In January 2020, Rockhopper and Premier signed a detailed Heads of Terms with Navitas Petroleum LP to farm in 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

US$1.8 bn

Gross CAPEX to first oil

80,000 bopd

Gross annual production (at plateau)

US$1.5 bn

Peak annual FCF

US$25 /bbl

Estimated opex per barrel (Life of field, including field opex and FPSO lease)

250 mmbbl

Resources to be monetised (Phase 1 only)

120,000 bpd

FPSO liquid capacity

The overall strategy to develop the North Falkland Basin remains a phased development solution, starting with Sea Lion Phase 1, which will commercialise, through a conventional FPSO development scheme, 250 mmbbls (gross) of oil resources in the northern part of PL032 (in which Rockhopper has a 30% working interest). A subsequent Phase 2 development will commercialise the remaining approximately 280 mmbbls (gross) resources in both 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 (gross) 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 29 subsea wells. Estimated gross capex to first oil is US$1.8 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 continued to be made in the first half of 2019 across a range of disciplines including FEED and optimisation work; finalisation of contractual arrangements with key service and supply contractors; and the preparation of the Preliminary Information Memorandum (“PIM”) and associated suite of lender due diligence reports, which were submitted after the period end.

Sea Lion has the potential to be transformational for Rockhopper and the Falkland Islands as a whole. The project is at a mature stage of definition and through the FEED and optimisation process has been substantially de-risked from a technical, cost and schedule perspective. Securing funding is the last remaining major milestone before Sea Lion can reach FID and all efforts are focused on securing such financing to allow the project to move into the execution phase.

The joint venture continues to lead engagement with a wide range of stakeholders to obtain the support required to secure senior debt, which represents the core of the project’s funding strategy. In this regard, a Preliminary Information Memorandum and comprehensive set of independent expert reports, which formed the basis of a financing application for the senior debt component of the project financing, were submitted to potential senior lenders including export credit agencies in July 2019.

On the vendor financing side, the project contractors have undertaken an extensive due diligence and assurance process and, are nearing final agreement to provide funding for the project, subject to the finalization of documentation.

Constructive and supportive engagement with the Falkland Islands Government (“FIG”) continues on a range of environmental, fiscal and regulatory matters with a view to obtaining the consents and agreements necessary to reach a final investment decision. Formal approval of the Environmental Impact Statement (“EIS”) and Field Development Plan (“FDP”) are expected at sanction.

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. However, given the nature of the project financing currently being pursued, the timetable and process to secure such funding remains outside our control and therefore, as a prudent precaution, discussions have commenced with FIG in relation to a 6 to 12 month extension to the Sea Lion Discovery Area licence.