Annual results to March today showed a net loss of US$78mln (US$75mln) in 2013 due to recognition of the capital gains tax liability on the Sea Lion farm out to Premier Oil. There was a cash balance of US$247mln at the year end.
Westhouse says the forthcoming 12 months are likely to be eventful for the company as the Sea Lion project moves through towards a final decision.
A rig, meanwhile, has just been signed for the 2015 programme of exploration in the North Falklands Basin, with Rockhopper participating in four wells, while Genel (LON:GENL) its new partner in Malta following the acquisition of Mediterrean Oil is drilling the Hagar Qim well.
Westhouse adds that Rockhopper is its sector favourite.
“Trading on a 65% discount to its core NAV (value of its production and development assets), the market is implying a paltry 15% probability that the Sea Lion phase 1 development goes ahead.”
“We argue that the recent acquisition of Mediterrean Oil & Gas was accretive for Rockhopper shareholders and opens up a new and interesting sphere of operations.
“The balance sheet remains very strong, RKH is still fully funded for the Sea Lion and development and no value is being attributed for the widened exploration programme.”
Shares eased 1p to 94p, valuing the company at £267mln.