingdom-based oil and gas exploration company. The Company is engaged in oil and gas exploration around the Falkland Islands. The Company's principal asset was its 100% interest in License PL001, which covered approximately 1,126 square kilometers in the North Falkland Basin. The Company has a farm-out agreement with Noble Energy Falklands Limited and Edison International S.p.A in respect of its interest in License PL001. The Company holds a royalty interest of 5% of gross revenues from all hydrocarbon discoveries developed within the License PL001. more »

LSE Price
2.75p
Change
 
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6.1
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55 Posts on this Thread show/hide all

Proselenes 3rd Jan '11 1 of 55
3

And so....what else is there ?
Lots...... and lots. RKH in their northern licenses have multiple strong leads, all derisked by the find of commercial oil at Sea Lion. There are Fox, Stephens, Jason, Chatham, George to name a few, and the new 3D work that is ongoing will of course show up more and also firm up the strongest other leads ready for exploration drilling. The potential for RKH is, as is known now, perhaps 2 billion to 4 billion recoverable barrels in its northernmost 2 licenses. The new rig contract, when released will mean that there should be plenty more drilling in 2011 and 2012. They also have the Johnson gas discovery which is potentially at a later stage a development project in conjunction with ARG.


If you load the picture in the link below you can see the 2 northern licenses that Rockhopper have, showing the area that has had 3D (in the dotted line box) and the prospects that are presently defined in there. However, as has been said, they are doing new 3D over the whole license area and outside as well in order to get the very latest and the clearer and concise 3D with which to do the new CPR and list down all the new and old prospects and their potential in these license areas.

http://img704.imageshack.us/img704/4962/rkhlic.png

Brokers....... ?
Goldman Sachs has Rockhopper as a “Conviction Buy” which in effect means “Strong Buy”. 5 brokers have RKH as a buy rating and 2 with an outperform rating, in effect all are saying it’s a buy.

http://uk.reuters.com/business/quotes/analyst?symbol=RKH.L

Goldman Sachs is one of the very big boys and for them to have a “Conviction Buy” rating on RKH says it all on the potential here.

Valuation..... ?
If all they have is the present discovery area of 170 MMBO recoverable the times that by 8.5 US$ and you get £926m.

£926m + leftover £150m cash end of 2011 = Target price of £4.19/share worst case IMO for end 2011.

If they strike it hot and get a billion barrels by end 2011 then...... you get £5.48b

£5.48b + £150m cash end of 2011 = Target price of £21.83/share as best case IMO for end 2011.

That is of course not the end of it, there is potentially up to 4 billion barrels or more recoverable in the two license areas when you consider Sea Lion on its own could deliver a billion recoverable, but anyway, let’s not get too much accused of ramping and hyping shall we, suffice to say downside risk is minimal in respect to your standard AIM oil and gas company, upside potential is very significant.

So it must therefore be understood the above valuations carry NOTHING for any other prospects in the two northern NFB licenses (including Johnson gas) and carries no valuation for anything in the southern NFB 2 licenses, even though the northern licenses have many prospects that are now significantly derisked by oil being found at Sea Lion.

Development costs.... ?
Will be high due to present lack of infrastructure, however there is talk of potential for farm out deals once Sea Lion exploration well 1 and appraisal well 1 are complete. Define the upside, firm the downside and then it’s possible we may see a farm out deal where Sea Lion is farmed out with RKH getting a free carry to production. Already lots of rumour and chitter chatter about Amerada Hess being interested in a return to the Falklands (they were previously involved in drilling a long time ago). Again to reiterate a 60 Million Recoverable Size find, in the Falklands, based on present lack of infrastructure with an oil price of 60 US$ a barrel is commercial as a standalone development and would make a lot of money in profits. Obviously the bigger the better, the higher the oil price the better and the more finds the better as this all increases profit levels however, 60 @ 60 is commercial as a standalone single field in the Falklands – worth remembering that when certain sections of the media write their drivel.

If you wish to read the old 2004 scoping document DES did, it’s available on the link below :

http://www.mediafire.com/?04pzdsdue2qoi1e

Planning permission is being sought on the Falklands to develop a new port area to service a production field in the Falklands waters. This project is being progressed by local businessmen and if approved and entered into would negate the need for a nearby port in Argentina or anywhere else. Nice little project to alleviate any need for suggested reliance on Argentina and one that will make the FI totally independent.

Risks...... ?
Argentina invasion, well, ok, not really any chance of that. Exploration drill failure (the 1st 2011 drill), very possible and even though it has no bearing on Sea Lion presently defined discovery it will knock sentiment but that’s all. Sea Lion appraisal (the 2nd 2011 drill) failing, low risk, but it’s a risk.

Other risks, constant attacking of Falklands stocks by certain media outlets, yes, they have and they continue to do so but people are becoming wise to it now and its effect on sentiment is diminishing, you can only cry wolf so many times and with Desire now coming to an end of their drilling the focus is now on Rockhopper and what they have. One of the very worst cases of “misleading media” was the reporting of the Wikileaks comments by the Exxon CEO saying he thought no commercial oil will be found. Rather than saying this comment was from back in Feb 2010 before any drilling commenced the wonderful “misleading media” quoted the comment and tried to make it sound like a very recent just released comment. If one wonders how they do this simply read the two comments below, both are correct but they give very different impressions:

“Wikileaks release said that in Feb 2010, prior to any drilling, the CEO of Exxon said in his opinion no commercial oil would be found, and this was later followed by the large Sea Lion find”.

And

“Last week Wikileaks release said that the CEO of Exxon said that in his opinion no commercial oil would be found”.

Notice how its very easy to manipulate people’s perceptions by simply adding some and missing out some words and information, welcome to the world of the media !! ;) LOL

Other risks are the usual, Asteroid impact, Alien invasion, 2012 end of the world etc... and I am sure the “misleading elements of the media” would use them if they thought they could get away with it and Rockhopper in the same sentence.

New Licenses....... ?
Possible for new licenses to come up for grabs in 2011 and RKH would be in a lead position given their spotless record of operations so far. The most exciting would be to the North of the present RKH/ARG licenses. See link for potential of new license areas :

http://www.bgs.ac.uk/falklands-oil/opportunities/new_lic.htm

What about the "South of the North" ?
RKH also hold 2 licenses in the South North Falkland’s Basin and are doing new seismic over them in conjunction with DES, however I would imagine these will not be on the 2011 list of drills unless Dawn comes in good for DES. RKH drilled one well there in 2010 at Ernest and found excellent reservoir but dry. That means no local source and no migration to the south at that area. These licenses are presently given zero valuation in the RKH price, but that may change should DES find gas, or oil, at Dawn.

Although gas it not wanted if the local source rock is proven active for gas it should revitalise the southern NFB licences. I see Dawn result for DES as a no lose situation for RKH, if Dawn is dry then it matters not as the 2 southern licenses are given no value presently. If DES strike oil at Dawn its whoopee time...... and if DES strike gas it’s a downer for DES but an upper for RKH as it might show some potential for their presently zero valued southern NFB licenses, in that a hydrocarbon system is down there in the south and therefore it offers hope that the South of the North might come good too.

Rig contract...... ?
Desire signed a rig contract for 4 firm and 6 options back in 2009. Once Desire finish drilling Dawn (about now) there should be just 3 options left of the 10 drills ( Liz / Sea Lion / Toroa / Ernest / Rachel-1 / Rachel-2 / Dawn(Jacinta) being 7 done). It is now clear that Rockhopper will take two of the remaining options for their 1 Exploration and 1 Appraisal program starting soon, and Desire will use the final option is their present plan. This will then conclude the 4+6 contract that Desire signed for the Ocean Guardian. Rockhopper had been in discussion for a new rig contract to follow on and we are still awaiting news on that.

Southern Basin......
The Southern Falklands Basin is where FOGL/BHP and BOR are exploring and its got nothing to do with the North Falklands Basin in that the geology and systems are totally independent. FOGL/BHP had a bad result at Toroa and subsequently BHP pulled out of that area, however BHP remain in with FOGL on the south eastern side and will plan more drilling in 2011 (FOGL alone may try further on what is now their 100% owned area). BOR are also planning to drill in 2011 (be it around Q4). However, as is said, in terms of geology and influence on the north, the SFB is totally separate to the NFB and success or failure in one does not influence the other. Its a common misconception that BHP pulled out of the Falklands exploration, thanks to the often mentioned “misleading media” – they only pulled out on one joint area and remain “in” in the other areas.

Board (not bored)
Detailed here : http://uk.reuters.com/business/quotes/companyOfficers?symbol=RKH.L
The key man for many is the Chairman, Dr Pierre Jungels, a strong career and twice President of the “Institute of Petroleum”. It is said he is very excited by Sea Lion and thinks it’s going to be a big one, Rockhopper shareholders hope he is proved right, certainly he has been buying lots of RKH shares from the market, see below.

Director Share Trading
No market sells by directors in recent times.

Plenty of decent size buys in recent times as below ;

6th July 2010

Dr Pierre Jungels purchased 23,350 shares @ £2.985 each share (circa £69K)
Chris Walton purchased 8,300 shares @ £2.97625 each share (circa £25K)

19th October 2010

Dr Pierre Jungels purchased 15,873 shares @ £3.15 each share (circa £50K)
Sam Moody purchased 9,524 shares @ £3.15 each share (circa £30K)
Peter Dixon-Clarke purch. 12,698 shares @ £3.15 each share (circa £40K)
David Bodecott purchased 12,698 shares @ £3.15 each share (circa £40K)
David McManus purchased 12,698 shares @ £3.15 each share (circa £40K)
Chris Walton purchased 6,349 shares @ £3.15 each share (circa £20K)
Robert Peters purchased 3,175 shares @ £3.15 each share (circa £10K)
John Crowle purchased 9,524 shares @ £3.15 each share (circa £30K)

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Proselenes 3rd Jan '11 2 of 55
1

SUM IT UP QUICK AND DIRTY : Directors have put money where their mouths are and purchased loads of shares, so have I purchased lots of shares (admittedly many below 50p but also some at higher than todays price and many in between) and so lets see where it goes in 2011.



Additional Info and links :

a/ For those that cannot visualise the 2 drills RKH will do in early 2011 one can look at the pic in the link below. (and please, this is just very rough in order to illustrate and it’s not to scale or indeed close)

The original Sea Lion discovery drill is in the red circle. As you can appreciate this is not in the centre of the structure and this is why present estimates are just P50 of 170 million recoverable barrels, as the CPR only includes the area within the red circle.

The Southern lobe is big and the northern lobe is a bit smaller than the southern one.

So, the first drill ( 1 x ) will be a test of the Northern Lobe and by association will, if it hits oil, make the P10 figure become near to the new P50 (all of the green shaded area) in excess of 1 billion barrels recoverable potential. It will derisk the blue circle area considerably and some of that, after flow test, can be added to P90 figures.

The second drill ( 2 x ) will be a test of a more central location of the Southern Lobe, and hopefully being more central they will encounter thicker net pay. Success here will allow the present discovery area of the red circle to be extended to be the size of the yellow circle, again which will boost up the P90 and P50 figures.

Further appraisal wells will be to test and prove up the area's not in the circles at the moment, so in between the north/south lobes and possibly one to the West.

Hopefully that allows a bit of a better understanding as to why the first drill is classed as "exploration" and has a massive upside effect, but no effect on the present defined small Sea Lion discovery area. Also, one can understand why the second appraisal well will have a significant effect on the P90 size and the P50 size.

One should also note that the data so far is based on 2 stacked fans however, there is a very real chance Sea Lion is up to 7 stacked fans and they have not found the oil/water contact point meaning that there might be a lot more oil there than presently envisaged in the P10 recoverable size estimates.


http://img708.imageshack.us/img708/2295/rkhd.png


------------------


b/ ARG – Argos Resources. I really do think they could be the surprise of 2011 and I should have perhaps picked them, however I do believe in the RKH upside and it compelled me to pick RKH. There is also potential that the planned ARG drilling in Q4 might end up in Q1 2012, so maybe ARG will be my pick for 2012 ? ;)

Argos has the license next door to the two northern Rockhopper licenses and they are doing joint 3D together. Argos is looking at completing the 3D seismic processing and updated CPR in Q3 2011 and drilling the 1st well in Q4 2011. I see ARG as potentially the ultimate second separate company to strike commercial oil in the Falklands. Their “Lead 1” and “Lead 2” are close to Sea Lion and potentially bigger than Sea Lion at P10 size, each.

http://img26.imageshack.us/img26/3424/args.png


Argos do have to raise money to drill, this will be spoiler on any major share price rise in the shorter term however once that is done with a new CPR based on the new seismic, and them drilling Q4 2011 there is no reason that their market cap cannot attain the levels of DES in 2010. The worry for me and the reason I did not pick ARG is the potential for another credit crisis in 2011, which could have a serious effect on ARG and raising money for drilling however the flip side to this could be, in a credit crunch situation, that RKH with all their cash can make a very tasty farm in to the ARG licenses by drilling a well at RKH cost, which was again something that made RKH more attractive to me than ARG for the 2011 competition, however in reality I have been buying a few ARG (fully paid for stock and put in the bottom drawer for later).

You can view the area that ARG/RKH are doing joint 3D on, on the picture below

http://img530.imageshack.us/img530/820/seismic2011b.jpg


c/ If you want the Goldman Sachs oil write up its here : http://www.mediafire.com/?i5bdmxxpmo6tm16


d/ if you want Tipping Toms outlook for oil it’s here : http://www.mediafire.com/?i5bdmxxpmo6tm16

e/ Oil outlook 2/1/2011 :

http://www.ibtimes.com/articles/96738/20110102/oil-natural-gas-crude-futures-2011-outlook.htm

f/ Annual report 2010 :

http://www.rockhopperexploration.co.uk/pdf/RKH_AR2010_Accounts_LOW+RES_FINAL.pdf

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alano20 3rd Jan '11 3 of 55
1

Your link d/ - "Tipping Toms outlook" is the same as c/, to Goldman Sachs.

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Proselenes 3rd Jan '11 4 of 55
1

Thanks, the TT link should be this :

http://www.mediafire.com/?r6bu3l17crtndul

.

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Proselenes 4th Jan '11 5 of 55

Evolution Securities prefers Rockhopper Exploration and Argos Resources (LON:ARG) to Desire and so do I :)


http://www.proactiveinvestors.co.uk/companies/news/24315/desire-shares-drop-another-20-pct-after-latest-falklands-duster-24315.html

Desire shares drop another 20 pct after latest Falklands duster

Tuesday, January 04, 2011 by Jamie Ashcroft

Desire Petroleum (LON:DES) shares slumped a further 20 percent this morning with yet another failed exploration well being plugged and abandoned.

This morning it revealed that its...................... .

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Proselenes 9th Jan '11 6 of 55

Drilling rig should be back into RKH control very soon, which means spud of an exploration well late this coming week or early the week after.

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Proselenes 10th Jan '11 7 of 55

http://www.independent.co.uk/news/business/sharewatch/small-talk-great-eastern-energy-taps-into-indias-growth-2180418.html


Small Talk: by Nikhil Kumar

Monday, 10 January 2011


.........Rockhopper set to scale new heights

Sticking with the oil and gas theme, take a look at Rockhopper Exploration, the oil prospector focused on the Falklands Islands, which enjoyed quite a run ove..........

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Proselenes 14th Jan '11 8 of 55

From the Sector Watcher today (FT Alphaville) , it should be noted that they allow nothing for the S2 fan and so if that comes in as well, expect valuations to go wild....


........."Rockhopper has spudded the next well on its PL032 licence in the North Falkland Basin, with the 14/10-3 well located 8 kilometres west of the Sea Lion discovery. The well, located outside the Sea Lion Discovery Area, will appraise the northern lobe of the Sea Lion structure, hence it should not be considered quite as high risk as a pure exploration well – I’d imagine the chance of success is around 1 in 2 to 1 in 3. Difficult to say what a successful well would do to reserves estimates on the overall Sea Lion structure – although with a current P10 case of over 600 million barrels of oil against a P50 case of around 170 million barrels there is clearly enormous upside. 

The well should take around 5 weeks to drill and will be followed by 14/10-4, designed to test the southerly extension of the field. Interestingly, if the southerly extension is successful, the structure could extend about 1 kilometre into Desire Petroleum’s acreage in the adjacent licence. Following the two wells, the Ocean Guardian rig will probably revert to Desire for its final well.

Thereafter RKH has signed up the rig for three firm wells and five contingent, designed to appraise Sea Lion and test further exploration prospects, so it will be a busy year for the group. Our current NAV on RKH is 494p/share, although this could be deemed conservative as it assumes only the base case reserves estimate of 170 million barrels and a long-term oil price of $70/barrel. On the basis of a successful P10 case, this valuation would likely more han treble.

RKH remains the best way to play the Falklands exploration province........

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Proselenes 19th Jan '11 9 of 55

Useful post from King Khan at LSE


IMO, Update from Drill is expected in 3rd week of drill commence day. I am expecting update on 31 Jan or 1st week of Feb.

Remember Sea Lion (TD: 2700m, Result in 20 days, initial expected day of result wsa 35 days),

Ernest: (TD: 2400m, Result in 25 days, Expected days: 30 days)

Rachel (TD: 2850m, Result: 18 days, expected days: 35 days)

Rachel North (TD: 3050m, result: 20 days, Expected days: 35 days)

Jacinta. (TD: 1300m result: 10days, Expected days: 20-30days)

Dawn (TD: 1670m, result: 16 days, expected: 30days), Provided that Office was closed for fews days on XMAS, BANK HOLIDAY.

On avg. Falkland drill rate is : 134m/day. On same drill rate, Current well is expected to reach TD in 22 days. (07 feb 2011)

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Proselenes 28th Jan '11 10 of 55
1

At this stage they could, if there has been no hold ups, now be drilling into Sea Lion main fan, there are perhaps 4 other targets to TD (Sea Lion Lower, S2 and also identified seismic events).

So, given they could now be into Sea Lion upper main fan, one should expect the rumour mill to go into overdrive very soon.

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Proselenes 28th Jan '11 11 of 55
1

News next week perhaps ?

http://www.proactiveinvestors.co.uk/companies/news/25026/rockhopper-explorations-new-sea-lion-well-nears-target-horizons--25026.html


Rockhopper Exploration’s new Sea Lion well nears target

Friday, January 28, 2011 by Jamie Ashcroft

Rockhopper Exploration (LON:RKH) may report findings from its latest oil exploration well in the Falkland as early as next week, according to research by Evolution Securities.

David Farrell, oil and gas analyst at Evolution, reckons the new Sea Lion well could potentially reach its two target horizons at some stage over the weekend.

Rockhopper spudded the 14/10-3 explora........................

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Proselenes 30th Jan '11 12 of 55
1

Worth remembering when valuing.


http://www.proactiveinvestors.co.uk/companies/news/21265/falklands-explorer-argos-is-hunting-for-another-sea-lion-21265.html


............... There are advantages to being a Falklands based company, not least the tax regime: the production royalty is only 9 per cent, while corporation tax is a competitive 26 per cent.

“So in terms of net back value to the operator this is top quartile in worldwide return,” Hogan explains.

“My rule of thumb is, one Falklands barrel is worth two North Sea barrels, and one Falklands barrel is worth three Norwegian North Sea barrels.

“The rate of tax in Norway is 78 per cent. So when you find barrels of oil in the Falklands, these are very valuable barrels to have.”.................

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djpreston 30th Jan '11 13 of 55

As I said over on TMF, you need to have the full facts re taxation.

Norway give a credit to explo so, IIRC, the cost to a company of an explo well is only 22%. Hence why the tax on production is so high. Means a company (or its shareholders) get more wells per unit of investment funding.

In other words, yóu could say for say $100m well cost, a Norwegian explo co (or any entity drilling therein) could do roughly 5 wells compared to 1 for another co. The shareholders effectively get 5 rolls of the dice instead of one.

Simplified but you get my drift.

Fund Management: European Wealth
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JPGH 30th Jan '11 14 of 55
2

UK has no royalty anymore and corporation tax is set at 30%, with supplmentarry 20% tax (for which small dvelopmentsor heavy oil deveopments can obtain a further £800m of tax credits). All Oil Co expenses (drilling, OPEX, cost of finance) are offsetable against revenue. The key though is no royalty.

With the high development costs associated with greenfield Falklands developments to also consider then I would say 1 bbl of Falklands oil = 1 to 1.5 bbl UKNS oil, depending on whether UKNS oil is small/heavy or large/light.

Norway is a bit different but definitely not as severe as 3:1. I will see if I can upload my chart on effecteive govenrment takes worldwide via a URL. I was suprised with Norway as I also was under teh impression it was a bit of a tax nightmare...but was nowhere near as bad as I thought.

JPGH

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Proselenes 31st Jan '11 15 of 55
1

So, no flow testing on this or the next drill. Only coring is to be done on this well and the appraisal well. And then RKH will keep doing appraisals to properly define Sea Lion until later this year.


http://www.falklandnews.com/public/story.cfm?get=5879&%3Bsource=3

January 30, 2011
by Phyl Rendell
DIRECTOR OF MINERAL RESOURCES REPORT FOR DECEMBER 2010:


............On completion of Desires well, the rig was taken on contract by Rockhopper Exploration and well 14/10-3 (Sea Lion North) was spudded on 13 January. This is an exploration well due to it being located outside the Discovery Area that has been declared by Rockhopper. It will be followed by an appraisal well that will be drilled in the Discovery Area. Neither of these two wells will be tested while being drilled but cores will be taken from these and subsequent wells for analysis. On completion of Rockhoppers first appraisal well, the rig will revert to Desire Petroleum in order to drill further well on a location yet to be decided. Rockhopper will then continue to drill a series of additional appraisal wells in order to assess the size of the Sea Lion discovery. This is likely to take until late in the year to complete.

Rockhopper Exploration has appointed Mr Neil Booth, an oil industry specialist, to be based in Stanley during offshore drilling activities.


2). 3D Seismic Surveys: The survey vessels Polarcus Nadia and the Polarcus Asima are carrying out 3D seismic surveys for Argos Resources, Desire Petroleum and Rockhopper Exploration in the North Falkland Basin. The vessels have made several port calls for technical reasons and crew changes. There are a number of support vessels accompanying the survey that will be seen in Stanley harbour periodically. Data from these surveys will greatly increase the geological understanding of the basin for future drilling programmes.

Both vessels have Marine Mammal Observers and Passive Acoustic Monitoring Operators on board during surveying. Environmental data collected is being provided to Falklands Conservation.

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