Rockhopper Exploration

LN: RKH

£73.3m market cap

16p last close

Rockhopper is a London-listed E&P with fully funded development of Sea Lion, a 500+mmbbl field in the Falklands as well as the potential of a similar size discovery to the south. It also holds production and exploration assets in the Mediterranean.

Investment summary

We believe the current share price implies a c 20% chance of success for Sea Lion Phase 1 at a $70/bbl long-term oil price (excluding any value for further phases of Sea Lion). Given the progress with the award of letters of intent (LOIs) for key project components, we are more positive on the chance of success. In our view, key outstanding risks are project funding and politics. H219 has the potential to be eventful, with more definitive guidance on the availability of export credit funding. In July 2019, a formal application and project information memorandum for senior debt was submitted. The Ombrina Mare arbitration hearing took place in Paris with an outcome expected in Q120. The company believes it has strong prospects of recovering significant monetary damages. Our updated valuation post the announcement of the Abu Sennan disposal stands at 79.6p/share.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2016A 10.4 (15.2) (9.0) (4.5) N/A 56.6
2017A 10.6 (2.4) (7.1) (1.4) N/A 17.0
2018E 10.7 (4.4) (2.1) (6.1) N/A 81.5
2019E 2.2 5.2 (9.7) (18.1) N/A N/A
Industry outlook

The Sea Lion JV is considering export credit and vendor/contractor finance as alternatives for field development. Contractor selection and finalising LOIs to underpin the provision of vendor funding for $400m is progressing.

Last updated on 21/11/2019
Sector
Oil & gas
Share price graph
Balance sheet
Forecast net cash (US$m) 27
Forecast gearing ratio (%) N/A
Price performance
%
1m
3m
12m
Actual (11.9) (9.7) (30.0)
Relative* (13.3) (12.2) (33.7)
52-week high/low 28.0p/16.0p
*% relative to local index
Key management
Sam Moody CEO
Stewart MacDonald CFO

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