Rockhopper Exploration, the North Falkland Basin oil and gas exploration company, is pleased to announce its interim results for the six months ended 30 September 2010
The period under review has been the Company’s most operationally active to date. The Ocean Guardian drilling rig has been on hire throughout and, with one exception, has been drilling either on the licences that Rockhopper operates or has farmed in to.
Highlights of the period include:
- Sea Lion well spudded 15 April 2010 and declared an oil discovery on 6 May 2010
- $68.1m after expenses raised in June 2010 to fund an initial flow test on Sea Lion and provide working capital for other related technical work
Successful flow test of Sea Lion oil discovery started on 16 September 2010, the first oil to flow to surface in the basin
- $67.9 million of resources available for exploration at 30 September 2010
Post-period highlights include:
- $325.7 million after expenses raised in November 2010
- Use of funds to include appraisal of Sea Lion oil discovery, drilling of further exploration wells and acquisition of further 3D seismic data, as well as commissioning of engineering studies to a produce a field development plan
- Signed two contracts in October 2010 with Polarcus Limited to acquire 3D seismic across a wide area of the basin
- Company in advanced discussions with Diamond Offshore Drilling, the owners and managers of the Ocean Guardian drilling rig, regarding a continuation of the drilling campaign
Dr. Pierre Jungels, Chairman of Rockhopper, commented,
“The successful flow test of Sea Lion is a major step forward for the group and has given us the confidence and momentum to raise the funds required to undertake the work needed to reach a final investment decision on that prospect. The recent fundraising enables us to progress both our appraisal of Sea Lion and associated field development planning as well as the ongoing interpretation of a wide area of the basin in order to identify further attractive exploration prospects.”
For the six months ended 30 September 2010
I last wrote to you, on 17 August 2010, when I set out the six key value points that needed to be achieved by a group such as Rockhopper to deliver maximum value. At that date we had achieved the first two points and with the successful flow testing of our discovery on Sea Lion we have just achieved the third.
In terms of the discovery on Sea Lion, the three remaining value points are:
– Confirmation of the size of the discovery for scoping development plans as well as full exploration of the acreage,
– Completion of a field development plan, and
– First oil and subsequent production.
Achieving the next two value points will give us the data to make a final investment decision as to the development potential of the Sea Lion prospect.
Getting to the point of final investment decision will require significant time and investment and so, following the successful flow test, we have been very busy in all three areas of the group, being technical, corporate and financial.
In the technical area, we have agreed on the programme required, and its expected cost, to get us to a final investment decision for the Sea Lion prospect. The programme will include drilling further wells, both exploration and appraisal, acquiring additional 3D seismic, both on the northern and southern acreage, and commissioning engineering studies, both to conclude on a field development plan and undertake an amount of front-end engineering design.
In the corporate area, I felt it time to revisit the make up of the board to ensure we had the right skills and balance between executive and non-executive members that the Combined Code requires for good governance. To that end, I am delighted that David McManus and Robert Peters have joined the board as non-executives. David brings the engineering skills and Robert the legal skills that the board will need going forward. I have also decided that this is the time for me to move from executive to non-executive chairman and for Sam Moody to become chief executive, in recognition of the exceptional leadership that he has demonstrated since the group’s inception.
In the financial area, with the work programme agreed, we raised $325.7 million, after expenses, in October 2010. Prior to October, we had spent considerable time researching each of the financing options available to us but had to conclude that the interests of the group were best served by speed and so a placing for the full amount required was the only option available to us at the time. This was because any fund raising being offered to all our present shareholders would require a prospectus and an updated Competent Person’s Report. Work on a prospectus had been started, but during preliminary discussions with the technical experts, it became apparent that the interpretation of the potential resources would be so wide that a report acceptable to the board would not be produced until further data had been gathered by acquiring additional 3D seismic and drilling further wells.
The successful flow test was a major step for the group and gave us the confidence and momentum to raise the funds required to continue exploring our acreage. We believe that the $325.7 million raised will allow us to acquire additional seismic across all the acreage, drill additional exploration wells, initially in the north but also in the south if the new seismic data supports it, and undertake the work on the Sea Lion prospect that is needed to reach a final investment decision as to its future development.
Dr. Pierre Jungles CBE
15 November 2010