Rockhopper Open Offer

HarryIb

Having a small position in Rockhopper Exploration (RKH), I've been invited as part of an open offer to purchase a small number of shares at the reduced price of £0.53 per share (current price £0.70). I've accepted the offer, but there's also an option to buy additional shares, should they be available as part of the offer. I'm wondering about applying for some more, but what typically happens to share prices when new shares are issued on the basis of an open offer (due for issue on 26/01/2026)?

Woodstok2000

The share price will typically go down, as the new shares are diluting existing shares and increasing supply to the market.  The impact of that decrease is offset for current shareholders by the offer of shares at a reduced price. The theory is that the future share price will be the blended average of the old and new shares. If you take up their offer, the value you gain buying discounted shares should theoretically offset the value you lose from the increased share supply.

Market perception can also play a big part. 

• If the company is issuing shares to stave off financial trouble, repay debt, or for general working capital due to poor cash generation, the market may see this as a warning sign and sell off the stock, pushing the price down further.
• If the funds are raised to finance a beneficial acquisition, expansion, or a growth opportunity, investors may view this favorably, which could limit the price drop or even cause the price to rise in some rare cases (though this is less common.

This is all theory of course - markets often move in mysterious ways!

HarryIb

Woodstok2000 said:

The share price will typically go down, as the new shares are diluting existing shares and increasing supply to the market.  The impact of that decrease is offset for current shareholders by the offer of shares at a reduced price. The theory is that the future share price will be the blended average of the old and new shares. If you take up their offer, the value you gain buying discounted shares should theoretically offset the value you lose from the increased share supply.

Market perception can also play a big part. 

• If the company is issuing shares to stave off financial trouble, repay debt, or for general working capital due to poor cash generation, the market may see this as a warning sign and sell off the stock, pushing the price down further.
• If the funds are raised to finance a beneficial acquisition, expansion, or a growth opportunity, investors may view this favorably, which could limit the price drop or even cause the price to rise in some rare cases (though this is less common.

This is all theory of course - markets often move in mysterious ways!

Thanks for that. I thought the share price would probably drop on the issue of the new shares. In the case of Rockhopper Exploration it's your second bullet point that's relevant; they're raising money to finance a drilling operation off The Falklands. I just have a few hundred pounds invested at the moment, and I've applied for another couple of hundred worth in addition to the small number of offer shares (1 share per 49 held). Worth a punt, as they say!

Eyeful

HarryIb:

You may think its worth a punt, I do not!

This is speculating not investing.

If I want to gamble, there is National Lottery, Premium Bonds or betting on the horses.

phlebas192

HarryIb said:

Having a small position in Rockhopper Exploration (RKH), I've been invited as part of an open offer to purchase a small number of shares at the reduced price of £0.53 per share (current price £0.70). I've accepted the offer, but there's also an option to buy additional shares, should they be available as part of the offer. I'm wondering about applying for some more, but what typically happens to share prices when new shares are issued on the basis of an open offer (due for issue on 26/01/2026)?

I doubt that the price will move very much at all as a result of these shares being issued. I've only skimmed the situation, but 1 new share for every 49 held is little more than a drop in the ocean and looks like a sop to the existing shareholders for the much larger dilution that occurred as a result of the non-open placing. 

Price movements generally happen when something is announced or when the right to something expires - in this case the right to the open offer was retrospective so it was the announcement that counted. As scuh you can assume that all the information is already contained within the share price. 

The one aspect that might cause the share price to move later in January is if people choose to offload their 'cheap' 53p shares for an immediate profit. But that's where we are back to the 1 for 49 point - even someone with 1m shares can only buy 20,040 new shares at 53p which even if they sold them at the current 70p would generate a profit of only £3.4k.

FWIW, I can't see why most holders wouldn't take up the open offer and apply for additional shares if available. So don't expect to get many additional ones - and, if you did, that would be a massive vote of no confidence in the company!

HarryIb

phlebas192 said:

HarryIb said:

Having a small position in Rockhopper Exploration (RKH), I've been invited as part of an open offer to purchase a small number of shares at the reduced price of £0.53 per share (current price £0.70). I've accepted the offer, but there's also an option to buy additional shares, should they be available as part of the offer. I'm wondering about applying for some more, but what typically happens to share prices when new shares are issued on the basis of an open offer (due for issue on 26/01/2026)?

I doubt that the price will move very much at all as a result of these shares being issued. I've only skimmed the situation, but 1 new share for every 49 held is little more than a drop in the ocean and looks like a sop to the existing shareholders for the much larger dilution that occurred as a result of the non-open placing. 

Price movements generally happen when something is announced or when the right to something expires - in this case the right to the open offer was retrospective so it was the announcement that counted. As scuh you can assume that all the information is already contained within the share price. 

The one aspect that might cause the share price to move later in January is if people choose to offload their 'cheap' 53p shares for an immediate profit. But that's where we are back to the 1 for 49 point - even someone with 1m shares can only buy 20,040 new shares at 53p which even if they sold them at the current 70p would generate a profit of only £3.4k.

FWIW, I can't see why most holders wouldn't take up the open offer and apply for additional shares if available. So don't expect to get many additional ones - and, if you did, that would be a massive vote of no confidence in the company!

Thanks for your thoughts on this. I must admit, as a holder of a small number of shares I initially wondered if it was worth doing anything about the offer. However, it will be interesting in the short term - end of January - to see how much the offer is taken up, and of course in the longer term to see how the company develops, and hopefully prospers.

Woodstok2000

phlebas192 said:

HarryIb said:

Having a small position in Rockhopper Exploration (RKH), I've been invited as part of an open offer to purchase a small number of shares at the reduced price of £0.53 per share (current price £0.70). I've accepted the offer, but there's also an option to buy additional shares, should they be available as part of the offer. I'm wondering about applying for some more, but what typically happens to share prices when new shares are issued on the basis of an open offer (due for issue on 26/01/2026)?

I doubt that the price will move very much at all as a result of these shares being issued. I've only skimmed the situation, but 1 new share for every 49 held is little more than a drop in the ocean and looks like a sop to the existing shareholders for the much larger dilution that occurred as a result of the non-open placing. 

Price movements generally happen when something is announced or when the right to something expires - in this case the right to the open offer was retrospective so it was the announcement that counted. As scuh you can assume that all the information is already contained within the share price. 

The one aspect that might cause the share price to move later in January is if people choose to offload their 'cheap' 53p shares for an immediate profit. But that's where we are back to the 1 for 49 point - even someone with 1m shares can only buy 20,040 new shares at 53p which even if they sold them at the current 70p would generate a profit of only £3.4k.

FWIW, I can't see why most holders wouldn't take up the open offer and apply for additional shares if available. So don't expect to get many additional ones - and, if you did, that would be a massive vote of no confidence in the company!

The overall share issue is around 1 in 3, not 1 in 49.  The impact on the price would still be relatively small based on the theory though (and no guarantee that translates to reality!)

In theory the price move would be approximately along these lines, discounting any market sentiment impact:

Current Value:
646,213,765 shares @70p = £452,349,635.5

New Share Value:
201,102,976 shares @53p = £106,584,577.28

Future Value:
£558,934,212.78  ÷ 847,316,741 = 65.9p

So a 6% drop

However, as usual, this has already been priced in by the market as the price was consistently in the high 70's prior to yhe announcement so the current price of 70p has the new shares issue baked in.

phlebas192

Woodstok2000 said:

phlebas192 said:

HarryIb said:

Having a small position in Rockhopper Exploration (RKH), I've been invited as part of an open offer to purchase a small number of shares at the reduced price of £0.53 per share (current price £0.70). I've accepted the offer, but there's also an option to buy additional shares, should they be available as part of the offer. I'm wondering about applying for some more, but what typically happens to share prices when new shares are issued on the basis of an open offer (due for issue on 26/01/2026)?

I doubt that the price will move very much at all as a result of these shares being issued. I've only skimmed the situation, but 1 new share for every 49 held is little more than a drop in the ocean and looks like a sop to the existing shareholders for the much larger dilution that occurred as a result of the non-open placing. 

Price movements generally happen when something is announced or when the right to something expires - in this case the right to the open offer was retrospective so it was the announcement that counted. As scuh you can assume that all the information is already contained within the share price. 

The one aspect that might cause the share price to move later in January is if people choose to offload their 'cheap' 53p shares for an immediate profit. But that's where we are back to the 1 for 49 point - even someone with 1m shares can only buy 20,040 new shares at 53p which even if they sold them at the current 70p would generate a profit of only £3.4k.

FWIW, I can't see why most holders wouldn't take up the open offer and apply for additional shares if available. So don't expect to get many additional ones - and, if you did, that would be a massive vote of no confidence in the company!

The overall share issue is around 1 in 3, not 1 in 49.  

OP asked about the impact of the open offer, not the already completed placing which looks to have been first announced back in July and should long since have been priced in.