Rockhopper Exploration jumps as its partner sells out of Falklands project
(RKH ) has now acquired part of Harbor Energy’s stake in the Sea Lion project offshore the Falklands Islands, as has its remaining partner, Navitas Petroleum.
Today, Rockhopper confirmed to investors that Harbor Energy is exiting the Falklands and that the oil and gas firm, alongside its partner, Navitas, has now aligned its working interests across all the Falkland licenses at 35% to Rockhopper and 65% to Navitas, respectively.
Rockhopper and Navitas will now 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.
Samuel Moody, CEO of Rockhopper, informed investors that the new Rockhopper-Navitas joint venture would be “fully aligned and committed to bringing Sea Lion to production.”
Rockhopper’s share of Sea Lion costs from transaction completion up to “Final Investment Decision” will be funded through a loan from Navitas with interest charged at 8% per annum.
The transaction, which will see Rockhopper retain a higher working interest in the Sea Lion project than under the former Premier-Navitas transaction from January 2020, is expected to allow for greater alignment and simplified commercial arrangements across the joint venture.
The Company said the proposals continue to ‘materially satisfy’ Rockhopper’s proportion of both pre-FID and post-FID costs for Sea Lion and that this transaction will enable greater access to Navitas’ expertise in executing and financing large scale oil field developments.
Looking ahead, the Company outlined that technical work will 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.
Shares in Rockhopper Exploration were trading 22.69% higher at 6.395 following the news.
A definitive documentation is expected to be finalised in 1Q22 with its completion subject to satisfaction of certain conditions including regulatory approval, the Company told investors.
Upon completion, Navitas will become the operator of the project. The Group said it intends to strengthen its offshore operating capability ‘with a focus on safe and efficient developments.’
Rockhopper explained that there would be potential for an additional project partner dependent upon funding requirements and that this would be defined through ongoing development and financing processes. Nevertheless, should an additional partner be required, Rockhopper stated that it does not intend to reduce its working interest.
Commenting, Moody added: “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.”
The London-listed oil and gas company Rockhopper Exploration was admitted to AIM in 2005 with its principal asset being prospective oil and gas acreage in the North Falkland Basin.
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