Rockhopper Exploration PLC
("the Company" or "Rockhopper")
Sea Lion update
Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and production company with interests in the North Falkland Basin and the Mediterranean region, is pleased to provide the following update on its Falkland Islands assets.
Rockhopper and Premier Oil have agreed to adopt a phased, lower cost development solution for the Sea Lion field. Highlights of phased development concept:
· Initial phase to commercialise approximately 160 mmbbls oil
· Leased FPSO development concept targeting gross production plateau of 50,000 - 60,000 barrels oil per day
· Costs to first oil on the initial phase estimated at less than $2 billion
· Confirmation from Premier that a project of this size can be funded from existing facilities and cash flows and that a farm-out is no longer a pre-requisite to be able to sanction the project
· Continuing to target first oil in 2019 following sanction in H1 2016
In light of the move to a phased development, Rockhopper and Premier have agreed the following amendments to their commercial arrangements (subject to documentation and internal approvals):
· Rockhopper to access the full $48 million Exploration Carry for the 2015 drilling campaign
· Rockhopper to contribute 40% of pre sanction costs, currently estimated at $100 million gross
· Anticipated net cash outflow to Rockhopper for Falklands activities during 2015 remains in line with previous guidance at approximately US$ 50 - 70 million
· Rockhopper to retain $337 million Development Carry for the initial phase; a further $337 million Development Carry deferred to the next phase of development
· Existing Standby Finance arrangements to be simplified to a more traditional loan structure of up to $750 million from Premier. Rockhopper will continue to review alternative funding sources
· Rockhopper remains fully financed through a combination of Development Carry and simplified loan from Premier
· Revised commercial terms remain subject to documentation and respective board approvals
Further details of proposed phased Sea Lion development
The lower cost Initial Development Scheme is designed to target more than 50% of the resources contained within PL032 and is likely to focus those resources in the North East segment of the field. Subsequent phases of the development, which will require separate project sanction, will then target the remaining resources in PL032, the already discovered resources in PL004 and any potential additional resources discovered during the 2015 exploration campaign. Initial indications suggest that the concept is likely to consist of 10-15 wells in total. Production will be via an FPSO that is anticipated to be a leased facility and will target a gross production plateau of approximately 50,000 to 60,000 barrels per day in the initial phase. A further announcement will be made once the Initial Development Scheme is further advanced.
Sam Moody, Rockhopper Exploration's CEO commented:-
"We have worked closely with Premier Oil on a lower cost initial development scheme that allows us to move together towards project sanction that is not contingent on the involvement of a third party.
Overall, we are delighted with this revised approach as it materially reduces uncertainty of first-oil from Sea Lion, which we expect to be on production in 2019, as well as very significantly reduces the capex required to reach production.
The decision to adopt a phased FPSO development together with our high impact four well exploration campaign currently due to begin as early as March 2015, is an exciting development as we continue to grow the business for the long term"
For further information, please contact:
Rockhopper Exploration plc
Tel: (via Vigo Communications) - 020 7016 9571
Sam Moody - Chief Executive
Stewart MacDonald - Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Joint Broker)
Tel: 020 7523 8000
Henry Fitzgerald-O'Connor
Liberum Capital (Joint Broker)
Tel: 020 3100 2227
Clayton Bush
Vigo Communications
Tel: 020 7016 9571
Peter Reilly
Patrick d'Ancona
Notes to Editors
Rockhopper was established in February 2004 with a strategy to invest in and carry out offshore oil exploration to the north of the Falkland Islands. The Company floated on AIM in August 2005.
An extensive work programme was carried out over a number of years on the licences operated by Rockhopper. This has included 2D and 3D seismic and controlled source electromagnetic mapping. In February 2010, the Ocean Guardian drilling rig arrived in Falkland waters to carry out a multi-well drilling campaign. Rockhopper drilled an exploration well on Sea Lion during April and May 2010, the result of which was the first oil discovery and Contingent Resource in the North Falkland Basin. The Sea Lion discovery well was successfully tested during September 2010 and resulted in the first flow of oil to surface in Falkland Islands waters. Rockhopper's drilling campaign lasted from 16 April 2010 to 8 January 2012. Of the ten wells drilled, seven were successful, with three oil discoveries, three gas discoveries, multiple successful Sea Lion appraisal wells and a successful appraisal well on Casper.
In October 2012 Rockhopper completed a farm-out agreement with Premier Oil plc, whereby Premier Oil acquired 60% of Rockhopper's interests in its North Falkland Basin licences.
In October 2013 Rockhopper agreed with Falkland Oil and Gas to farm-in to licences PL004a and PL004c increasing the Company's interest in those licences to 24%.
Rockhopper currently has a 40% interest in licences PL032 and PL033 and a 24% interest in licences PL004a, PL004b and PL004c, all of which are operated by Premier Oil. PL004b contains the extension to the Sea Lion Field as well as the Beverley, Casper and Casper South discoveries. Rockhopper also has a 3% interest in PL003, operated by Falkland Oil & Gas.
In August 2014 Rockhopper completed the takeover of Mediterranean Oil & Gas plc ("MOG"). Through the acquisition of MOG, Rockhopper now holds a portfolio of production, development/appraisal and exploration interests in Italy, Malta and France.
Rockhopper Exploration plc
www.rockhopperexploration.co.uk
