Darwin vs Sea Lion | Why I Avoid Borders & Southern
Investors often compare the Darwin to Sea Lion projects, expecting a repeat story. From where I stand, that comparison doesn’t hold.
As of the date of writing, I hold shares in Rockhopper Exploration (RKH) and Navitas Petroleum (NVPT)
Background
Both Sea Lion (Navitas and Rockhopper Exploration) and Darwin (Borders & Southern) projects are located offshore the Falkland Islands. On the surface, they seem similar: two undeveloped oil and gas discoveries in the same area. But beneath the surface, the differences are significant.
The North Falklands Basin (Sea Lion) and the South Falklands Basin (Darwin) are worlds apart in cost, complexity, and investment readiness.
In this post, I’ll explain why I avoid exposure to Darwin by comparing the project to Sea Lion. Although there is a significant price gap between the two, I still believe Darwin is several years behind Sea Lion. I'll try to explain why I think the risk-adjusted upside is much more substantial with Sea Lion.
Covered topics:
Location and Development Economics
Timeline and Funding Readiness
Risk vs Reward
Resource Base Comparison
Valuation and Certainty Premium
Bottom Line