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Following the FT article yesterday i have been bombared with shareholders and hedge funds waiting to add wanting to know the real situation regarding the lastest FT article concerning the Sea Lion Development in the Falklands .
The article claims Sea Lion Deveopment 40% owned by (LSE:RKH) Rockhopper Exploration and 60% owned by (LSE:PMO) Premier Oil is to be delayed due to the low oil price in an interview with Tony Durrant CEO Premier oil. Last night this story was even mentioned on channel 4 news for a few seconds regarding a topic on job cuts in the oil sector and today a new article appeared in the Times stating the Sea Lion needs $80 a barrel oil to be economic.
Frankly i totally disagree with there position if we go back to Part 1 of my orgional article on the oil price the Falklands breakeven is $35 a barrel which was published in an article interview with Tony Durrant last year by the FT. So i am not sure where the $80 comes from ? The Falklands have always been commercial at todays oil price of around $50 a barrel combined with the giant cost savings of supply contracts on Sea Lions FEED being completed by early Q2 2015.
I would add Sea Lion has 458m P50 of light oil recoverable oil and the drilling campaign soon proving up the extension of Sea Lion will mean oil is economic at $40 a barrel down in the Falklands.
If the North Sea is economic at $60 a barrel the Falklands are vastly cheaper due to the fiscal regime, remember North Sea 62% of all costs compared to 26% in the Falklands a quote which was also mentioned in the FT late last year.
Moreover Sea lion development has not been delayed until end of this year, second quarter of 2016 was always going to be the FID sanction date as stated in Rockhopper Exploration interim results.
I also contacted Rockhopper Exploration and confirm the Feed is on track as the interims and oil is still forcast for 2019.
So use this media mix up to your advantage and buy more (LSE:RKH) Rockhopper Exploration after the rig departed from South Africa and now postioned offshore Ivory Coast for departure at the end of the month.
Today Canaccord updated its new target for RKH to £1.70 given the oil price slump this is still a vast gain compared to the rest of the oil sector. Much of which will be gained by drilling the first low risk well Zebedee Sea Lion extension with a 52% chance of sucess in oil terms thats high when the normal percentage is in the 15% range.
I will go into detail regarding Rockhopper Exploration and the other Falklands plays soon so stay tuned to chrisoil.
If you are interested in the Falklands advfn has excellent data and level 2 well worth registering below.
Until the next time more ramblings at the castle can be seen @ chrisoil
http://www.chrisoil.blogspot.co.uk
