TIDMRKH
RNS Number : 3731A
Rockhopper Exploration plc
22 January 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").
22 January 2024
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Sea Lion and Corporate 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 included an
updated development plan to align with their static and dynamic
reservoir models, resulting in the increase in certified resources
in an updated NFB independent resource report conducted by
Netherland Sewell & Associates ("NSAI") (the "2024 NSAI
Independent Report") on behalf of Navitas.
According to the 2024 NSAI Independent Report, the certified
gross 2C resources in the overall NFB have increased from 712
MMbbls to 791 MMbbls. This represents an increase in resources of
11% in the overall NFB portfolio compared to the previous certified
2C resource, as published on 20 March 2023.
Navitas has identified suitable and available existing floating
production storage and offloading ("FPSO") vessels and is actively
working with leading industry vendors to secure all long lead
equipment, continuing to target Sea Lion phase 1 Final Investment
Decision ("FID") in 2024 and first oil at the end of 2026.
The Sea Lion Field Development Plan ("FDP"), which has been
optimised utilising the selected FPSO specifications, still
comprises 23 wells drilled in two phases with a 16% increase in
gross 2C resources from 269 MMbbls to 312 MMbbls out of overall 791
MMbbls certified discovered resources in the NFB. Against a
background of continued industry cost inflation, gross capex
required to first oil has been reduced from US$1.3 billion to
US$1.2 billion with a capex of approximately US$8 per barrel and
opex across life of field has been materially reduced to under
US$17 per barrel, providing very robust economics and a lower risk
project with a lower attractive break even under US$25 per barrel
(compared to the US$27 previously reported).
The hydrocarbons will be produced through the redeployed FPSO,
to provide an extended plateau for some eight years through a
"Drill to Fill" optimization, with a peak production rate of up to
55,000 bbls/d. The prolonged plateau increased total recovery and
lowered cost per barrel means that the NPV10 remains within 5% of
previously published numbers despite the initial lower plateau
production rate. Front end engineering design ("FEED") is ongoing
evaluating potential for further accelerated production ramp up and
increased capacity.
The FPSO has a disconnectable turret enabling redeployment to
another NFB field and allowing a second, potentially larger vessel
to replace it on Sea Lion with increased production capacity above
80,000 bbls/d. The long term potential for the Basin could utilise
up to 3 FPSOs with a total production of approximately 200,000
bbls/d. This phased plan minimises CAPEX to first oil while
providing flexibility for basin expansion and acceleration of
production from fields beyond Sea Lion.
An updated FDP has been submitted to the Falkland Islands
Government and it is anticipated that an updated Environmental
Impact Assessment ("EIA") will be submitted during Q1 2024.
Key Information
2C Contingent Resources (Development Pending) phase 1 and 2
development concept for the Sea Lion field:
-- 23 wells
o Phased drilling
o 11 wells in phase 1, with 5 of them pre first oil
o 12 additional wells in phase 2 approximately 4 years post
first oil
-- Total barrels developed 312 MMbbls
-- Peak production rate up to 55,000 barrels per day
-- Total capex US$2.5bn
-- Pre first oil capex US$1.2bn
Per barrel cost life of field (rounded):
Capex US$8
Opex US$17
------
Total cost US$25
------
Navitas published the 2024 NSAI Independent Report which is
available on Navitas' website, and contains the following resource
estimates:
1C (MMbbls) 2C (MMbbls) 3C (MMbbls)
Development Pending 228 312 406
------------ ------------ ------------
Development Unclarified 281 479 757
------------ ------------ ------------
Total 509 791 1,163
------------ ------------ ------------
The Development Pending category of 2C 312 MMbbls is the phase 1
and 2 development outlined above. The Development Unclarified
category of 479 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.
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.
Corporate Update
The Company's cash position as at 31 December 2023 was
approximately $8 million which does not include a further $2.2
million receivable by the Company in January pursuant to the
exercise of warrants.
Further to the announcement on 20 December 2023 regarding the
monetisation of Ombrina Mare Arbitration Award, the Company
continues to work through the requisite approvals and still expects
completion by no later than 30 June 2024.
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/Ana Ercegovic
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 2024 NSAI Independent Report. The 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 sufficient
opportunity to review the 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.
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
NPV Net present value
NPV10 Net present value at a 10% discount rate
PRMS 2018 Petroleum Resources Management System approved by the Society of Petroleum Engineers
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