[UK] Sea Lion

[escveritas]

In January 2020, Rockhopper and Premier signed a detailed Heads of Terms with Navitas Petroleum for a 30 per cent interest in the Sea Lion project.



Key facts

World scale resource

• 1.7 billion barrels oil in place

• Well understood reservoir

• Highly marketable crude

Proven development concept

• Technically straightforward FPSO development

• Extensive project development and engineering complete

• Supply chain and logistics proven after multiple drilling campaigns

Regulatory interface well-advanced

• Environmental Impact Statement public consultation process completed

• FDP substantially agreed; final update at sanction

• Alignment with FIG on key fiscal, commercial and regulatory items

World class contractor team

• Experienced in comparable projects

• Opportunity to lock in supply chain at competitive rates

• Alignment via provison of vendor financing

Rockhopper has been operating offshore the Falkland Islands since 2004. We are a long-term partner of the Falklands and our aim has always been to support the rights of the Falkland Islanders to develop their natural resources for their own economic benefit.

Having completed the technical definition of the Sea Lion project, at the outset of 2020 the priorities for the year ahead included securing senior debt financing for the project, completing the farm down to Navitas Petroleum LP (“Navitas”) and submitting a Field Development Plan for the Sea Lion project to the Falkland Island Government (“FIG”).

However, in response to the unprecedented fall in the oil price experienced in March 2020, a decision was made in early April 2020 to reduce costs and scale-back headcount and activity on the project. Though the rest of the year, a reduced team continued to progress a number of regulatory and commercial workstreams, including the development of Sea Lion’s net zero emissions plan and finalising the terms of the Navitas farm-in.

The recently completed merger of Premier Oil plc (“Premier”) and Chrysaor Holdings Limited (“Chrysoar”) to create Harbour Energy plc (“Harbour”) results in a materially larger and financially strong operator of the Sea Lion project. Navitas has confirmed that it remains committed to the proposed farm-in. However, in order to enable the new management of Harbour to make a firm decision on the Sea Lion project, Rockhopper, Premier and Navitas agreed to extend the exclusivity period for the farm-in to 30 September 2021, While there can be no guarantee around Harbour’s future intensions for Sea Lion, Harbour has publicly stated a desire to pursue international growth with a preference for material operated positions and with capital allocated to those projects which best fits its investment strategy.

Rockhopper’s Board remain confident the Sea Lion project benefits from robust economics (at $65bbl 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 if compares favourably to other investment opportunities which may be available in the current environment.

In March 2021, the Company was please to announce that, following discussions between the joint venture partners, Harbour and FIG, FIG has agreed to extend each of the Group’s North Falkland Basis Petroleum Licences, including the Sea Lion Discovery Area, until 1 November 2022, with no additional licence commitments.

[escveritas]

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 all regulatory consents required for the transaction between the Company, Harbour Energy plc (“Harbour”) and Navitas Petroleum LP (“Navitas”) as announced on 19 April 2022 (the “Transaction”) have been received from both the Falkland Islands Government (“FIG”) and the UK Secretary of State. As part of the Transaction, FIG has agreed to grant a two-year licence extension to all the licences held by Rockhopper in the North Falkland Basin. Accordingly, the licences will now run until 1 November 2024.

The Transaction remains subject to certain other conditions but is expected to formally complete during Q3 2022.

[escveritas]

Sea Lion FPSO FEED



The contract confirms Aibel’s strengthened position in the FPSO market.

The FEED project was finished in October 2019. The assignment has engaged approx. 50 employees at Aibel’s office in Singapore.

The field operator is Premier Oil, and the Sea Lion field is located by the Falkland Islands in the British part of the South Atlantic Ocean.

Facts

• Contract: Topside FEED (Front End Engineering Design)

• Client: BW Offshore

• Value: Approx. NOK 40 million

• Delivery: 2019

• The modules for the FPSO will have a total weight of approx. 17,000 tons.

Primary purpose of a FEED is to provide a plan for implementation together with a cost assessment that makes it possible for the customer to make a final investment decision. It also provides the basis for EPC - engineering, procurement and construction.

[escveritas]

9 December 2021

Fresh air for Falklands' oil industry: Navitas to become operator with Rockhopper, and Harbour exits

Encouraging news for the Falkland Islands budding hydrocarbons industry. Rockhopper Exploration officially announced on Wednesday that it had reached a new agreement with Navitas Petroleum by which its potential farm-in portion of the Sea Lion project increases significantly, while the current holder of the majority share, Harbour Energy exits the undertaking.

Under the terms of the agreement which still needs regulatory approval, the Israel based explorer and producer will end with 65% interest in the Sea Lion project, compared to the 30% originally agreed last year. Rockhopper thus retains the 35% holding of the project it discovered in 2010 in the North Falkland Basin.

Harbour Energy last September revealed plans to exit projects in Brazil, Mexico and the Falkland Islands, because of strategic policy, concentrating on lower-risk opportunities in regions where the company already has a presence. Harbour is the largest UK-listed independent oil and gas producer with most of its assets located in Southeast Asia and the North Sea.

Rockhopper said in the statement that it hopes for “greater alignment and simplified commercial arrangements across the joint venture” to push forward the project towards FID, the final investment decision. Navitas will be the operator of Sea Lion development, and Rockhopper will retain its 35% share in the event of the need for new farm-in partners in the future.

According to prudent estimates, Sea Lion holds commercial gross reserves of 523 million barrels of oil equivalent but has seen its development delayed several years, the last time in 2020 when international oil prices collapsed caused by the Covid 19 pandemic and considerable lesser consumption.

For cash, short Rockhopper Navitas will provide a loan, with a first instalment pre-FID and later will extend additional financial support to help cover two-thirds of the company's share of development costs. The pre-FID interest will be 8%, and with a positive FID, the loan will be interest-free, and funds repaid from 85% of Rockhopper's working interest share of free cash flow.

If FID has not occurred within five years of completion of the proposed transaction, Rockhopper can elect to remove Navitas from the Falkland Islands petroleum licences by repaying the Pre-FID Loan.

However the finalisation of definitive documentation under the plan is now expected in the first quarter of 2022, the new partnership announced.

Rockhopper also underlined Navitas’ expertise in executing and financing large scale oil field developments. In effect last August and partners arranged project financing in excess of US$ 900 million and took FID on the Beacon Offshore-operated US$ 330 million barrel Shenandoah project in the US Gulf of Mexico.

Additionally, Navitas said in recent presentations to investors that it expects global oil demand to keep growing at least until 2035, despite energy transition winds. As to the working partnership, Rockhopper said partners will consider a lower-cost alternative development plan for Sea Lion using the design and engineering work that was undertaken for the project in the last decade.

An earlier ambitious development plan for Sea Lion called for the drilling of 23 subsea wells hooked up to a floating production, storage and offloading vessel.

(*) Harbour Energy was founded by private equity firm EIG Global Energy Partners in 2014. In 2017, Harbour made its first acquisition backing Chrysaor Holdings Limited to acquire a package of UK North Sea assets from Shell for US$ 3 billion and, in 2019, acquired ConocoPhillips UK North Sea for US$ 2.7 billion. In 2021, through a reverse takeover, Chrysaor merged with Premier Oil plc to create Harbour Energy plc.