Following the Company’s acquisition of FOGL in early 2016, Rockhopper became the leading acreage holder in the North Falkland Basin with a material working interest in all key licences.
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
The overall strategy to develop the North Falkland Basin remains a phased development solution, starting with Sea Lion Phase 1, which will develop approximately 220 mmbbls in PL032 (in which Rockhopper has a 40% working interest). A subsequent Phase 2 development will develop a further 300 mmbbls from the remaining resources in PL032 and the satellite accumulations in the north of PL004 (in which Rockhopper has a 64% working interest). In addition, there is a further 200 mmbbls of low risk, near field exploration potential which could be included in either the Phase 1 or Phase 2 developments. Phase 3 will entail the development of the Isobel/Elaine fan complex in the south of PL004, subject to further appraisal drilling.
The resources in Sea Lion Phase 1 will be commercialised utilising a conventional FPSO development scheme with approximately 23 subsea wells. Estimated gross capex to first oil remains US$1.5 billion. The Sea Lion financing plan comprises funding elements including senior project finance debt, vendor financing from contractors and equity from the joint venture. Rockhopper’s share of the joint venture equity is to be funded through the carry arrangements with Premier.
Material progress continues to be made across a range of commercial, fiscal and funding matters as Rockhopper and Premier work towards a final investment decision on the Phase 1 development of the Sea Lion field.
During 2018, FEED contracts were awarded for all the outstanding elements of the project scope and the FEED process concluded in March 2019. Letters of award for the provision of contractor services and vendor finance will be issued as the joint venture goes through the sanction gate.
Engagement continues with the Falkland Islands Government (“FIG”) on a range of environmental, fiscal and regulatory matters with a view to obtaining the consents and agreements necessary to be in a position to reach a final investment decision. A revised Field Development Plan (“FDP”) was submitted to FIG in March 2018 and is now substantially agreed. The Environmental Impact Statement (“EIS”) public consultation process concluded in March 2018 with no material objections received and the final EIS document has been submitted to FIG. Formal approval of the EIS and FDP are expected at sanction.
Good progress has been made with FIG on the royalty and fiscal terms which will apply to Sea Lion Phase 1 and there has been definition on a number of important regulatory and tax matters.
The Sea Lion financing plan comprises funding elements including senior project finance debt, vendor financing from contractors and equity from the joint venture. Rockhopper’s share of the joint venture equity is to be funded through the carry arrangements with Premier. The joint venture has engaged with a wide range of stakeholders to obtain the support required to secure senior project finance debt and the joint venture expects to submit the Project Information Memorandum and formal funding application in mid 2019. On the vendor financing side, the project contractors have undertaken an extensive due diligence and assurance process and have agreed to provide up to US$400 million of funding for the project subject to documentation.
The Sea Lion Discovery Area is due to expire on 15 April 2020. The submission of the final Field Development Plan for FIG approval is expected before that date and therefore no further license extension is currently thought to be required from FIG.