viewRockhopper Exploration PLC

Rockhopper eyes Sea Lion sanction in 2018 as funding talks continue

"In the Falklands we are extremely encouraged by the progress made in securing the funding for Sea Lion," said Sam Moody, Rockhopper chief executive.

offshore oil workers
Sea Lion would produce 75,000 bopd once ramped up

Rockhopper Exploration Plc told investors it is hopeful that the Sea Lion field development, in the Falklands, may reach project sanctioning next year.

The Sea Lion project comprises a number of significant offshore discoveries which would yield some 75,000 barrels of oil per day once in peak production. Rockhopper is partnered with Premier Oil PLC (LON:PMO) in the project, though it presently remains in the desktop phase and project financing has been the main uncertainty.

In a portfolio update today, the company said that a number of contractors have expressed interest in potentially providing project funding and it is working to reach agreements in principle on key terms.

It also highlighted that talks are also progressing with potential export credit providers for the project.

Rockhopper also noted that the project’s engineering design – front end engineering design (FEED) – has now been substantially progressed and de-risked the project.

"In the Falklands we are extremely encouraged by the progress made in securing the funding for Sea Lion where we continue to work very closely with Premier to progress the project to sanction in 2018,” said Sam Moody, chief executive.

Drilling and workovers in Egypt

The company, meanwhile, also updated on its interests in Egypt where it is advancing drilling and work over operations.

It highlighted that the El Salmiya-2ST1 well has resumed production at the Abu Sennan concessions following work-over, and Abu Sennan assets are now producing 3,500 barrels oil equivalent per day, or 770 boepd net to Rockhopper.

The Al Jahraa SE-2X exploration well, also part of Abu Sennan, tested an Abu Roash reservoir but this primary target was found to be dry. The well is now being side-tracked to the north, into the known Al Jahraa SE field where it may be completed as a production well in the AR-C reservoir.

Al Jahraa SE-2X is one of two planned wells, the other is Al Jahraa 9 which spudded on Saturday June 10. It is targeting the AR-C reservoir at a deeper location.

The main aim is to show a connection between the Al Jahraa and Al Jahraa South East fields. It is expected that the drill programme will last 70 days.

Rockhopper highlighted that it had received US$5mln of payments against outstanding receivables owed in Egypt, and the tally of outstanding receivables now amounted to US$4.5mln. It said it had a cash balance of around US$63mln as at June 12.

Arbitration process underway for Italy asset

In Italy, is advancing an arbitration process against the government relating to the Ombrina Mare project which has stalled. A formal arbitration request was submitted in April, and the company expects a tribunal will be constituted in the third quarter.

Earlier this month, Rockhopper agreed to sell its non-core Italian production asset, Civita, to Northern Petroleum Plc (LON:NOP).

Today, Moody added: “With the current work program in Egypt giving the ability to quickly compensate for the lost production at Civita, the payment situation continuing to improve and more low cost exploration to come we are very pleased at the progress being made in Egypt.”

Quick facts: Rockhopper Exploration PLC

Price: 5.9 GBX

Market: AIM
Market Cap: £27.01 m

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