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, further to the heads of terms notified on 8 December 2021, Rockhopper, Harbour Energy plc and Navitas Petroleum LP have signed legally binding definitive documentation in relation to Harbour exiting and Navitas entering the North Falkland Basin (the 'Transaction').
The Transaction remains subject to completion pending, inter alia, regulatory approvals.
Highlights
Navitas will acquire Premier Oil Exploration and Production Limited ('POEPL'), the Company in which Harbour holds all of its Falkland Islands licences
Rockhopper and Navitas will seek to align working interests across all their North Falkland Basin petroleum licences - Rockhopper 35% / Navitas 65% - subject to all necessary consents
Rockhopper and Navitas to jointly develop and agree a technical and financing plan to enable the development of the Sea Lion project to achieve first oil on a lower cost and expedited basis post sanction
Navitas to provide loan funding to Rockhopper
The majority of Rockhopper's share of Sea Lion phase one related 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'). 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
In the event that material progress towards FID has not occurred within five years of completion of the 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. Should material progress have been made, but FID not achieved, then the five year period can be extended by 12 months and then a further six months if certain project milestones have been achieved
Samuel Moody, CEO, commented: 'We are delighted to have signed definitive documentation to bring Navitas into the North Falkland Basin. Subject to regulatory consents, we believe this marks the start of a new exciting chapter for the Falklands, and for the Sea Lion project in particular. Navitas' US$1 billion Shenandoah financing in 2021 proved their ability to fund challenging offshore oil and gas developments. Given this, coupled with a more positive oil price environment, we are very excited to have them as new partners and look forward to pushing ahead with Sea Lion, a world class resource.'
Contact:
Sam Moody
Tel: +44 (0) 20 7390 0234
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 mmbbls of 2C Contingent Resources.
Rockhopper's Board remain confident the Sea Lion project benefits from robust economics (at $65/bbl Brent - NPV10@FID $1.8bn; break-even $42/bbl; life of project free cash flow $4.2bn with material upside at higher oil prices) and that it compares favourably to other investment opportunities which may be available in the current environment.
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.
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ROCKHOPPER EXPLORATION PLC 
