Rockhopper Exploration plc has confirmed a final investment decision for Phase 1 of the Sea Lion field development, with its partner Navitas Petroleum also giving the go-ahead.
The project requires US$1.8 billion in post-FID funding through to First Oil, to be covered by US$1.0 billion in senior debt—US$350 million of which is allocated to Rockhopper—alongside joint-venture equity contributions and cash flow generated after production begins. Rockhopper’s share of the equity funding is estimated at about US$112 million.
The company has additionally resolved a disputed tax liability with the Falkland Islands Government for £30 million, to be paid in instalments. Financial close is anticipated in the coming weeks, which will prompt completion of a US$140 million placing and the launch of an open offer. Phase 1 is targeting First Oil in 2028.
The initial phase of the Sea Lion field development will see an investment of 2.1 billion dollars, aiming for production to begin by 2028. The project targets 170 million barrels, with an anticipated peak output of 50000 barrels per day.
The Falkland Islands government has approved a second phase that would seek to recover an additional 149 million barrels. Navitas and Rockhopper anticipate the venture will play a significant role in supporting the local economy and creating skilled employment across the United Kingdom. According to Navitas, this project will generate considerable long term opportunities in engineering, management, manufacturing, and operational roles spanning the next three decades. The government of the Falkland Islands will benefit financially through a nine percent royalty on gross revenue and a twenty six percent corporation tax on profits generated.
The initiative may prompt renewed geopolitical tensions with Argentina, which claims sovereignty over the islands known locally as Las Malvinas. The Sea Lion field is located 136 miles north of the Falklands and is believed to contain more than 900 million barrels of oil. Exploration began in 2010, with the field sitting approximately 1.6 miles beneath the sea bed in water depths of almost 1500 feet.
Oil from the Sea Lion field will be produced and transported using a floating production, storage, and offloading vessel, enabling distribution to global markets. Ownership of the project is split with Navitas holding a sixty five percent stake and Rockhopper retaining thirty five percent. The companies have noted rising project costs, with Rockhopper’s share increasing to 102 million dollars, up from previous estimates, and heightened obligations to cover potential early project failure costs which now stand at 52.5 million dollars.
Rockhopper is financing its share primarily through debt, including loans from Navitas, and a combination of equity placements. The company raised 140 million dollars in an earlier placement and signalled that up to 9.2 million dollars could be secured via an open offer after the final investment decision. Market response to these developments has been mixed; Rockhopper’s shares experienced a decline of 7.1 percent, closing at 81.25 pence, following the disclosure of increased costs and potential additional equity requirements should costs rise further ahead of key project milestones.
Despite heightened expenditures and continuing uncertainties regarding actual project outlays and future decommissioning commitments, Rockhopper maintains that it remains funded to proceed with the development. Additional capital is expected from open offer proceeds and potential future warrant exercise, positioning the company to advance towards first oil production and prospective long term economic benefits for stakeholders in both the Falkland Islands and the United Kingdom.
