REG - Rockhopper Exp plc - Final Results
29/05/2025 07:00
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RNS Number : 5764K Rockhopper Exploration plc 29 May 2025
29 May 2025
Rockhopper Exploration plc
("Rockhopper", the "Group" or the "Company")
Full-Year Results for the Year Ended 31 December 2024
Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and
production company with key interests in the North Falkland Basin, is pleased
to announce its audited results for the year ended 31 December 2024.
2024 AND POST PERIOD HIGHLIGHTS
Sea Lion Development
Financing
· Lead technical and lending bank mandate signed
· Financing plan now includes senior bank debt
· Positive initial feedback from potential providers of capital to the
financing
· New timing for Final Investment Decision ("FID") expected H2 2025 to
allow for bank to complete due diligence ("DD")
Resources
· Updated independent report commissioned by Navitas*
o Gross 917 mmbbls 2C with additional upside (Rockhopper 35% working
interest)
o Phased development
o 5 phases
o 2 FPSOs
o First 2 phases developed via a single FPSO with 2 drilling campaigns
· Rockhopper commissioned independent resource update to be published
shortly
Corporate and Financial
· US$20.9 million cash and term deposits at 31 December 2024
· Share Purchase Agreement ("SPA") signed to dispose of Italian
business
o Awaiting consents from Falkland Islands Government ("FIG") and the Italian
regulators
· Cost control remains a focus
Ombrina Mare Arbitration Award
· No outcome of annulment to date
· Monetisation of the Award with a regulated specialist fund
("Specialist Fund")
o Completion and First Tranche payment received, €19 million retained
o If successful in defending annulment, Second Tranche payment of €65
million due from Specialist Fund
· Insurance in place to ensure minimum of €31 million even in the
event of annulment
Sam Moody, Chief Executive of Rockhopper Exploration, commented:
"This has been a very important period for Rockhopper and an exciting time for
the Company and its shareholders as we continue to work with operator Navitas
in moving the Sea Lion project towards FID. With work on financing for the
development beginning to gather pace and continued progress on the technical
side, we look forward to providing the market with further updates."
* Rockhopper is not an addressee and has not been party to the production of
the March 2025 NSAI Independent Report. The March 2025 NSAI Independent Report
has been produced to PRMS standards. The last independent resource report
commissioned directly by Rockhopper was the ERCE 2016 Report which had an
estimated 2C value of 517 mmbbls. Rockhopper has commissioned it's own
independent resource update to be published shortly
Enquiries:
Rockhopper Exploration plc
Sam Moody, Chief Executive Officer
Tel. +44 (0)20 7390 0234 (via Vigo Consulting)
Canaccord Genuity Limited (NOMAD and Joint Broker)
Henry Fitzgerald-O'Connor/James Asensio/Charlie Hammond
Tel. +44 (0) 20 7523 8000
Peel Hunt LLP (Joint Broker)
Richard Crichton/Georgia Langoulant
Tel. +44 (0) 20 7418 8900
Vigo Consulting
Patrick d'Ancona/Ben Simons/Fiona Hetherington
Tel. +44 (0) 20 7390 0234
Note regarding financial information disclosure
The financial information set out below does not constitute the Group's
statutory accounts for the year ended 31 December 2024, but is derived from
those accounts. References within the document may refer to information in the
statutory accounts and these will be sent to shareholders and published on the
Company's website imminently.
CHAIR AND CEO REVIEW
Sea Lion
The period under review and subsequently has seen the most material positive
development to date in relation to the potential Sea Lion development
financing. A mandate has been signed by the Operator with a well known
international lead technical lending bank with expertise in lending to oil and
gas projects. The Operator has indicated it is currently envisioned that
the bank will cornerstone the project financing with additional capital
provided by a number of other investors. We understand that initial
discussions with these potential providers of capital have been positive.
The target is for that bank financing to be completed within 6 months, with
FID now anticipated in H2 2025, giving the necessary time for the lead bank to
complete all technical, regulatory and other due diligence and for the wider
financing scheme to be completed.
A number of LOIs, MOUs and contracts have been signed relating to the project,
including for the provision of an FPSO along with various key pieces of subsea
infrastructure. Discussions are also currently ongoing for the provision of
a suitable drilling unit.
The Operator continues to work closely with FIG to secure all required
consents which Rockhopper believes will be forthcoming in a timescale allowing
formal FID in H2 of 2025. In the light of the positive developments on the
financing, and in order to provide the most stable platform for that financing
to be completed, the existing reciprocal pre-emption right contained within
the Joint Operating Agreement ('JOA') that operates at the asset level, has
been extended to cover a corporate change of control. That pre-emptive
right, which is reciprocal between Navitas and Rockhopper, will last until the
earlier of formal project sanction or 31 December 2025.
Sea Lion - Key Information
· Rockhopper holds a 35% working interest
· Rockhopper benefits from pre and post FID loan from the Operator
Navitas (1)
· Independent Resource Report commissioned by Navitas (2)
· 2C Contingent Resources (Development Pending) phased development
concept for the Sea Lion field:
· 64 wells to develop the full 730 mmbbls
· Phased development
§ Northern Area
· 1st Phase - 11 wells, 6 pre-drilled 170 mmbbls
· 2nd Phase - 12 wells. 149 mmbbls
· 3rd Phase - 16 wells, 95 mmbbls
§ Central Area
· 1st Phase - 12 wells, 212 mmbbls
· 2nd Phase - 13 wells. 102 mmbbls
· Northern Area Phase 1 + Phase 2 total barrels developed, 319 mmbbls
· Total barrels developed (all phases) 730 mmbbls(3)
· Northern AreaPhase 1 + Phase 2 peak production rate 55,000
bbls/day, increasing up to 150,000 bbls/day once all phases have been
developed
· Pre first oil capex (Phase 1 only) US$1.4bn
· Production breakeven approximately US$24 per barrel (Phase1, 2
and 3)
(1) The majority of Rockhopper's share of Sea Lion phase one related costs up
to FID will be funded through a loan from Navitas with interest charged at 8%
per annum (the "Pre-FID Loan"). Certain costs, such as licence costs, are
excluded. Subject to a positive FID, Navitas will provide an interest free
loan to Rockhopper to fund two-thirds of Rockhopper's share of Sea Lion phase
one development costs (for any costs not met by third party debt financing).
Certain costs, such as licence costs, are excluded
Funds drawn under the loans will be repaid from 85% of Rockhopper's working
interest share of free cash flow
(2) Rockhopper is not an addressee and has not been party to the production of
the March 2025 NSAI Independent Report. The March 2025 NSAI Independent Report
has been produced to PRMS standards.
The last independent resource report commissioned directly by Rockhopper was
the ERCE 2016 Report which had an estimated 2C value of 517 mmbbls. Rockhopper
has commissioned it own independent resource update to be published shortly.
(3) Totals may not sum precisely due to rounding adjustments
Ombrina Mare
Having announced an agreement to monetise the Ombrina Mare Arbitration Award
('the "Award") on 20 December 2023 (the 'Monetisation'), Rockhopper received
the Tranche 1 payment in June 2024 and retained €19mm. The annulment process
has no formal timetable and may now slip into H2 2025, however we remain
hopeful of an outcome in the relatively near future. Should Rockhopper succeed
in defending the annulment attempt, an additional payment of €65 million
will become due from the Specialist Fund. During the period, Rockhopper put in
place insurance to cover the event that the Italian Republic is successful in
having the Award annulled. The insurance policy will ensure that, in the event
that the Italian Republic succeeds in having the entire Award annulled or in
the event of partial annulment, the combination of the Tranche 2 payment and
the insurance payout shall entitle Rockhopper to a total no less than €31
million.
The policy has been placed via a FCA-registered specialist insurance
brokerage. The policy has been underwritten by a specialist underwriting
agency and subscribed to by a number of A-rated insurance carriers and
syndicates.
Tax of approximately 12.5% to 15% is likely to be due on receipts from the
Monetisation.
Italian disposal
As announced on 14 October 2024, Rockhopper signed an SPA to dispose its
Italian interests, other than the Ombrina Mare arbitration, to Zodiac Energy
Limited ("Zodiac"), a locally run Italian E&P company.
The SPA is for the sale of Rockhopper Civita Limited (a wholly owned
subsidiary of Rockhopper Exploration Plc). Rockhopper Civita Limited holds all
Rockhopper's Italian assets and liabilities with the exception of the Ombrina
Mare Arbitration Award.
Under the terms of the SPA, Rockhopper will pay Zodiac in two instalments,
with a retained upside participation to Rockhopper in two undeveloped
licences.
The first instalment of €3 million is payable to Zodiac on satisfaction of
two precedent conditions ("Completion"), those being receipt of all necessary
regulatory consents in Italy, as well as regulatory consents in the
Falklands.
The second instalment of €2.5 million is payable to Zodiac on or after
Completion, assuming the satisfaction of two additional conditions, those
being successfully defending the Italian Republic's annulment application and
receiving a minimum of €10 million from the Award monetisation (the
Tranche 2 payment under the Award monetisation is €65 million, due on a
successful defence of the annulment application, but can be reduced in the
event of a partial annulment).
In addition, assuming the second instalment is payable, Rockhopper will
retain a royalty on two assets within the Rockhopper Civita Limited portfolio,
those being AC19 (a northern Adriatic licence with two gas discoveries and an
additional adjacent prospect) and Serra San Bernado (which contains the Monte
Grosso exploration prospect).
The royalties will take the form of either 10% of the revenues of the
interests acquired by Zodiac or, should they realise value by on-selling the
licences acquired, 25% of the gross proceeds received for the part sold.
The transaction is subject to regulatory approvals, the timing of which is
uncertain but are anticipated within 12 months.
The transaction will significantly reduce both Rockhoppers annual running
costs and long run decommissioning liabilities.
Falklands Capital gains Tax ("CGT")
Rockhopper is in discussions with FIG to come to an agreement over the
deferred CGT arising from the farm down to Premier Oil in 2012, as the current
arrangements make the Sea Lion financing significantly more difficult. This is
discussed in greater detail in the Financial Review.
Summary
With a lead lending bank appointed, positive feedback from potential funders,
Sea Lion resources and values independently confirmed and FIG continuing to
support the development of the field, the sanction of Sea Lion has never been
closer with a target of H2 this year, an event that would represent the
culmination of some 20 years of work for Rockhopper.
Whilst our balance sheet remains strong, it is possible that the Group will
require additional funding in order to take FID. The final amount of that
funding will be a function of the outcome of the Ombrina Mare annulment
process, final project costs and Sea Lion financing details.
The Navitas independent NSAI report confirms the scale of Sea Lion and the
possibility for it to generate significant value for all stakeholders should
sanction be achieved. We also look forward to publishing shortly our own
independent report which we expect to corroborate this significant resource
base.
FINANCIAL REVIEW
OVERVIEW
From a finance perspective, the most significant event in 2024 was completion
of the announced Monetisation. From an accounting perspective the Monetisation
Agreement is a separate financial instrument to the Arbitration Award itself.
This has meant recognising the fair value of the Monetisation Agreement of
US$79.8 million as Other income. This fair value comprises the USD equivalent
value of not only the initial €19 million Tranche 1 proceeds but also
subsequent tranches, predominantly the €65 million Tranche 2 proceeds, which
are receivable on success in the Arbitration Award annulment proceedings. The
€19 million was received during the year with the remaining fair value of
the subsequent tranches of US$58 million being held as a financial asset.
The Award annulment proceedings themselves concluded in 2024 and we just await
the outcome. We and our advisors remain confident in the merits of our
arguments but have put in place insurance to ensure a minimum €31 million
should be received.
RESULTS FOR THE YEAR
For the year ended 31 December 2024 the Group, including discontinued
operations, reported a profit of US$47.6 million (2023: loss of US$4.6
million).
DISCONTINUED OPERATIONS
In October 2024, the Group announced the disposal, subject to conditions
precedent, of its 100% interest in Rockhopper Civita Limited which holds the
Group's remaining operations in the Greater Mediterranean geographical
segment. The transaction had not completed at the year end, but the assets and
associated liabilities have been reclassified as held for sale on the balance
sheet. Due to the fact that the disposal group has been classified as held for
sale and represents a geographical area of operations it has also been treated
as a discontinued operation in line with IFRS 5. As such the comparative
information in the Income Statement and relevant notes have been re-presented.
OPERATING COSTS
Exploration and evaluation expenses are not material in the year. The
impairment in the current year of US$0.4 million (2023: US$0.3 million) is due
to cost write-offs relating to the South Falkland Basin and areas of the North
Falkland Basin which will not be developed as part of the Sea Lion Phase 1
project.
Administrative expenses have reduced during the year to US$3.3 million (2023:
US$3.8 million). The prior year included legal fees in relation to contesting
the Annulment of the Award of US$1.6 million. The Group chose to use existing
resources to fund all legal costs arising from contesting the request by Italy
for Annulment while it explored all acceptable funding possibilities. Since
signing of the Monetisation agreement, the Specialist Fund are responsible for
all legal fees, therefore no costs have been incurred in relation to the
Arbitration in 2024. This reduction has been offset by an increase in staff
costs, which predominantly relate to discretionary bonuses to staff on receipt
of the Tranche 1 proceeds of the Monetisation Agreement
Finance income has increased to US$1.9 million (2023: US$1.2 million). Income
on cash and term deposits has increased US$0.3 million due to increased cash
balances during the year. Also the current year includes the unwinding of
discounts on the fair value of the Monetisation Agreement of US$1.3 million.
The prior year saw a gain on derivative financial liabilities of US$0.9
million.
Other income and other expenses relate to the Monetisation Agreement. As noted
earlier US$79.8 million of Other income relates to the fair value of the
Monetisation Agreement. Other expenses of US$1.0 million relate to costs
associated with the Monetisation Agreement and also associated with an
insurance policy taken out during the year.
In October 2024 the Group decided, in line with normal market practice, that
insuring to protect shareholders against loss resulting from an annulment of
the Award to be the most prudent course of action. The insurance policy will
ensure that, in the event that the Italian Republic succeeds in having the
entire Award annulled or in the event of partial annulment, the combination of
the Tranche 2 payment and the insurance payout shall entitle Rockhopper to a
total of no less than €31 million. The only impact on the financial
statements is the total cost of the policy, which including applicable taxes
and underwriting fees, is €4 million. This cost has been spread over the
life of the policy (which materially exceeds the expected time to receive an
outcome from the Award annulment). As such the majority of this cost is
recorded as a prepayment in the 2024 financial statements.
CASH MOVEMENTS AND CAPITAL EXPENDITURE
As at 31 December 2024, the Group had cash and term deposits of US$20.9
million (31 December 2023: US$8.0 million).
Cash and term deposit movements during the period:
US$m
Opening cash balance (31 December 2023) 8.0
Discontinued operations (0.4)
Falkland Islands (1.8)
Administrative expenses (3.3)
Net proceeds of warrant exercises 2.2
Monetisation Agreement 20.6
Arbitration award insurance (4.2)
Miscellaneous (0.2)
Closing cash balance (31 December 2024) 20.9
Miscellaneous includes foreign exchange and movements in working capital
during the period.
The additions to intangible exploration and evaluation assets during the year
of US$14.7 million relate principally to the Sea Lion development. The
majority of cash costs were covered by the Pre-FID co-venturer loan provided
by Navitas as part of the farm out in 2022. This co- venturer loan facility
was utilised for the first time during the year and costs covered and accrued
interest as at the year end totalled US$15.3 million (2023: US$nil).
Management considered whether there were any indicators of impairment to the
carrying value of the intangible as it relates to the first phase of the Sea
Lion development and concluded there were none.
In the event of Sea Lion being sanctioned the Group benefits from a Post FID
loan which will cover two thirds of its share of project equity costs. It is
likely that to enable sanction the Group will need to raise additional finance
to cover its proportion of unfunded project costs.
In addition, FIG has indicated a likely requirement for certain potential
project decommissioning liabilities to be secured and funded commensurate with
the contingent abandonment liabilities as the project is developed and enters
production. These liabilities relate to the possible early plugging and
abandonment of wells and will commence from drilling of the first well until
completion of phase 1 at which point it shall be replaced with a
decommissioning fund to be established and accumulated following first oil.
This is likely to place an additional phased financial requirement on
Rockhopper, starting at the time the first pre drilled well is spudded, and is
estimated as peaking at approximately US$40million at phase 1 completion. The
Company is discussing this with the Operator and investigating options to
fulfil this requirement, including the possibility of using a suitably highly
rated decommissioning bond. In parallel the Company is investigating other
potential sources of funding, if required, to ensure that it is able to meet
its share of Sea Lion project equity costs at sanction, which are currently
unknown.
The level of equity injection into the project required for Rockhopper to take
FID is a function of final project costs, details of the project financing and
other potential costs or financing requirements such as contingencies, fees
and any other possible costs, none of which are currently certain. The
Operator currently estimates project costs to first oil of US$1.4 billion and
total project financing (senior debt) is anticipated to amount to
approximately US$1.0 billion.
A number of possible scenarios are set out below:-
The numbers below are indicative and subject to change and are not a
prediction of the final Rockhopper share of the project equity requirement.
If the project cost was US$1.25 billion of which debt financing was
US$700million then the Rockhopper equity contribution to the project would be
approximately US$64million, being 1/3(rd) of the Rockhopper 35% working
interest, with the remaining 2/3 of the 35% working interest costs being
funded via the post FID loan from Navitas.
If the project cost was US$1.5 billion of which debt financing was
US$900million then the Rockhopper equity contribution to the project would be
approximately US$70million, being 1/3(rd) of the Rockhopper 35% working
interest, with the remaining 2/3 of the 35% working interest costs being
funded via the post FID loan from Navitas.
If the project cost was US$1.75 billion of which debt financing was
US$1billion then the Rockhopper equity contribution to the project would be
approximately $88million, being 1/3(rd) of the Rockhopper 35% working
interest, with the remaining 2/3 of the 35% working interest costs being
funded via the post FID loan from Navitas.
The above numbers do not include an allowance for decommissioning provisions
relating to the pre first oil wells as it is currently unknown how that
provision will be funded. Under the terms of the post FID loan, certain costs
such as licence fees and Rockhopper specific taxes and G&A are excluded
and would need to be funded directly by Rockhopper.
Possible sources of funds for the currently unknown Rockhopper project equity
requirement include but are not limited to: Any proceeds from the monetisation
of the Ombrina Mare arbitration, any payout under the insurance policy put in
place to cover the annulment outcome, balance sheet cash, a convertible issue
or other mezzanine finance instrument, an equity issue or a farm out. In the
event funding was necessary and not achievable then the Group could not
sanction the project.
Impairment during the year is in relation to licences that hold discovered
barrels of oil that would be produced in any subsequent phases of development
as well as our Southern Falkland Basin licences. This is in line with
accounting standards given the limited capital we are currently spending on
these licences.
OTHER RECEIVABLES
Other receivables have increased to US$62.3 million (2023: US$1.2 million).
This is as a result of the year end fair value of the Monetisation Agreement
of US$58.2 million and the prepayment of Award annulment insurance of US$3.9
million.
TAXATION
Current tax payable of US$1.8 million relates to amounts expected to be due in
relation to the Tranche 1 proceeds received from the Monetisation Agreement.
Separately as a result of the recognition of the fair value of the
Monetisation Agreement an additional US$6.2 million of deferred tax liability
has been recognised.
A non-current tax payable of US$22.3 million has been recognised in the year
and relates to the potential liability arising from the historic farm-outs in
the Falkland Islands.
On the 8 April 2015, the Group agreed binding documentation ("Tax Settlement
Deed") with FIG in relation to the tax arising from the Group's 2012 farm out.
The Tax Settlement Deed confirms the quantum and deferment of the outstanding
tax liability and is made under Extra Statutory Concession 16. The Tax
Settlement Deed also states that the Group is entitled to make adjustment to
the outstanding tax liability if and to the extent that the Commissioner is
satisfied that any part of the Development Carry becomes irrecoverable. In
September 2022 the transaction enabling Harbour Energy plc to exit and Navitas
to enter the North Falkland Basin completed. Under the transaction the balance
of Development Carry became irrecoverable.
Following the transaction professional advice (the 'Advice') was sought over
whether the Group was entitled to adjust the tax returns for the irrecoverable
Development Carry. The Advice confirmed that it is probable that the Group is
entitled to adjust the outstanding tax liability. As such the Group submitted
tax returns on this basis. FIG disagreed with this analysis and asserted that
the Group continued to owe £59.6 million payable around first oil. Based on
the information as at 31 December 2023 the Directors made a judgement to
derecognise any liability, given that it was considered the most probable
outcome based on the Advice.
Separately the Group submitted tax returns in relation to the farm out to
Navitas that occurred immediately after their acquisition, from Harbour Energy
plc of the company that holds the North Falkland's Basin licences. The
consideration for this transaction was the provision of loan funding to the
Group to cover the majority of its share of Sea Lion phase 1 related costs
from transaction completion up to FID through a loan from Navitas with
interest charged at 8% per annum (the "Pre-FID Loan"). Subject to a positive
FID, Navitas will provide an interest free loan to fund two-thirds of the
Group's share of Sea Lion phase 1 development costs (for any costs not met by
third party debt financing). The Directors are confident that the Group has
sufficient losses to ensure no tax liability will arise.
The Group has continued discussions with FIG to resolve differences regarding
any outstanding tax liability arising from the Tax Settlement Deed and
recognise that the current arrangements make the project financing for Sea
Lion significantly more difficult.
Given these discussions, and notwithstanding the Advice, the level of
uncertainty relating to the potential tax liability has increased. For this
reason, the Directors' have recognised a liability this year, which has been
determined with reference to a probability weighting approach to reflect the
additional uncertainty. For the avoidance of doubt there is no agreement to
date with FIG and the ultimate tax liability could be materially different.
Should it be proven that there is no entitlement to adjustment under the Tax
Settlement Deed then the outstanding tax liability would be £59.6 million and
still payable on the earlier of: (i) the first royalty payment date on Sea
Lion; (ii) the date of which Rockhopper disposes of all or a substantial part
of the Group's remaining licence interests in the North Falkland Basin; or
(iii) a change of control of Rockhopper Exploration plc.
Warrants
During 2022 by way of a Placing and Subscription and an Open Offer in July
2022 the group issued Warrants. Each Warrant gave the holder the right to
subscribe for one new Ordinary Share at a price of 9 pence per Ordinary Share
(the "Strike Price") at any time from the issue of the Warrants up to (and
including) 5.00 p.m. on 31 December 2023.
At the start of the year 20.3 million shares were issued in relation to
Warrants that were validly exercised immediately prior to their expiry. This
raised US$2.2million of net proceeds.
LIQUIDITY, COUNTERPARTY RISK AND GOING CONCERN
The Directors have performed an assessment of whether the Company and Group
would be able to continue as a going concern until at least September 2026. In
their assessment, the Group has taken into account its financial position,
expected future performance, its debt and other available credit facilities,
its working capital and capital expenditure commitments and forecasts.
At 31 December 2024, the Group had cash and cash equivalents and term deposits
of $20.9 million and the Group benefits from loan funding for its share of all
Sea Lion pre-sanction costs (other than licence fees and taxes), historically
the largest annual expenditure. This loan funding is the Group's only external
debt and is long term, ultimately repayable out of future cash flows from any
Sea Lion Development.
Based on a detailed cash flow forecast prepared by management, in which it
included any reasonable possible change in the key assumptions on which the
cash flow forecast is based, the Board of Directors have a reasonable
expectation that the Group will have adequate resources to continue in
operational existence.
The cash flow forecast does not include the benefit of any further proceeds
from the Ombrina Mare Award should that be through the Monetisation Agreement
or insurance. It also does not include any post sanction Sea Lion costs. The
Group benefits from a Post FID loan which will cover two thirds of its share
of project equity costs. It is possible that to enable sanction the Group will
need to raise additional finance to cover its proportion of unfunded project
costs. The exact quantum is still to be determined but the Directors believe
that, to the extent necessary, extra funding will be achievable based on
current expectations of project costs and funding availability. Ultimately
from a going concern perspective project sanction is a discretionary act and
if funding was not achievable then the Group would not sanction the project.
PRINCIPAL RISK AND UNCERTAINTIES
A detailed review of the potential risks and uncertainties which could impact
the Group are outlined elsewhere in this Strategic Report. The Group
identified its key risks at the end of 2024 as being:
1 failure of joint venture partners to secure the
requisite funding at a project level to allow a Sea Lion Final Investment
Decision;
2 availability and access to capital at a Group
level;
3 oil price volatility; and
4 joint venture partner and wider stakeholder
alignment.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2024
Notes 2024 2023
$'000 $'000
Restated*
Exploration and evaluation expenses 4 (393) (275)
Administrative expenses 5 (3,330) (3,840)
Charge for share based payments 8 (76) (117)
Foreign exchange movement 9 170 328
Results from operating activities (3,629) (3,904)
Other income 10 79,802 -
Other expenses 10 (1,024) -
Finance income 11 1,927 1,191
Finance expense 11 (296) (121)
Profit/(loss) before tax 76,780 (2,834)
Tax expense 12 (30,421) -
Profit/(loss) from continuing operations 46,359 (2,834)
Profit/(loss) for the year from discontinued operations 13 1,253 (1,716)
Profit/(loss) attributable to equity shareholders of the parent company 47,612 (4,550)
Profit/(loss) per share attributable to the equity shareholders of the parent
company: cents
Basic 14 7.40 (0.77)
Diluted 14 7.28 (0.77)
Basic (continuing operations) 14 7.20 (0.48)
Diluted(continuing operations) 14 7.09 (0.48)
* The comparative information has been re-presented due to a discontinued
operation. See Note 13.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2024
2024 2023
$'000 $'000
Profit/(loss) for the year 47,612 (4,550)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations (2,094) (502)
Total comprehensive profit/(loss) for the year 45,518 (5,052)
The notes on pages 44 to 64 form an integral part of these consolidated
financial statements.
CONSOLIDATED BALANCE SHEET
as at 31 December 2024
Notes 2024 2023
$'000 $'000
Non current assets
Exploration and evaluation assets 15 271,110 257,228
Property, plant and equipment 10 29
Current assets
Other receivables 16 62,330 1,241
Finance lease receivable - 235
Restricted cash - 529
Term deposits 17 19,969 4,501
Cash and cash equivalents 915 3,487
Assets classified as held for sale 13 1,203 -
Total assets 355,537 267,250
Current liabilities
Other payables 18 6,516 7,176
Tax payable 20 1,806 -
Derivative financial liabilities 19 - 450
Lease liability - 246
Liabilities associated with assets held for sale 13 14,279 -
Non-current liabilities
Co-venturers loan 18 15,354 -
Tax payable 20 22,300 -
Provisions 21 1,600 20,121
Deferred tax liability 22 45,305 39,137
Total liabilities 107,160 67,130
Equity
Share capital 23 9,455 9,196
Share premium 24 12,585 10,181
Share based remuneration 24 2,185 2,109
Own shares held in trust 24 (1,320) (1,320)
Merger reserve 24 78,208 78,208
Foreign currency translation reserve 24 (10,595) (8,501)
Special reserve 24 175,281 175,281
Retained losses 24 (17,422) (65,034)
Attributable to the equity shareholders of the company 248,377 200,120
Total liabilities and equity 355,537 267,250
These financial statements on pages 40 to 64 were approved by the directors
and authorised for issue on 28 May 2025 and are signed on their behalf by:
Samuel Moody
Chief Executive Officer
Rockhopper Exploration plc Registered Company Number: 05250250
The notes on pages 44 to 64 form an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2024
Foreign currency translation
Share capital Share premium Share based remuneration Merger reserve reserve Special reserve Retained losses Total equity
Shares held
in trust
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 31 December 2022 8,771 6,518 1,492 (1,494) 78,208 (7,999) 175,281 (60,310) 200,467
Loss for the year - - - - - - - (4,550) (4,550)
Other comprehensive loss for the year - - - - - (502) - - (502)
Total comprehensive loss for the year - - - - - (502) - (4,550) (5,052)
Share based payments (see note 8) - - 617 - - - - - 617
Share issues (net of expenses) 425 3,663 - - - - - - 4,088
Other transfers - - - 174 - - - (174) -
Balance at 31 December 2023 9,196 10,181 2,109 (1,320) 78,208 (8,501) 175,281 (65,034) 200,120
Profit for the year - - - - - - - 47,612 47,612
Other comprehensive loss for the year - - - - - (2,094) - - (2,094)
Total comprehensive profit for the year - - - - - (2,094) - 47,612 45,518
Share based payments (see note 8) - - 76 - - - - - 76
Share issues (net of expenses) 259 2,404 - - - - - - 2,663
Other transfers - - - - - - - - -
Balance at 31 December 2024 9,455 12,585 2,185 (1,320) 78,208 (10,595) 175,281 (17,422) 248,377
See note 24 for a description of each of the reserves of the Group.
Other transfers relate to Shares held in trust where they have been used to
satisfy exercised options.
The notes on pages 44 to 64 form an integral part of these consolidated
financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2024
Notes 2024 2023
$'000 $'000
Cash flows from operating activities
Profit/(loss) for the year 47,612 (4,550)
Adjustments to reconcile net losses to cash:
Depreciation of property, plant and equipment 19 39
Share based payment expense 8 76 117
Written off exploration costs 15 393 158
Finance expenses 11 595 482
Finance income 11 (1,322) (889)
Foreign exchange 9 (3,786) (356)
Income tax expense 12 30,421 -
Operating cash flows before movements in working capital 74,008 (4,999)
Changes in working capital:
(Increase)/decrease in receivables (60,613) 517
Increase in payables 386 112
Decrease in provisions (2.397) (41)
Cash utilised by operating activities 11,384 (4,411)
Cash flows from investing activities
Capitalised expenditure on exploration and evaluation assets (1,834) (1,293)
Cash classified as held for sale (17) -
Investing cash flows before movements in capital balances (1,851) (1,293)
Changes in:
Restricted cash 542 -
Term deposits (15,073) 4,533
Cash flow (used in)/from investing activities (16,382) 3,240
Cash flows from financing activities
Exercise of warrants and share options 2,213 3,682
Lease liability payments (11) (132)
Cash flow from financing activities 2,202 3,550
Exchange gain/loss on cash and cash equivalents 224 49
Net cash flow (2,796) 2,379
Cash and cash equivalents brought forward 3,487 1,059
Cash and cash equivalents carried forward 915 3,487
The notes on pages 44 to 64 form an integral part of these consolidated
financial statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2024
1. Accounting policies
1.1 Group and its operations
Rockhopper Exploration plc, the 'Company', a public limited company quoted on
AIM, incorporated and domiciled in the United Kingdom ('UK'), together with
its subsidiaries, collectively 'the 'Group' holds certain exploration licences
for the exploration and exploitation of oil and gas in the Falkland Islands.
In addition, it has operations in the Greater Mediterranean based in Italy
which have been classified as discontinued operations and whose assets and
liabilities are classified as held for sale. The registered office of the
Company is Warner House, 123 Castle Street, Salisbury, Wiltshire, SP1 3TB.
1.2 Statement of compliance
The consolidated financial statements of the Group have been prepared on a
going concern basis in accordance with UK adopted International Accounting
Standards in conformity with the requirements of the Companies Act 2006. The
consolidated financial statements were approved for issue by the board of
directors on 28 May 2025 and are subject to approval at the Annual General
Meeting of shareholders on 27 June 2025.
1.3 Basis of preparation
The results upon which these financial statements have been based were
prepared using the accounting policies set out below. These policies have been
consistently applied unless otherwise stated.
These consolidated financial statements have been prepared under the
historical cost convention with the exception of certain items which are
measured at fair value.
Items included in the results of each of the Group's entities are measured in
the currency of the primary economic environment in which that entity operates
(the "functional currency"). The consolidated financial statements are
presented in US Dollars ($), which is Rockhopper Exploration plc's functional
currency.
All values are rounded to the nearest thousand dollars ($'000) or thousand
pounds (£'000), except when otherwise indicated.
1.4 Change in accounting policy
Changes in accounting standards
In the current year the following new and revised Standards and
Interpretations have been adopted. None of these have a material impact on the
Group's annual results.
- Supplier Finance Arrangements (Amendments to IAS7 &
IFRS 7);
- Lease liability in a sale and Leaseback (Amendments to
IFRS 16);
- Classification of Liabilities as Current or Non-Current
(Amendments to IAS 1); and
- Non-current Liabilities with Covenants (Amendments to
IAS 1).
New accounting pronouncements
At 31 December 2024, the following Standards, Amendments and Interpretations
were in issue but not yet effective:
The following amendments are effective for the period beginning 1 January
2025:
- Lack of exchangeability (Amendment to IAS 21 The Effects
of changes in Foreign Exchange rates).: Disclosures).
The following amendments are effective for the period beginning 1 January
2026:
- Amendments to the classification and Measurement of
Financial Instruments (Amendments to IFRS 9 Financial Instruments and IFRS 7);
and
- Contracts Referencing Nature-dependent Electricity
(Amendments to IFRS 9 and IFRS 7).
The following amendments are effective for the period beginning 1 January
2027:
- IFRS 18 Presentation and Disclosure in Financial; and
- IFRS 19 Subsidiaries without Public Accountability:
Disclosures.
The Directors do not expect that the adoption of the above Standards,
Amendments and Interpretations will have a material impact on the Financial
Statements of the Group in future periods.
1.5 Going concern
The Directors have performed an assessment of whether the Company and Group
would be able to continue as a going concern until at least September 2026. In
their assessment, the Group has taken into account its financial position,
expected future performance, its debt and other available credit facilities,
its working capital and capital expenditure commitments and forecasts.
At 31 December 2024, the Group had cash and cash equivalents and term deposits
of $20.9 million and the Group benefits from loan funding for its share of all
Sea Lion pre-sanction costs (other than licence fees and taxes), historically
the largest annual expenditure. This loan funding is the Group's only external
debt and is long term, ultimately repayable out of future cash flows from any
Sea Lion Development.
Based on a detailed cash flow forecast prepared by management, in which it
included any reasonable possible change in the key assumptions on which the
cash flow forecast is based, the Board of Directors have a reasonable
expectation that the Group will have adequate resources to continue in
operational existence until at least September 2026 and that at this point in
time there are no material uncertainties regarding going concern.
Key assumptions underpinning this forecast include forecast committed
expenditure. The forecasts assume outflows for the completion of its announced
disposal of its Italian operations, although should this transaction not
complete it would not impact the going concern assessment during the period
considered.
The cash flow forecast does not include the benefit of any proceeds from the
Ombrina Mare Award should that be through the Monetisation Agreement or
insurance. It also does not include any post sanction Sea Lion costs. The
Group benefit from a Post FID loan which will cover two thirds of its share of
project equity costs. It is likely that to enable sanction the Group will
need to raise additional finance to cover its proportion of unfunded project
costs. The exact quantum is still to be determined but the Directors believe
that, to the extent necessary, extra funding will be achievable based on
current expectations of project costs and funding availability. Ultimately
from a going concern perspective project sanction is a discretionary act and
if funding was not achievable then the Group would not sanction the project.
Cash flow forecasts prepared based on current committed expenditure and
non-discretionary spend indicate that the Company has sufficient cash
resources to continue in operation for a period in excess of 12 months from
the date of signing the Consolidated and Parent Company Financial Statements.
The Directors therefore believe there is not a material uncertainty regarding
going concern and that it is appropriate to prepare the financial statements
on a going concern basis.
1.6 Significant accounting policies
(A) Basis of accounting
The Group has identified the accounting policies that are most significant to
its business operations and the understanding of its results. These accounting
policies are those which involve the most complex or subjective decisions or
assessments, and relate to the capitalisation of exploration expenditure. The
determination of this is fundamental to the financial results and position and
requires management to make a complex judgement based on information and data
that may change in future periods.
Since these policies involve the use of assumptions and subjective judgements
as to future events and are subject to change, the use of different
assumptions or data could produce materially different results. The
measurement basis that has been applied in preparing the results is historical
cost.
The significant accounting policies adopted in the preparation of the results
are set out below.
(B) Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its subsidiary undertakings drawn up to 31 December 2024.
Subsidiaries are those entities over which the Group has control. Control is
achieved where the Group has the power over the subsidiary, is exposed, or has
rights to variable returns from the subsidiary and has the ability to use its
power to affect its returns. All subsidiaries are 100 per cent owned by the
Group and there are no non-controlling interests.
The results of subsidiaries acquired or disposed of during the year are
included in the income statement from the effective date of acquisition or up
to the effective date of disposal, as appropriate. Where necessary,
adjustments are made to the financial statements of subsidiaries acquired to
bring the accounting policies used into line with those used by other members
of the Group.
All intercompany balances have been eliminated on consolidation.
(C) Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker as required by IFRS8
Operating Segments. The chief operating decision maker, who is responsible for
allocating resources and assessing performance of the operating segments, has
been identified as the board of directors.
The Group's operations are made up of three segments, the oil and gas
exploration and production activities in the geographical regions of the
Falkland Islands and the Greater Mediterranean region as well as its corporate
activities mainly centered in the UK.
(D) Oil and gas assets
The Group applies the successful efforts method of accounting for exploration
and evaluation ("E&E") costs, having regard to the requirements of IFRS6 -
'Exploration for and evaluation of mineral resources'.
Exploration and evaluation ("E&E") expenditure Expensed exploration &
evaluation costs
Expenditure on costs incurred prior to obtaining the legal rights to explore
an area, geological and geophysical costs are expensed immediately to the
income statement.
Capitalised intangible exploration and evaluation assets
All directly attributable E&E costs are initially capitalised in well,
field, prospect, or other specific, cost pools as appropriate, pending
determination.
Treatment of intangible E&E assets at conclusion of appraisal activities
Intangible E&E assets related to each cost pool are carried forward until
the existence, or otherwise, of commercial reserves have been determined,
subject to certain limitations including review for indicators of impairment.
If commercial reserves have been discovered, the carrying value, after any
impairment loss, of the relevant E&E assets, are then reclassified as
development and production assets within property plant and equipment.
However, if commercial reserves have not been found, the capitalised costs are
charged to expense.
Development and production assets
Development and production assets, classified within property, plant and
equipment, are accumulated generally on a field-by-field basis and represent
the costs of developing the commercial reserves discovered and bringing them
into production, together with the E&E expenditures incurred in finding
commercial reserves transferred from intangible E&E assets.
Depreciation of producing assets
The net book values of producing assets are depreciated generally on a
field-by-field basis using the unit-of-production method by reference to the
ratio of production in the year and the related commercial reserves of the
field, taking into account the future development expenditure necessary to
bring those reserves into production.
Disposals
Net cash proceeds from any disposal of an intangible E&E asset are
initially credited against the previously capitalised costs. Any surplus
proceeds are credited to the income statement.
Decommissioning
Provision for decommissioning is recognised in full when the related
facilities are installed. The amount recognised is the present value of the
estimated future expenditure. A corresponding amount equivalent to the
provision is also recognised as part of the cost of the related oil and gas
property. This is subsequently depreciated as part of the capital costs of the
production facilities. Any change in the present value of the estimated
expenditure is dealt with prospectively as an adjustment to the provision and
the oil and gas property. The unwinding of the discount is included in finance
cost.
(E) Foreign currency translation Functional and presentation currency:
Items included in the results of each of the Group's entities are measured
using the currency of the primary economic environment in which the entity
operates, the functional currency. The consolidated financial statements are
presented in US$ as this best reflects the economic environment of the oil
exploration sector in which the Group operates. The Group maintains the
financial statements of the parent and subsidiary undertakings in their
functional currency. Where applicable, the Group translates subsidiary
financial statements into the presentation currency, US$, using the closing
rate method for assets and liabilities which are translated at the rate of
exchange prevailing at the balance sheet date and rates at the date of
transactions for income statement accounts. Differences are taken through the
Statement of Comprehensive Income to reserves.
Transactions and balances:
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of monetary assets and
liabilities denominated in foreign currencies are expensed in the income
statement, except when deferred in equity as qualifying cash flow hedges and
qualifying net investment hedges.
The year end rates of exchange were:
31 December 2024 31 December 2023
£ : US$ 1.25 1.27
€ : US$ 1.04 1.10
(F) Revenue and income
Investment income
There is no revenue in either this or the prior period.
Investment income consists of interest receivable for the period. Interest
income is recognised as it accrues, taking into account the effective yield on
the investment.
(G) Non-derivative financial instruments
Financial assets and financial liabilities are recognised on the Group's
balance sheet when the Group has become a party to the contractual provisions
of the instrument.
(i) Other receivables
Other receivables are initially measured at fair value. Those that meet the
following conditions are measured subsequently at fair value through other
comprehensive income (FVTOCI):
· the financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and selling
the financial assets; and
· the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
By default, all other financial assets are measured subsequently at fair value
through profit or loss (FVTPL).
The Group recognises an allowance for expected credit losses for all debt
instruments not held at fair value through profit or loss. Expected credit
losses are based on the difference between the contractual cash flows due in
accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest
rate.
(ii) Restricted cash
Restricted cash is disclosed separately on the face of the balance sheet and
denoted as restricted when it is not under the exclusive control of the Group.
All amounts relate to balances held as security in relation to property
leases.
(iii) Term deposits
Term deposits are disclosed separately on the face of the balance sheet when
their term is equal or greater than one month and they are unbreakable.
(iv) Cash and cash equivalents
They are stated at carrying value which is deemed to be fair value. Cash and
cash equivalents comprise instant access bank balances as well as a small
amount of cash in hand.
(v) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
(vi) Account and other payables
Account payables are initially recognised at fair value and subsequently at
amortised cost using the effective interest method.
(vii) Derivative financial liabilities
Derivative financial liabilities are initially recognised and carried at fair
value with changes in fair value recognised in the consolidated statement of
comprehensive income.
(viii) Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
(H) Income taxes and deferred taxation
The current tax amount is based on the taxable profits or losses of the year,
after any adjustments in respect of prior years. Tax, including tax relief for
losses if applicable, is allocated over profits before tax and amounts charged
or credited to reserves as appropriate.
Deferred taxation is recognised in respect of all taxable temporary
differences that have originated but not reversed at the balance sheet date
where a transaction or events have occurred at that date that will result in
an obligation to pay more, or a right to pay less or to receive more, tax,
with the exception that deferred tax assets are recognised only to the extent
that its considered probable that there will be suitable taxable profits from
which the future reversal of the underlying temporary differences can be
deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are
expected to apply in the periods in which temporary differences reverse, based
on tax rates and laws enacted or substantively enacted at the balance sheet
date.
Where there are uncertainties over how to apply the recognition and
measurement requirements in IAS 12 the group applies IFRIC 23, Uncertainty
over Income TaxTreatment.
(I) Share based remuneration
The Group issues equity settled share based payments to certain employees.
Equity settled share based payments are measured at fair value (excluding the
effect of non market based vesting conditions) at the date of grant. The fair
value determined at the grant date of the equity settled share based payments
is expensed on a straight line basis over the vesting period, based on the
Group's estimate of shares that will eventually vest and adjusted for non
market based vesting conditions.
Cash settled share based payment transactions result in a liability. Services
received and liabilities incurred are measured initially at fair value of the
liability at grant date, and the liability is remeasured each reporting period
until settlement. The liability is recognised on a straight line basis over
the period that services are rendered.
(J) Capital commitments
Capital commitments include all projects for which specific board approval has
been obtained up to the reporting date. Projects still under investigation for
which specific board approvals have not yet been obtained are excluded.
2. Use of estimates, assumptions and judgements
The Group makes estimates, assumptions and judgements that affect the reported
amounts of assets and liabilities. Estimates, assumptions and judgements are
continually evaluated and based on historical experience and other factors,
including expectations of future events that are believed to be reasonable
under the circumstances.
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the balance sheet date, that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are discussed in the relevant note as is sensitivity
analysis as required. The key areas identified and the relevant note are as
follows:
Fair value of Monetisation Agreement (note 10) - estimates
To calculate the fair value of the Monetisation Agreement involved
estimation. Future cash flows under the agreement are contractual and it was
measured at fair value using a discounted cash flow basis. This required
estimating the cost to insure the same cash flows, the timing of these cash
flows and the discount rate applied.
Carrying value of intangible exploration and evaluation assets (note 15) -
judgements
Given the quantum of intangible exploration and evaluation assets potential
impairment could have a material impact on the financial statements.
Management has made a judgement as to the existence of any indicators of
impairment under IFRS 6, including the right to continue exploration exists,
continued expenditure is planned, exploration results indicate commercially
viable quantities of resources and that the carrying amount is likely to be
recovered in full.
Tax payable (note 20) - judgements and estimates
The Group's recognised an estimated Non-current tax payable of $22.3 million
arising from the historic farm-outs in the Falkland Islands on open tax
positions where the liabilities remain to be agreed with the Falkland Islands
Tax Authority. Due to the uncertainty associated with such tax items, there is
a possibility that, on conclusion of open tax matters at a future date, the
final outcome may differ significantly and be as large as £59.6 million.
Management had to form a judgment on the possible outcomes from a tax
legislation perspective and then estimate the probability of each outcome and
the associated tax liability in order to calculate the probability weighted
outcome.
Decommissioning costs (note 21) - judgements and estimates
Estimates are made around appropriate inflation and discount rates to be
applied as well as the timing of any future decommissioning. Decommissioning
costs are uncertain and management's cost estimates can vary in response to
many factors, including changes to the relevant legal requirements, the
emergence of new technology or experience at other assets. The expected
timing, work scope and amount of expenditure may also change.
3. Segmental information
The Group's operations are located and managed in three geographically
distinct business units; namely the Falkland Islands, the Greater
Mediterranean, and Corporate (includes UK and the Ombrina Mare Arbitration).
Some of the business units currently do not generate any revenue or have any
material operating income. The business is only engaged in one business, that
of upstream oil and gas exploration and production.
Falkland Islands Corporate Total Greater Mediterranean
(Continuing) (Discontinued)
Year ended 31 December 2024 $'000 $'000 $'000 $'000
Cost of sales - - - 1,685
Gross profit - - - 1,685
Exploration and evaluation expense (393) - (393) -
Administrative expenses - (3,330) (3,330) (130)
Charge for share based payments - (76) (76) -
Foreign exchange gain - 170 170 -
Results from operating activities and other income (393) (3,236) (3,629) 1,555
Other income - 79,802 79,802 -
Other expenses - (1,024) (1,024) -
Finance income - 1,927 1,927 -
Finance expense (285) (11) (296) (302)
Profit/(loss) before tax (678) 77,458 76,780 1,253
Tax (22,300) (8,121) (30,421) -
Profit/(loss) for year (22,978) 69,337 46,359 1,253
Reporting segments assets 271,110 83,224 354,334 1,203
Reporting segments liabilities 84,559 8,322 92,881 14,279
Depreciation and impairments 393 19 412 -
Year ended 31 December 2023 Falkland Islands Corporate Total Greater Mediterranean
(Continuing)) (Discontinued)
Cost of sales - - - (870)
Gross loss - - - (870)
Exploration and evaluation expense (158) (117) (275) (3)
Administrative expenses - (3,840) (3,840) (446)
Charge for share based payments - (117) (117) -
Foreign exchange gain/(loss) - 328 328 (21)
Results from operating activities and other income (158) (3,746) (3,904) (1,340)
Finance income - 1,191 1,191 -
Finance expense (110) (11) (121) (376)
Loss before tax (268) (2,566) (2,834) (1,716)
Tax - - - -
Loss for year (268) (2,566) (2,834) (1,716)
Reporting segments assets 256,847 9,051 265,898 1,352
Reporting segments liabilities 47,294 2,139 49,433 17,697
Depreciation and impairments 158 39 197 -
4. Exploration and evaluation expenses
2024 2023
$'000 $'000
Restated
Exploration and evaluation assets written off (see note 15) 393 158
Other exploration and evaluation expenses - 117
393 275
5. Administrative expenses
2024 2023
$'000 $'000
Restated
Directors' remuneration excluding benefits and pensions (see note 6) 844 785
Other employees' salaries 1,293 856
National insurance costs 1,027 303
Pension costs 172 67
Employee benefit costs 62 52
Total staff costs 3,398 2,063
Amounts reallocated (1,147) (661)
Total staff costs charged to administrative expenses 2,251 1,402
Auditors' remuneration (see note 7) 212 178
Other professional fees 416 1,836
Other 733 690
Depreciation 19 39
Amounts reallocated (301) (305)
3,330 3,840
The average number of full time equivalent staff employed during the year was
7 (2023: 7). As at the year end the Group employed (including part time) 9
staff, 7 of which were in the UK and 2 in Italy.
Amounts reallocated relate to the costs of staff and associated overhead in
relation to non administrative tasks. These costs are allocated to relevant
expenses or capitalised as part of the intangible exploration and evaluation
assets as appropriate.
6. Directors' remuneration
2024 2023
$'000 $'000
Executive salaries 585 475
Company pension contributions to money purchase schemes & pension cash 62 58
allowance
Benefits 13 11
Non-executive fees 259 252
919 796
The total remuneration of the highest paid director in GBP, was:
2024 2023
£'000 £'000
Annual salary 458 381
Money purchase pension schemes & pension cash allowance 49 47
Benefits 5 5
512 433
Interest in outstanding share options, LTIPs and SARs, by director, are also
separately disclosed in the directors' remuneration report.
7. Auditors' remuneration
2024 2023
$'000 $'000
Fees payable to the Company's auditors for the audit of the Company's annual 186 146
financial statements
Fees payable to the Company's auditors and its associates for other services:
Audit of the accounts of subsidiaries 26 26
Assurance related non-audit services - 6
212 178
8. Share based payments
The charge for share based payments relate to options granted to employees of
the Group.
2024 2023
$'000 $'000
Charge for option scheme 76 117
Charge for services outside the Group - 500
76 617
During the prior year 4.5 million options were issued at 7.0p per share in
connection with the delivery of the Sea Lion project to an individual employed
outside of the Rockhopper group. These options vest in three tranches of 1.5
million each at project sanction, first oil, and reaching project completion.
The value of these options was $500,000 and made with reference to the
services received. The cost of the options was offset against the liability in
relation to the service provided.
Option scheme
An equity option package was implemented during 2020 (the "Option Scheme") to
replace the existing long term incentive plan. In place of the LTIP scheme,
executive directors and senior staff received options to subscribe for
Ordinary Shares, exercisable at a price of 6.25 pence per new Ordinary Share
(the "Market Price Options"). The Market Price Options will vest in equal
tranches after three, four and five years' further continuous employment.
Executive directors and staff in lieu of their contractual notice periods also
received options to subscribe for an aggregate new ordinary shares in the
capital of the Company ("Ordinary Shares"), exercisable at a price of 1 pence
per new Ordinary Share (the "1p Options").
The following movements occurred during the year:
Issue date Vesting date Expiry date At 31 December Lapsed/Granted At 31 December
2023 2024
18 May 2020 18 Nov 2020 18 May 2030 1,986,972 - 1,986,972
18 May 2020 18 May 2021 18 May 2030 3,271,917 - 3,271,917
18 May 2020 18 May 2023 18 May 2030 5,116,664 - 5,116,664
18 May 2020 18 May 2024 18 May 2030 5,116,667 - 5,116,667
18 May 2020 18 May 2025 18 May 2030 5,116,669 - 5,116,669
25 January 2023 Variable 25 January 2033 4,500,000 - 4,500,000
25,108,889 - 25,108,889
Long term incentive plan
LTIP awards relate to a historic scheme and are structured as nil cost
options. All LTIPs have vested and there were no movements during the year.
Issue date Expiry date At 31 December Expired/Exercised At 31 December
2023 2024
16 June 2017 16 June 2027 2,352,000 - 2,352,000
31 July 2019 31 July 2029 2,337,501 - 2,337,501
4,689,501 - 4,689,501
9. Foreign exchange 2024 2023
$'000 $'000
Restated
Other foreign exchange movements 170 328
Total net foreign exchange gain 170 328
10. Other income and expense 2024 2023
$'000 $'000
Monetisation Agreement - fair value tranche 1 proceeds 20,556 -
Monetisation Agreement - fair value tranche 2 proceeds 59,246 -
Other income 79,802 -
Other expenses (1,024) -
In August 2022, pursuant to an ICSID arbitration which commenced in 2017,
Rockhopper was awarded approximately €190 million plus interest and costs
following a unanimous decision by the ICSID appointed arbitral Tribunal that
Italy had breached its obligations under the Energy Charter Treaty (the
"Award").
Rockhopper submitted a letter to the Italian Republic in September 2022
formally requesting payment of €247 million, representing the Award amount
plus accrued interest from 29 January 2016 to 23 August 2022 and costs.
Interest was paused for four months following the date of the Award (being 23
August 2022) and is now accruing at EURIBOR + 4% which Rockhopper estimates at
between €1.25 million and €1.5 million per calendar month. Interest
compounds annually.
Following Italy's request to seek annulment of the Award, an ad hoc Committee
was constituted to hear relevant arguments and ultimately make a ruling on
Italy's request to annul the Award. A hearing was held in Madrid in April 2024
as part of Italy's request to have the Award annulled following which post
hearing submissions were made in response to questions raised by the
Committee. No further submissions are anticipated to be needed by the
Committee and our expectation is that we just await an outcome.
On 20 December 2023, Rockhopper announced its entry into a funded
participation agreement (the "Agreement") with a regulated specialist fund
that has experience in investing in legal assets (the "Specialist Fund") to
monetise its Award.
Under the terms of the Agreement, the Specialist Fund will make cash payments
to Rockhopper in up to three tranches:
· Tranche 1 - Rockhopper retain €19 million of an upfront payment
of €45million on completion. As previously disclosed, Rockhopper entered
into a litigation funding agreement in 2017 under which all costs relating to
the Arbitration from commencement to the rendering of the Award were paid on
its behalf by a separate specialist arbitration funder (the "Original
Arbitration Funder"). That agreement entitles the Original Arbitration Funder
to a proportion of any proceeds from the Award or any monetisation of the
Award. Rockhopper has entered into an agreement with the Original Arbitration
Funder to pay €26 million of the Tranche 1 proceeds to discharge all of its
liabilities under the agreement with the Original Arbitration Funder.
· Tranche 2 - Additional contingent payment of €65 million upon a
successful annulment outcome. Should the Award be partially annulled and the
quantum reduced as a result, then Tranche 2 will be reduced such that the
amounts under Tranche 1 and Tranche 2 shall be adjusted downward on a pro-rata
basis. For example, if the quantum of the Award is reduced by 20%, then the
amounts under Tranche 1 and Tranche 2 shall be reduced by 20%. For the
avoidance of doubt, the amounts under Tranche 1 and Tranche 2 shall not reduce
below €45m in any circumstance.
· Tranche 3 - Potential payment of 20% on recovery of amounts in
excess of 200% of the Specialist Fund's total investment including costs.
At the prior year end the Agreement was still contingent on precedent
conditions being satisfied and as such the Agreement was also classified as a
contingent asset. In June 2024 the precedent conditions were satisfied and
Rockhopper received its initial consideration of €19 million. Management
have determined that the Agreement is a financial instrument within the scope
of IFRS 9 and as such should be fair valued on initial recognition and
subsequently through profit and loss. Other income relates to the fair value
of this consideration, i.e. the retained €19 million on completion plus the
fair value of subsequent tranches translated at the prevailing €:$ rate as
at completion.
Other expenses relate principally to legal costs associated with the
Arbitration Award and Monetisation. In October 2024 the Group decided, in line
with normal market practice, that insuring to protect shareholders against
loss resulting from an annulment of the Award to be the most prudent course of
action. The insurance policy will ensure that, in the event that the Italian
Republic succeeds in having the entire Award annulled or in the event of
partial annulment, the combination of the Tranche 2 payment and the insurance
payout shall entitle Rockhopper to a total no less than €31 million.
The policy has been placed via an FCA-registered specialist insurance
brokerage. The policy has been underwritten by a specialist underwriting
agency and subscribed to by a number of A-rated insurance carriers and
syndicates. The only impact on the financial statements is the total cost of
the policy, which including applicable taxes and underwriting fees, is €4
million. This cost has been spread over the life of the policy (which
materially exceeds the expected time to receive an outcome from the Award
annulment). As such the majority of this cost is recorded as a prepayment. The
balance has been included in other expenses along with the other
aforementioned legal costs.
11. Finance income and expense 2024 2023
$'000 $'000
Restated
Warrants (see note 19) - 889
Unwinding of discounts on fair value of Monetisation Agreement (see note 10) 1,323 -
Bank and other interest receivable 604 302
Total finance income 1,927 1,191
Unwinding of discount on decommissioning provisions (see note 21) 91 110
Other 205 11
Total finance expense 296 121
12. Taxation 2024 2023
$'000 $'000
Current tax:
Overseas tax 1,840 -
Adjustment in respect of prior years (see Note 20) 22,300 -
Total current tax charge 24,140 -
Deferred tax:
Overseas tax 6,281 -
Total deferred tax charge - note 22 6,281 -
Tax on profit/(loss) on ordinary activities 30,421 -
The reasons for the difference between the actual tax charge for the year and
the standard rate of corporation tax applied to profits for the year are as
follows:
Profit/(loss) on ordinary activities before tax 76,780 (4,550)
Profit/(loss) on ordinary activities multiplied at 26% (31 December 2023: 26%) 19,963 (1,183)
Effects of:
Income and gains not subject to taxation (15,750) -
Expenditure not deductible for taxation 127 81
Losses (utilised)/carried forward (3,120) 1,102
Adjustments in respect of prior years (see Note 20) 22,300 -
Deferred taxes 6,421 -
Other (including changes to, and differences in, tax rates) (480) -
Current tax charge for the year 30,421 -
The total carried forward losses and carried forward pre trading expenditures
potentially available for relief are as follows:
2024 2023
$'000 $'000
UK 85,631 81,729
Falkland Islands 640,979 623,323
Italy 42,568 69,748
Deferred tax assets are only recognised on losses carried forward to the
extent it is deemed probable that they will be utilised in the future. No
deferred tax asset has been recognised in respect of temporary differences
arising on losses carried forward, outstanding share options or depreciation
in excess of capital allowances where there is uncertainty in the timing of
profits and hence future utilisation. Losses carried forward in the Falkland
Islands includes amounts held within entities where utilisation of the losses
in the future may not be possible. As disclosed in Note 20 Tax payable, we are
in the process of agreeing our tax returns in relation to the farm-out to
Navitas that completed in September 2022. The carried forward losses is based
on our returns to FIG and may be revised leading to fewer losses carried
forward.
13. Discontinued operations
In October 2024, the Group announced the disposal, subject to conditions
precedent, of its 100% interest in Rockhopper Civita Limited which holds the
Group's remaining operations in the Greater Mediterranean geographical segment
("the disposal group"). The transaction had not completed at the year end, but
the assets and associated liabilities have been reclassified as held for sale
on the balance sheet.
Due to the fact that the disposal group has been classified as held for sale
and represents a geographical area of operations it has also been treated as a
discontinued operation in line with IFRS 5. As such the comparative
information in the Income Statement and relevant notes has been re-presented.
The results of the discontinued operations, which have been included in the
profit for the year, are the same as the Greater Mediterranean segment as
disclosed in Note 3.
Cash flows from discontinued operations
2024 2023
$'000 $'000
Net cash from operating activities (312) (877)
Net cash from investing activities (88) -
Net cash from financing activities - -
The costs of disposal of Rockhopper Civita Limited are expected to be
substantially less than the carrying amount of the related net liabilities and
accordingly no impairment losses have been recognised on the classification of
these operations as held for sale. The major classes of assets and liabilities
comprising the operations classified as held for sale are as follows:
2024
$'000
Exploration and evaluation assets 441
Other receivables 745
Cash and cash equivalents 17
Assets classified as held for sale 1,203
Other payables 1,692
Provisions 12,587
Liabilities associated with assets held for sale 14,279
14. Basic and diluted profit/(loss) per share 2024 2023
Number Number
Weighted average number of Ordinary Shares 644,879,070 595,630,305
Weighted average of shares held in Employee Benefit Trust (1,304,500) (1,304,500)
Weighted average number of Ordinary Shares for the purposes of basic earnings 643,574,570 594,325,805
per share
Effects of
Share options and warrants 10,498,279 -
Weighted average number of Ordinary Shares for the purposes of diluted 654,072,849 594,325,805
earnings per share
Continuing operations Discontinued operations Total Continuing operations Discontinued operations Total
2024 2024 2024 2023 2023 2023
$'000 $'000 $'000 $'000 $'000 $'000
Net profit/(loss) after tax for purposes of basic and diluted earnings per 46,359 1,253 47,612 (2,834) (1,716) (4,550)
share
The weighted average number of Ordinary Shares takes into account those shares
which are treated as own shares held in trust. As at the year end the Group
had 1,304,500 Ordinary shares held in an Employee Benefit Trust (2023:
1,304,500) which have been purchased to settle future exercises of options.
4.5 million options (2023: 4.5 million) have not been included in the
calculation of diluted EPS because their exercise is contingent on the
satisfaction of certain criteria that had not been met at 31 December 2024.
The total number of options in issue is disclosed in note 8.
As the Group is reporting a loss in the prior year then in accordance with
IAS33 the share options are not considered dilutive because the exercise of
the share options would have the effect of reducing the loss per share.
15. Intangible exploration and evaluation assets
Falkland Greater
Islands Mediterranean Total
$'000 $'000 $'000
At 31 December 2022 251,589 381 251,970
Additions 5,416 - 5,416
Written off exploration costs (158) - (158)
Foreign exchange movement - - -
At 31 December 2023 256,847 381 257,228
Additions 14,656 78 14,734
Written off exploration costs (393) - (393)
Foreign exchange movement - (18) (18)
Reclassified to assets held for sale - (441) (441)
At 31 December 2024 271,110 - 274,110
Falkland Islands Licences
The amounts for intangible exploration and evaluation assets represent active
exploration and evaluation projects. The additions during the year of US$14.7
million relate principally to the Sea Lion development.
Given the quantum of intangible exploration and evaluation assets potential
impairment could have a material impact on the financial statements. As such
whether there are indicators of impairment is a key judgement. Management
looked at a number of factors in making a judgement as to whether there are
any indicators of impairment during the year. In particular with regard to the
carrying value of the Falkland Islands assets, which relates to the Sea Lion
Phase one development these include, but are not limited to;
• The Operator published an updated CPR in March 2025 which continued to
evidence a robust project and publically talk of being able to sanction the
project in mid 2025;
• Rockhopper and Navitas have used the extensive engineering work
already carried out to create a lower cost development;
• Licences were due to expire during 2024. A license extension was
requested across all the licences and the Falkland Islands Government have
continued to be supportive and granted an extension to the end of 2026;
• Financing availability at a project level and also to cover any equity
shortfall of the Group after utilising Post-FID loan facilities; and
• Current market conditions, including oil price and security of supply,
provide stronger prospects for ultimate sanction of Sea Lion.
The Group benefit from a Post FID loan which will cover two thirds of its
share of project equity costs. It is likely that to enable sanction the Group
will need to raise additional finance to cover its proportion of unfunded
project costs. The exact quantum is still to be determined but Management
believe that, to the extent necessary, extra funding will be achievable based
on current expectations of project costs and funding availability.
Management concluded that for these reasons, currently for Phase 1 of the Sea
Lion development, there were no indicators of impairment.
Ultimately should any required additional funding not be available then it
would not be possible to sanction the Sea Lion phase 1 development. This would
possibly lead to the carrying value of the intangible asset not being
recovered.
Management made the judgement that the limited near term capital being
invested outside of the Phase 1 project is still an indicator of impairment in
the subsequent phases of the project. Accordingly the decision continues to be
to write off historic exploration costs associated with the resources which
will not be developed as part of the Sea Lion Phase 1 project. This impairment
has no impact on the Group's long‐term strategy for multiple phases of
development in the North Falkland Basin. This will be re-evaluated when the
Phase 1 project has been sanctioned and investment resumes on the Phase 2
project.
16. Other receivables 2024 2023
$'000 $'000
Current
Receivables 193 675
Prepayments 3,906 -
Other 58,238 566
62,337 1,241
The carrying value of receivables approximates to fair value. Other
receivables relates to the fair value of the subsequent tranches of the
Monetisation Agreement and prepayments relate to costs associated with an
insurance policy taken out during the year. Further details of both of these
amounts are disclosed in note 10. The year end fair value of the Monetisation
Agreement of $58.2 million varies from the amount initially recognised of
$59.2 million as a result of a $1.3 million unwinding of discount offset by a
$2.3 million foreign exchange loss. These foreign exchange losses are part
of the exchange differences on translation of foreign operations included the
Consolidated Statement of Comprehensive Income.
17. Term deposits
2024 2023
$'000 $'000
Maturing after the period end
Within three months 19,969 4,501
19,969 4,501
Term deposits relate to amounts placed on fixed term deposit with various A
rated deposit banks.
18. Other payables and accruals
Current liabilities 2024 2023
$'000 $'000
Accounts payable 225 2,309
Accruals 6,289 4,586
Other creditors 2 281
6,516 7,176
All amounts are expected to be settled within twelve months of the balance
sheet date and so the book values and fair values are considered to be the
same. Accruals include $4.7 million (2023: $3.6 million) amounts owed to
Navitas in relation to Sea Lion. These amounts are expected to be invoiced and
then ultimately settled using the Pre FID loan facility provided by Navitas.
For further details see Non-current liabilities below.
Non current liabilities 2024 2023
$'000 $'000
Co-venturers loan 15,354 -
15,354 -
The Group benefits from funding to cover the majority of its share of Sea Lion
phase 1 related costs up to FID through a loan from Navitas with interest
charged at 8% per annum (the "Pre-FID Loan"). Subject to a positive FID,
Navitas will provide an interest free loan to fund two-thirds of the Group's
share of Sea Lion phase 1 development costs (for any costs not met by third
party debt financing).
Co-venturers loan relate entirely to amounts utilised under the Pre-FID Loan
facility and associated interest. This loan is repayable from 85% of
Rockhopper's working interest share of Sea Lion Phase 1 project cash flows and
as such has been classified as non current. In the event that material
progress towards FID has not occurred by 23 September 2027, Rockhopper can
elect to remove Navitas from the Falkland Islands petroleum licences (should
the licences still be in effect at that time) by repaying the Pre-FID Loan.
Should material progress have been made, but FID not achieved, then this
period can be extended by 12 months and then a further six months if certain
project milestones have been achieved.
19. Derivative financial liabilities 2024 2023
$'000 $'000
Brought forward 450 1,744
Changes in fair value taken to finance income (see note 11) - (889)
Exercise of warrants (450) (405)
- 450
Warrants issued as part of the Placing and Subscription ("Warrants") were
treated as derivative financial liabilities and as such carried at fair value
on the balance sheet with changes in fair value recognised in finance income
or finance expenses in the income statement as appropriate. They are not
designated as hedging instruments.
20. Tax payable 2024 2023
$'000 $'000
Current tax payable 1,806 -
Non current tax payable 22,300 -
Total tax payable 24,106 -
Current tax payable of $1.8 million relates to amounts expected to be due in
relation to the Tranche 1 proceeds received from the Agreement as disclosed in
note 10. Non-current tax payable of $22.3 million relates to the potential
liability arising from the historic farm-outs in the Falkland Islands.
On the 8 April 2015, the Group agreed binding documentation ("Tax Settlement
Deed") with FIG in relation to the tax arising from the Group's 2012 farm out.
The Tax Settlement Deed confirms the quantum and deferment of the outstanding
tax liability and is made under Extra Statutory Concession 16. The Tax
Settlement Deed also states that the Group is entitled to make adjustment to
the outstanding tax liability if and to the extent that the Commissioner is
satisfied that any part of the Development Carry becomes irrecoverable.
In September 2022 the transaction enabling Harbour Energy plc to exit and
Navitas to enter the North Falkland Basin completed. Under the transaction the
balance of Development Carry became irrecoverable.
Following the transaction professional advice (the 'Advice') was sought over
whether the Group was entitled to adjust the tax returns for the irrecoverable
Development Carry. The Advice confirmed that it is probable that the Group is
entitled to adjust the outstanding tax liability. As such the Group submitted
tax returns on this basis. FIG disagreed with this analysis and asserted that
the Group continued to owe £59.6 million payable around first oil.
Based on the information as at 31 December 2023 the Directors made a
judgement to derecognise any liability, given that it was considered the most
probable outcome based on the Advice.
Separately the Group submitted tax returns in relation to the farm out to
Navitas that occurred immediately after their acquisition, from Harbour Energy
plc of the company that holds the North Falkland's Basin licences. The
consideration for this transaction was the provision of loan funding to the
Group to cover the majority of its share of Sea Lion phase 1 related costs
from transaction completion up to FID through a loan from Navitas with
interest charged at 8% per annum (the "Pre-FID Loan"). Subject to a positive
FID, Navitas will provide an interest free loan to fund two-thirds of the
Group's share of Sea Lion phase 1 development costs (for any costs not met by
third party debt financing). The Directors are confident that the Group has
sufficient losses to ensure no tax liability will arise.
The Group has continued discussions with FIG to resolve differences regarding
any outstanding tax liability arising from the Tax Settlement Deed and
recognise that the arrangements make the project financing for Sea Lion
significantly more difficult.
Given these discussions, and notwithstanding the Advice, the level of
uncertainty relating to the potential tax liability has increased. For this
reason, the Directors' have recognised a liability this year, which has been
determined with reference to a probability weighting approach to reflect the
additional uncertainty. For the avoidance of doubt there is no agreement to
date with FIG and the ultimate tax liability could be materially different.
Should it be proven that there is no entitlement to adjustment under the Tax
Settlement Deed then the outstanding tax liability would be £59.6 million and
still payable on the earlier of: (i) the first royalty payment date on Sea
Lion; (ii) the date of which Rockhopper disposes of all or a substantial part
of the Group's remaining licence interests in the North Falkland Basin; or
(iii) a change of control of Rockhopper Exploration plc.
21. Provisions Decommissioning Other
provision provisions 2024 2023
$'000 $'000 $'000 $'000
Brought forward 19,099 33 19,132 19,177
Amounts utilized - - - (48)
Changes in estimate (5,400) - (5,400) -
Amounts arising in the year - 3 3 2
Unwinding of discount 392 - 392 482
Foreign exchange 60 - 60 508
Reclassified to liabilities held for sale (12,551) (36) (12,587) -
Carried forward at year end 1,600 - 1,600 20,121
The decommissioning provision relates to the Group's licences in the Greater
Mediterranean region and facilities in the Falkland Islands. As disclosed in
note 13 amounts relating to the Greater Mediterranean have been reclassified
as liabilities held for sale. Prior to reclassification Management based the
liability on the Group's plans should the transaction not complete.
Judgements are made based on the long term economic environment around
appropriate inflation and discount rates to be applied as well as the timing
of any future decommissioning. In the Falkland Islands costs are most likely
to be in $US or GB£. Management consider the UK economic environment is best
when informing these judgements due to probable contractor base likely to be
used. All assets in the Greater Mediterranean are in Italy and so costs are
likely to be in Euros and as such management consider the Italian as well as
the broader Eurozone region to inform these judgements
The Group believe it appropriate to use the following inflation and discount
rates;
2024 2023
Falklands Greater Mediterranean Falklands Greater Mediterranean
Inflation 1.6% 1.85% 2.0% 2.0%
Discount 5.2% 2.36% - 3.25% 2.0% 2.0%
Period (years) 30 1-25 30 2-25
The changes in estimate in the year all relate to the change in relative
discount and inflation rates.
Decommissioning costs are uncertain and management's cost estimates can vary
in response to many factors, including changes to the relevant legal
requirements, the emergence of new technology or experience at other assets.
The expected timing, work scope and amount of expenditure may also change.
Therefore, significant estimates and assumptions are made in determining the
costs associated with the provision for decommissioning. The estimated
decommissioning costs are reviewed annually, and the results of the most
recent available review used as a basis for the amounts in the Consolidated
Financial Statements. Provision for environmental clean-up and remediation
costs is based on current legal and contractual requirements, technology and
price levels. However, actual decommissioning costs will ultimately depend
upon future market prices for the necessary decommissioning works required
which will reflect market conditions at the relevant time.
The estimated costs associated with the decommissioning works are those that
are likely to have a material impact on the provision. Given the facilities in
the Falkland Islands are expected to be utilised during the Sea Lion
development any changes in the provision are capitalised in the intangbile
asset. A 10 per cent increase in these estimates would increase both the
provision and the intangible assets in the year by US$160 thousand. Similarly,
a 10 per cent reduction in these estimated costs would decrease both the
provision and the intangible assets in the year by US$160 thousand.
Other provisions include amounts due for accrued holiday and leaving indemnity
to staff in Italy, that will become payable when they cease employment, these
have also been reclassified to liabilities held for sale.
22. Deferred tax
The following are the major deferred tax liabilities and assets recognised by
the group and movements thereon during the current and prior reporting period.
Accelerated tax Revaluation of financial assets Tax Total
depreciation $'000 losses
$'000 $'000 $'000
At 1 January 2023 and 1 January 2024 (39,137) - - (39,137)
Foreign exchange - 309 (196) 113
Movement in period - (17,088) 10,807 (6,281)
At 31 December 2024 (39,137) (16,779) 10,611 (45,305)
Deferred tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when they relate to income taxes levied by the same taxation authority and
the group intends to settle its current tax assets and liabilities on a net
basis.
Total carried forward losses and carried forward pre-trading expenditures
available for relief on commencement of trade at 31 December 2024 are
disclosed in note 12 Taxation. Deferred tax assets are only recognised in
relation to these losses to the extent it is probable that future suitable
taxable profits will be available against which these losses can be utilised.
23. Share capital
2024 2023
$'000 Number $'000 Number
Authorised, called up, issued and fully paid: Ordinary shares of £0.01 each 9,455 640,578,764 9,196 620,229,436
2024 2023
Number Number
Shares in issue brought forward 620,229,436 586,485,319
Shares issued
- Issued on exercise of warrants and share options 20,349,328 33,744,117
Shares in issue carried forward 640,578,764 620,229,436
24. Reserves
Set out below is a description of each of the reserves of the Group:
Share premium Amount subscribed for share capital in excess of its nominal value.
Share based remuneration The share incentive plan reserve captures the equity related element of the
expenses recognised for the issue of options, comprising the cumulative charge
to the income statement for IFRS2 charges for share based payments less
amounts released to retained earnings upon the exercise of options.
Own shares held in trust Shares held in trust by the Employee Benefit Trust which have been purchased
to settle future exercises of options.
Merger reserve The difference between the nominal value and the fair value of shares issued
on acquisition of subsidiaries.
Foreign currency translation reserve Exchange differences arising on consolidating the assets and liabilities of
the Group's subsidiaries are classified as equity and transferred to the
Group's translation reserve.
Special reserve The reserve is non distributable and was created following cancellation of the
share premium account on 4 July 2013. It can be used to reduce the amount of
losses incurred by the Parent Company or distributed or used to acquire the
share capital of the Company subject to settling all contingent and actual
liabilities as at 4 July 2013. Should not all of the contingent and actual
liabilities be settled, prior to distribution the Parent Company must either
gain permission from the actual or contingent creditors for distribution or
set aside in escrow an amount equal to the unsettled actual or contingent
liability.
Retained losses Cumulative net gains and losses recognised in the financial statements.
25. Capital commitments
Significant capital expenditure contracted for at the end of the reporting
period but not recognised as liabilities is US$0.6million (2023: US$0.7
million) relating to the Group's intangible exploration and evaluation assets.
26. Related party transactions
Transactions between the Company and its subsidiaries, which are related
parties, have been eliminated on consolidation and are not disclosed.
Subsidiaries are listed in notes of the Company financial statements.
The remuneration of directors, who are the key management personnel of the
Group, is set out below in aggregate. Further information about the
remuneration of individual directors, including deferred salary and bonus
amounts, is provided in the Directors' Remuneration Report on pages 28 to 37.
Year ended Year ended
31 December 31 December
2024 2023
$'000 $'000
Short term employee benefits 918 796
Share based payments 48 72
966 868
On 6 April 2023, Alison Baker, Senior Independent Director, in order to effect
a "Bed and ISA" transaction, sold 142,865 Ordinary shares of 1 pence each
(Ordinary Shares) at a price of 10.725 pence per Ordinary Share and then
purchased into an Individual Savings Account (ISA) 142,753 Ordinary Shares at
the same price.
On the 20 December 2023 the Company received notifications from the below
Directors and former Directors of the exercise of Warrants. In total an
aggregate 1,071,426 new Ordinary Shares of £0.01 each ("Ordinary Shares") in
the Company were issued at an exercise price of 9 pence per ordinary share,
providing the Company with proceeds of £96,428.
Number of Warrants
Sam Moody 714,285
Keith Lough 214,285
Alison Baker 71,428
John Summers 71,428
27. Financial instruments - Fair values and risk management
A. Accounting classifications and fair values
The only assets classified at fair value through profit and loss is the
Agreement as disclosed in note 10 Other income and expenses.
The only liabilities classified as at fair value through profit and loss are
the derivative financial liabilities as disclosed in note 19.
B. Measurement of fair values
This section explains the judgements and estimates made in determining the
fair values of the financial instruments that are recognised and measured at
fair value in the financial statements. To provide an indication about the
reliability of the inputs used in determining fair value, the group has
classified its financial instruments into the three levels prescribed under
the accounting standards. An explanation of each level follows underneath.
Financial asset/liability Level Valuation technique/key inputs Significant unobservable input(s) Relationship and sensitivity of unobservable inputs
Other receivables (Note 16) 1 Discounted cash flow Timing of cash flows. The later the timing of cash flows the lower the fair value. If the timing was
3 months longer/shorter the carrying value would decrease/increase $650,000.
Future cash flows are contractual. To the extent necessary these were risked
with reference to the actual cost incurred to insure the same cash flows.
These were then discounted at market observable rates.
Derivative financial liabilities (Note 19) 1 Black-scholes model. N/A N/A
The following variables were taken into consideration: current underlying
price of the commodity, options strike price, time until expiration, implied
volatility of the commodity and Risk free rate
Warrants issued as part of the Placing and Subscription were treated as
derivative financial liabilities and as such carried at fair value on the
balance sheet with changes in fair value recognised in finance income or
expenses in the income statement as appropriate. They are not designated as
hedging instruments. Fair value of the Warrants were determined using a black
scholes model the key inputs of which are summarised below.
C. Financial risk management
The Group has exposure to the following risks arising from financial
instruments:
· Market risk see Note 27 C i
· Credit risk see Note 27 C ii
· Liquidity risk see Note 27 C iii
· Capital risk see Note 27 C iv
i. Market rate risk
Foreign exchange risks: The Group is exposed to foreign exchange movements on
monetary assets and liabilities denominated in currencies other than US$. A
number of the Group's subsidiaries have a functional currency other than US$,
where this is the case the Group has an exposure to foreign exchange
differences with differences being taken to reserves.
The Group has cash and cash equivalents and term deposits of US$20.9 million
of which US$0.4 million was held in US$ denominations. The Group has
expenditure in GB£ and Euro and accepts that to the extent current cash
balances in those currencies are not sufficient to meet those expenditures
they will need to acquire them. The following table summarises the split of
the Group's assets and liabilities by currency:
Currency denomination of balance $ £ €
$'000 $'000 $'000
Assets
31 December 2024 275,536 4,575 75,426
31 December 2023 258,152 7,743 1,355
Liabilities
31 December 2024 60,815 23,932 22,413
31 December 2023 47,180 2,249 17,697
The following table summarises the impact on the Group's pre-tax profit/(loss)
and equity of a reasonably possible change in the US$ to GB£ exchange rate
and the US$ to euro exchange:
Pre tax profit/(loss) Total equity
+10% US$ rate -10% US$ rate +10% US$ rate -10% US$ rate
increase decrease increase decrease
$'000 $'000 $'000 $'000
US$ against GB£
31 December 2024 (194) 194 (194) 194
31 December 2023 549 (549) 549 (549)
US$ against euro
31 December 2024 5,301 (5,301) 5,301 (5,301)
31 December 2023 (1,634) 1,634 (1,634) 1,634
Interest rate risks: the Group's only external debt is the Pre-FID loan from
Navitas. It is at a fixed rate of interest and the Group does not account for
this at FVTPL so a change in interest rate at the reporting date would not
affect profit or loss. Therefore exposure to interest rates is limited to
finance income it receives on cash and term deposits. The Group is not
dependent on its finance income and given the current interest rates the risk
is not considered to be material.
ii. Credit risk
The Group recharges partners and third parties for the provision of services.
Should the companies holding these accounts become insolvent then these funds
may be lost or delayed in their release. The amounts classified as receivables
as at the 31 December 2024 $193,000 (31 December 2023: $910,000).
Other receivables relates to the fair value of the Agreement to monetise the
Group's Award. The counter party to the Agreement is a specialist fund with
significant funds under management. In the unlikely event the contingent
Tranche 2 proceeds become due and fail to be paid, then the acquirer will
forfeit all their rights under the agreement along with any payments to date.
Credit risk relating to the Group's other financial assets which comprise
principally cash and cash equivalents and term deposits arises from the
potential default of counterparties. Investments of cash and deposits are made
within credit limits assigned to each counterparty. The risk of loss through
counterparty failure is therefore mitigated by the Group splitting its funds
across a number of banks.
iii. Liquidity risk
The Group monitors the liquidity position by preparing cash flow forecasts to
ensure sufficient funds are available. Further information can be found in the
going concern assessment contained in Note 1.5.
Maturity of financial liabilities
The table below analyses the Group's financial liabilities, which will be
settled on a gross basis, into relevant maturity groups based on the remaining
period at the balance sheet to the contractual maturity date. The amounts
disclosed in the table are the contractual undiscounted cash flows. The
Co-venturers loan balance of $15,354,000 (2023: $nil) included in non-current
payables has been excluded from the analysis as its repayment is to be made
from its as yet unsanctioned Sea Lion development. Whilst it is expected that
the project will be sanctioned in the future there is no guarantee on timing
so the date of any repayment is yet to be determined and any impact on
liquidity would be considered at sanction.
More than Total contractual
Within 1 year 2 to 5 years 5 years cashflows Carrying amount
At 31 December 2024 $'000 $'000 $'000 $'000 $'000
Other payables 6,516 - - 6,516 6,516
6,516 - - 6,516 6,516
More than
5 years Total contractual
Within 1 year 2 to 5 years cashflows Carrying amount
At 31 December 2023 $'000 $'000 $'000 $'000 $'000
Other payables 7,176 - - 7,176 7,176
Lease liability 246 - - 246 246
7,422 - - 7,422 7,422
iv. Capital risk
The Group manages capital to ensure that it is able to continue as a going
concern whilst maximising the return to shareholders. The capital structure
consists of cash and cash equivalents and equity. The board regularly monitors
the future capital requirements of the Group, particularly in respect of its
ongoing development programme. Further information can be found in the going
concern assessment contained in Note 1.5.
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