REG - Rockhopper Exp plc - Sea Lion Update

Rockhopper ExplorationAnnouncement

08/12/2021 07:00

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RNS Number : 8985U  Rockhopper Exploration plc  08 December 2021

8 December 2021

 

Rockhopper Exploration plc

("Rockhopper" or the "Company")

 

Heads of Terms with Harbour to exit the Falklands and Navitas to farm-in

 

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 that Rockhopper, Harbour Energy plc ("Harbour") and Navitas
Petroleum LP ("Navitas") have signed detailed heads of terms for Harbour to
exit the Falklands and for Navitas to farm-in. The proposed transaction
remains subject to definitive documentation and completion subject to, inter
alia, regulatory approval.

 

Highlights

 

·    Harbour will divest its licence interests in the Falkland Islands,
and Rockhopper and Navitas will seek to align working interests across all
their Falkland Islands petroleum licences - Rockhopper 35%, Navitas 65%,
subject to necessary consents

 

·    Rockhopper and Navitas to jointly develop and agree a technical and
financing plan to enable the development of the project to achieve first oil
on a lower cost and expedited basis

 

·    Navitas to provide loan funding to Rockhopper:

 

o Rockhopper's share of Sea Lion costs from transaction completion up to Final
Investment Decision ("FID") will be funded through a loan from Navitas with
interest charged at 8% per annum (the "Pre-FID Loan")

 

o In the event of a positive FID, Navitas will provide an interest free loan
to Rockhopper to fund two-thirds of Rockhopper's share of development costs
(for any costs not met by third party debt financing)

 

o Funds drawn under the loans will be repaid from 85% of Rockhopper's working
interest share of free cash flow

 

·    In the event that FID has not occurred within five years of
completion of the proposed transaction, 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

 

Benefits of the proposed transaction

 

·    Greater alignment and simplified commercial arrangements across the
joint venture

 

·    Rockhopper retains a higher working interest in the Sea Lion project
than under the previous Premier-Navitas transaction announced in January 2020

 

·    The proposals continue to materially satisfy Rockhopper's proportion
of both pre-FID and post-FID costs for Sea Lion

 

·    Access to Navitas' expertise in executing and financing large scale
oil field developments

 

·    Clean exit for Harbour

 

·    Optionality for Temporary Dock Facility - scope to upgrade for Sea
Lion development or future decommissioning

 

 

Forward plan for Sea Lion

 

·    Technical work to commence by Rockhopper and Navitas jointly in
relation to a lower-cost, alternative development for Sea Lion utilising the
existing extensive design and engineering work undertaken for the project in
recent years

 

·    Finalisation of definitive documentation expected in Q1 2022 with
completion subject to satisfaction of certain conditions including regulatory
approval

 

·    Navitas to become Operator at completion

 

·    Potential for an additional project partner dependent upon funding
requirements - to be defined through ongoing development and financing
processes

o Should an additional partner be required, Rockhopper does not intend to
reduce its working interest

 

·    Navitas intends to strengthen its offshore operating capability with
a focus on safe and efficient developments

 

Samuel Moody, CEO, commented:

 

"We are delighted to be able to announce what we believe is the start of a new
chapter in the potential development of Sea Lion. The new Rockhopper-Navitas
joint venture will be fully aligned and committed to bringing Sea Lion to
production.

 

We at Rockhopper have huge historic and detailed technical knowledge of the
asset and experience of operating in the Islands, while Navitas brings
significant proven capital raising expertise and ability as well as
development experience. This transaction will ensure we have material funding
while increasing our retained working interest compared to the previously
announced partnership structure with Premier and Navitas. The importance of
Sea Lion in the Navitas portfolio is, in my mind, without question a further
positive as we both seek to unlock its underlying value.

 

We look forward to entering into fully binding documentation in the first
quarter of next year."

 

Keith Lough, Chairman, commented:

 

"We look forward to welcoming Navitas to the Falklands and thank Harbour not
only for coming to a clear decision on Sea Lion but for their work over the
recent months in securing a deal which allows a clean exit for them and an
exciting future for Sea Lion, Rockhopper and Navitas."

 

About Sea Lion and the North Falkland Basin

 

Rockhopper was admitted to AIM in 2005 with its principal asset being
prospective oil and gas acreage in the North Falkland Basin.  During 2010 -
2012, Rockhopper, as operator, successfully evaluated, drilled and appraised
its acreage culminating in the discovery of Sea Lion and its satellite fields.
Further exploration drilling occurred during 2015 and 2016. Sea Lion and its
satellite fields are independently estimated to hold approximately 520 mmbbl
of 2C Contingent Resources.

 

As disclosed in the Company's unaudited half-year results for the six months
to 30 June 2021, the loss for the period, related to the Company's Falkland
Islands interests, was US$270,000. Reported Segmental Assets and Liabilities,
related to the Company's Falkland Islands interests, were US$244 million and
US$80 million respectively.

 

 

Enquiries:

 

Rockhopper Exploration plc

Sam Moody - Chief Executive

Stewart MacDonald - Chief Financial Officer

Tel. +44 (0) 20 7390 0234 (via Vigo Consulting)

 

Canaccord Genuity Limited (NOMAD and Joint Broker)

Henry Fitzgerald-O'Connor/James Asensio

Tel. +44 (0) 20 7523 8000

 

Peel Hunt LLP (Joint Broker)

Richard Crichton

Tel. +44 (0) 20 7418 8900

 

Vigo Consulting

Patrick d'Ancona/Ben Simons

Tel. +44 (0) 20 7390 0234

 

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 ("MAR").

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