The big news from Rockhopper Exploration (RKH) is that the farm-out agreement - whereby Premier Oil acquires 60 per cent of the Sea Lion oil field in the Falklands - was signed off in October. This means that development can now go ahead.
Bringing in a partner was the only viable option because the alternative would have been to raise $2bn (£1.2bn) of capital to fund development costs. By securing a partner, Rockhopper can now look forward to tapping the estimated 142m barrels of oil that should start to generate cash flow from 2017. In fact, Rockhopper's share of that cash flow is expected to exceed $2bn. For now, though, the plan is to have a three well exploration programme in place for 2014.
At the operating level, half-year losses were reduced as a result of a $25m fall in exploration and evaluation expenses to just $4m - reflecting a $15m drop in impairment charges and a $10m reduction in development costs. Free cash deposits stood at $43m at the half-year but, in October, and as a result of the farm-out agreement, Rockhopper received an additional $231m - which, after transaction costs, leaves free cash of around $270m.
| ROCKHOPPER EXPLORATION (RKH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 158p | MARKET VALUE: | £449m | |
| TOUCH: | 157-158p | 12-MONTH HIGH: | 399p | LOW: 143p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 141¢* | NET CASH: | $93.3m** | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | nil | -32.5 | -12.6 | nil |
| 2012 | nil | -6.38 | -2.24 | nil |
| % change | - | - | - | - |
Ex-div:- Payment:- *Includes intangible assets of $307m, or 108¢ a share **Includes term deposits and restricted cash of $50.6m £1=$1.61 | ||||
