Rockhopper (RKH) has announced it is to purchase a stake in the Abu Sennan asset from Beach Energy. This is a rekindling of the deal first announced in August 2015 (then cancelled due to pre-emption). The deal agreed has better headline prices ($11.9m/$2.7/boe 2P+2C vs $22m/$4.5/boe) and, despite the lower commodity prices, returns metrics (IRR of 23% vs 22%). The acquisition gives Rockhopper valuable low-cost production and exposure to appraisal and exploration at Abu Sennan and El Qa’a Plain. Until closing, we do not include the proposed deal in the NAV, but our modelling indicates that it would add $15m or 2.3p/share. We have remodelled Sea Lion to account for larger volumes indicated by Premier, which increases the core NAV to 90p/share. This indicates notable upside for investors with a long-term outlook.

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