REG - Rockhopper Exp plc - Sea Lion Operator’s Update

Rockhopper ExplorationAnnouncement

25/11/2024 10:00

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RNS Number : 5179N  Rockhopper Exploration plc  25 November 2024

The information contained within this Announcement is deemed by Rockhopper
Exploration plc to constitute inside information as stipulated under the
Market Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue
of the European Union (Withdrawal) Act 2018 ("MAR").

 

25 November 2024

Rockhopper Exploration plc

("Rockhopper" or the "Company")

 

Sea Lion Operator's Update

 

Rockhopper Exploration plc (AIM: RKH), the oil and gas company with key
interests in the North Falkland Basin ("NFB"), notes the recent update
published by Navitas Petroleum LP ("Navitas" or the "Operator") on Sea Lion
development progress which includes an updated NFB independent resource report
conducted by Netherland Sewell & Associates ("NSAI") (the "October 2024
NSAI Independent Report") on behalf of Navitas.

 

The EIS for the Northern Development Area, Phase 1 & 2 development (the
"Northern Development Area") was submitted to the Falkland Islands Government
("FIG") for statutory public consultation in July 2024 and in November FIG
confirmed that, having received a number of comments, no further public
consultation was required. An MOU has been signed for the provision of a
redeployed FPSO with a current UK safety case. FEED for the FPSO commenced in
November 2024.

 

The hydrocarbons will initially be produced through the redeployed FPSO with a
peak production rate of up to 55,000 bbls/d.

 

Against a background of continued industry cost inflation, gross capex
required to first oil has increased to US$1.4bn (including contingency).
 Despite this increase, project economics remain highly robust.

Following these developments, Navitas indicates that FID is now scheduled for
mid 2025 and first oil for Q4 2027.

 

October 2024 NSAI Independent Report

 

The new NSAI report, which Rockhopper has not reviewed, categorises the
resources into 3 areas, Northern, Central and Southern Development Areas.

·    The Northern Development Area - previously described by Rockhopper as
Sea Lion phase one

o  using a single FPSO with 2 separate drilling campaigns which Navitas refer
to as the Northen Area Phase 1 and Phase 2

o  recovering 319 MMbbls of oil in total (compared to 312 MMbbls in previous
reports)

·    The Central Development Area - contains what Rockhopper has previously
described as Sea Lion phase two (Zebedee, Casper and other associated fans)

·    The Southern Development Area aiming to develop fans around the Isobel
/ Elaine discovery

 

In addition to the previously certified Northern Development Area, Phase 1
& 2 FDP, a further development plan has been certified by NSAI to develop
the Central Area.  Central Development Area, Phase 1 will comprise 12 wells,
increasing gross 2C Development Pending oil resources from 312 MMbbls to 532
MMbbls out of overall 917 MMbbls certified discovered oil resources in the
NFB.  Navitas has commenced work on the Central Development Area, Phase 1
FDP.

 

According to the October 2024 NSAI Independent Report, the certified gross 2C
recoverable oil resources in the overall NFB have increased from 791 MMbbls to
917 MMbbls.  In addition, 2.1 TCF of 2C recoverable gas resources have been
certified by NSAI.  This represents an increase in oil resources of 16% in
the overall NFB portfolio compared to the previous certified 2C resource, as
published in January 2024.

 

Key Information

2C Contingent Resources (Development Pending) phased development concept for
the Sea Lion field:

·    35 wells

·    Phased Development

o  1st Phase - (Northern Area)  11 wells with approximately 6 drilled and
completed prior to first oil

o  2nd Phase - 12 wells (Northern Area)

o  3rd Phase - 12 wells (Central Area)

·    Phase 1 + Phase 2 total barrels developed, 319 MMbbls

·    Total barrels developed (all 3 phases) 532 MMbbls

·    Phase 1 + Phase 2 peak production rate 55,000 bbls/day, increasing up
to 120,000 bbls/day once all 3 phases have been developed

·    Pre first oil capex (Phase 1 only) US$1.4bn

·    Total capex (Phase 1, 2 and 3) US$4.0bn

·    Production breakeven approximately US$24 per barrel (Phase1, 2 and 3)

 

Navitas published the October 2024 NSAI Independent Report which is available
on Navitas' website, and contains the following resource estimates (rounded,
for oil only):

 

                         1C (MMbbls)  2C (MMbbls)  3C (MMbbls)
 Development Pending     371          532          673
 Development On Hold     177          376          566
 Development Not Viable  6            10           15
 Total                   554          917          1,254

 

The Development Pending category of 2C 532 MMbbls outlined above comprises the
following certified development plans:

 

·    Northern Development Area, Phase 1

·    Northern Development Area, Phase 2

·    Central Development Area, Phase 1

 

The Development On Hold category of 376 MMbbls 2C are the additional gross
resources contained on the NFB held by Navitas and Rockhopper, including Sea
Lion and Isobel/Elaine, that could be developed under future phases but for
which there is currently no published development plan.

 

The Development Not Viable category of 10 MMbbls are the additional gross
resources from Gas Condensate contained on the NFB held by Navitas and
Rockhopper, that could be developed under future phases but for which there is
currently no published development plan or market.

 

Rockhopper holds a 35% working interest in Sea Lion and associated NFB
licences and benefits from various loans from Navitas in relation to the
development, which are detailed in previous announcements.

 

 

Rockhopper Exploration plc

Sam Moody - Chief Executive Officer

Tel. +44 (0)20 7390 0230 (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

 

Resource Disclosure

 

Rockhopper is not an addressee and has not been party to the production of the
October 2024 NSAI Independent Report. The October 2024 NSAI Independent Report
has been produced to PRMS standards. Rockhopper's technical team which
includes Lucy Williams (BSc Geology, MSc Petroleum Geology, Chartered
Geologist) has reviewed the content of this announcement but has not had
opportunity to review the October 2024 NSAI Independent Report, although has
confidence in the experience and suitability of NSAI to produce such an
independent report.

 

The last independent resource report commissioned directly by Rockhopper was
the ERCE 2016 Report which had an estimated 2C value of 517 MMbbls.

 EIS                   Environmental Impact Statement
 FDP                   Field Development Plan
 FEED                  Front-End Engineering Design
 FPSO                  Floating Production Storage and Offloading
 FID                   Final Investment Decision
 1C                    Low estimate scenario of contingent resources
 2C                    Best (Most Likely, Mid) estimate scenario of contingent resources
 3C                    High estimate scenario of contingent resources
 Contingent Resources  Those quantities of petroleum which are estimated on a given date, to be
                       potentially recoverable from known accumulations by application of development
                       project, but which are not currently considered to be commercially recoverable
                       owing to one or more contingencies
 NSAI                  Netherland Sewell & Associates
 bbls/d                Barrels of crude oil per day
 MMbbls                Millions barrels of oil
 MoU                   Memorandum of Understanding
 PRMS                  2018 Petroleum Resources Management System approved by the Society of
                       Petroleum Engineers
 TCF                   Trillion cubic feet

 

 

 

 

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