Rockhopper Exploration plc (AIM: RKH), the oil and gas company with key interests in the North Falkland Basin and the Greater Mediterranean region, is pleased to provide the following operational and corporate update.
Sea Lion Phase 1, North Falkland Basin (RKH 40% working interest)
The Front End Engineering and Design (“FEED”) process has substantially progressed and de-risked the Sea Lion development with focus in 2017 continuing on the commercial, fiscal and financing elements of the project.
A number of contractors have now expressed interest in potentially providing funding for the project and the Company is hopeful of reaching agreement in principle on key terms over the coming months with a view to being in a position to sanction the project during 2018.
Discussions are also progressing with potential providers of export credit finance to the project.
Abu Sennan, Egypt (RKH 22% working interest)
Al Jahraa SE-2X
Exploration well Al Jahraa SE-2X, situated on the Abu Sennan-5 (Al Jahraa South East) Development Lease, was spudded on 25 April 2017 as the first of a two-well drilling campaign.
The primary target of the well was the Cretaceous Abu Roash-C (AR-C) reservoir in the fault block immediately to the south of the Al Jahraa South East field. The target reservoir was dry, but the well has been side-tracked northwards into the Al Jahraa SE field. If logging confirms oil pay, the well will be completed as the first oil producer in the AR-C reservoir in this field giving a near term increase to average daily production on the concession.
Development well Al Jahraa-9 was spudded on 10 June 2017, and will target the AR-C reservoir at a location deeper than the current deepest oil penetration at Al Jahraa-4. The primary aim of the well is to demonstrate the connection between the Al Jahraa and Al Jahraa South East fields through the oil leg.
The well is anticipated to take approximately 70 days to drill, evaluate and complete as a producer upon success.
Work over operations
Production at the El Salmiya-2ST1 well has resumed after the installation of a sucker-rod pump. This operation was deferred from 2016 and two additional workovers, aimed at increasing production, are planned during the remainder of the year.
Current production from the Abu Sennan concession is approximately 3,500 boepd gross (approximately 770 boepd net to Rockhopper).
Rockhopper has recently received a gross payment of US$5 million, towards its outstanding receivables balance. This is in addition to the US$1.4 million gross received since 1 January 2017.
Under the terms of the acquisition of Beach Egypt, a proportion of any payments received are paid to Beach Energy until their historic receivable position is satisfied.
As at 12 June 2017, Rockhopper’s EGPC receivable balance (net of amounts due to Beach Energy) was approximately US$4.5 million (unaudited).
Rockhopper’s cash balance, as at 12 June 2017, is approximately US$63 million (unaudited).
Ombrina Mare arbitration
As previously announced, in March 2017 Rockhopper commenced international arbitration proceedings against the Republic of Italy in relation to the Ombrina Mare project.
A Request for Arbitration was formally lodged with ICSID in April 2017 and the Company has now appointed its arbitrator. The Company anticipates the Arbitral Tribunal to be constituted in Q3 2017.
Rockhopper remains confident that it has strong prospects of recovering very significant monetary damages as a result of the Republic of Italy’s breaches of the Energy Charter Treaty. Damages would be sought on the basis of lost profits.
Sam Moody, CEO, commented
“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.
“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.”
For further information, please contact:
Rockhopper Exploration plc
Tel: (via Vigo Communications) – 020 7830 9700
Sam Moody – Chief Executive
Stewart MacDonald – Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Broker)
Tel: 020 7523 8000
Tel: 020 7830 9700
This announcement has been approved by Rockhopper’s geological staff who include Lucy Williams (Geoscience Manager) who is a Chartered Geologist, a Fellow of the Geological Society of London and a Member of the Petroleum Exploration Society of Great Britain and American Association of Petroleum Geologists with over 25 years of experience in petroleum exploration and management and who is the qualified person as defined in the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in respect of AIM companies.