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 2019.
Sea Lion Phase 1 development – project validated and de-risked through introduction of Navitas as joint venture partner
· Detailed Heads of Terms signed with Navitas to farm-in for a 30 per cent interest in the Sea Lion project
· Under the Heads of Terms, Rockhopper’s costs for the Phase 1 development (not met by external debt) are to be funded by Premier and Navitas from 1 January 2020 to Phase 1 Project Completion (estimated to occur 9-12 months after first oil)*
· Through the FEED and optimisation processes, the project has been substantially de-risked from a technical and cost perspective
· Resources to be developed in Phase 1 increased from 220 to 250 mmbbls (gross) with associated capex to first oil estimated at approximately US$1.8 billion (gross)
· Public commitment that Sea Lion will be developed on a net zero emissions basis
· Revenue of US$10.3 million and operating costs US$4.6 million
· Cash operating costs of US$9.9 per boe – maintaining a low cost base
· Continued management of G&A costs – US$5.3 million – reduced by circa 30% in the last 3 years
· Cash resources of US$21.9 million as at 1 April 2020 (unaudited)
· A ppointment of Keith Lough as Non-Executive Chairman following the retirement of David McManus at the Company’s AGM in May 2019
· Ombrina Mare arbitration – in June 2019 the Tribunal rejected Italy’s request for suspension and related intra-EU jurisdictional objections
· Disposal of Rockhopper Egypt Pty Limited for US$16.0 million completed in February 2020
· Initiatives identified to further materially reduce corporate G&A costs in response to current market conditions
· Despite the current oil price weakness, all parties remain committed to the finalisation of the Navitas farm-out agreement with completion subject to agreed consents and approvals
· In response to recent external events, cost reduction process initiated to scale-back headcount and activity at Sea Lion pending an improvement in the external macro environment
· Outcome in relation to Ombrina Mare arbitration expected in the coming months – seeking significant monetary damages
Keith Lough, Chairman of Rockhopper, commented:
” In the first quarter of 2020, equity markets and oil prices have fallen significantly due to a combination of fears over the spread of COVID-19 and the impact this will have on the global balance of supply and demand for oil coupled with the recent inability of OPEC and Russia to agree on supply cuts.
Recent initiatives by the Company, including the sale of Rockhopper Egypt Pty Limited together with the legally binding Heads of Terms signed with Premier Oil place the Company in a relatively stable financial position with cash at 1 April 2020 of approximately US$22 million and with limited exposure to future development costs at Sea Lion.
We look forward to the finalisation and ultimate completion of the farm-out to Navitas which we believe validates the world-class nature of the Sea Lion asset and enhances, once the oil price and capital markets recover, the prospects of securing the requisite senior debt to allow sanction.
With a supportive interim ruling on jurisdiction, we are positive on the prospects of recovering significant monetary damages through our international arbitration against the Republic of Italy in respect of Ombrina Mare and look forward to an outcome in the coming months.”
* Excluding licence fees, taxes and project wind down costs
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