Excellent press and forecast for Falklands’ Rockhopper Exploration oil prospect
Investment banking heavyweight Credit Suisse has initiated coverage of Rockhopper Exploration with a bullish assessment of prospects for the Falklands–focused firm, reports Proactive Investors UK.
It rates the stock as ‘outperform’ with a 408p price target, some 40% more than the current market price of 282p. Rockhopper’s Sea Lion oil discovery is the most advanced asset in the waters off the Falkland Islands.
After a successful appraisal drilling campaign last year, the focus is on engineering and financing as it moves towards a final investment decision for a future oilfield development project
Analyst Arpit Harbhajanka added that having already discovered oil in the North Falkland basin, Rockhopper will try to bring in a partner to develop the new oilfield.
“A successful farm-out of the Sea Lion discovery is central to Rockhopper's investment proposition. The Sea Lion discovery is likely to be a commercially viable field, in our opinion,” he said.
The analyst believes the firm’s oil resources could increase in the future and because Rockhopper is the largest holder of undeveloped resources in the North Falkland basin it may become a takeover target.
Merchant Securities also named Rockhopper as one of its ‘Twelve Top Picks for 2012’ today.
Analyst Brendan Long believes the shares will rise because of ‘value recognition’ rather than the kind of drilling success seen in 2011. Long says a new competent persons report at the end of March will increase reserves and in turn crystallise the firm’s recent operational successes.
The Merchant Securities’ analyst’s view on a potential farm-out echoes Credit Suisse’s assessment.
“A farm-out of a partial interest in the Sea Lion Project to a global leader in the oil & gas sector would increase the credibility of reserve and value estimates; ensure the project will go ahead; and reduce substantially funding risks which would typically be borne by the new partner,” Long said in a note to clients.
“Thus a farm-out would be a major catalyst that would represent a new phase for the advancement of the Sea-Lion project.”
Merchant Securities have a ‘buy’ recommendation on the stock with a 428p price target.
Rockhopper’s initial assessment of the Sea Lion development project’s scope, revealed in September, estimated development costs of 2 billion dollars.
That initial plan assumed first oil would occur in early 2016. It estimated that the field could achieve maximum production of 120,000 barrels a day by 2018.
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15 comments Feed
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You could have had a share of it if you had not ripped up your end of the 1995 hydrocarbon agreement.
This coupled with your constant harrassment, provocation and aggression have effectively lead to you “cutting your nose of to spite your face” as far as the UK and Falklands are concerned.
in other words;
they can not sustain their operations even if oil will be found there...!!
Firstly the NFB is not deep sea drilling. It is standard offshore drilling and nothing like the Gulf of Mexico etc.
$2bn development for FPSO is peanuts for a find of this size and this does not include the other discoveries. With enhanced recovery factor due to the Casper gas cap and a reserves upgrade in the pipeline then it is all systems go once farm-in development schedule is sorted. Geo, RKH will not finance this development. Mr Big Oil will finance it for a slice of the pie. The data room is there for a reason.
Argentina cannot complain as it decided to back out of oil expo collaboration and it will not get one single dime. Argentina is also unwilling to mount a legal challenge (as it has no legal argument) or a military challenge. Argentina, the country that could have lots but chooses not to. A country with a complex?
Can you smell what the Rock is cookin!
Credit Suisse ?...that is a Swiss under the FBI investigation ..!!
do you have an idea the costs of land /sea drilling per hour ...??
these kinds of marginal firms are the paravanes of bigger oil companies
by way of some personal speculators indirectly.....
i am certain that all emerging countries well know this reality..!
Regarding cost of sea drilling per hour etc. Such calculations are not really relevant. All the costings are accounted for, drilling lives fees, royalties, tax, equipment rental, maintenance etc. etc. This is then compared against removable oil volumes and production flow rates etc. This gives you a price per barrel in the ground. This is the figure that matters. Sealion is a world class discovery, wax issue is now not an issue as proven by the last flow test. FI has a very low tax and royalty burden on eventual producers (as written into the licence agreement).
As a result I expect the price per barrel in the ground to be higher than most finds. This is also a fairly easy development to take into production, relatively shallow and using an of the shelf FPSO well system that has been used before.
This mother is going to make the Falkland Islanders the richest people in the world per capita. I think they deserve it considering what they have to put up with from the local yellow bellied neighbours.
you are confused on base scales..
i asked mere costs not price formations...
The IIs will have calculated potential costs when determining their investment and it is likely these will be higher than the eventual costs.
Discussing oil in the ground price is more relevant for an investor. This rises with more oil and with upward pressure on market oil price.
RKH are presenting at oil E&P conferences tomorrow and Tuesday. Things are going to get interesting as this news flow starts to speed up!!!!
Counting down the day until my mortgage of £200k is paid off due to RKH!
Long live equity investing and speculation.
thanks a lot ...!
long live walnut/grapes added cake + tea
And geo you are BUSTED!!!!!!
Long Live the Falklands.
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