Rockhopper Exploration is responding to market developments by reducing staffing levels and activity related to the Sea Lion development in the offshore North Falkland basin. The company plans to maintain a smaller team, mainly focused on regulatory, fiscal and financial issues, pending a recovery in the external macro-environment.
A delay to the final investment decision (FID) for the project now looks inevitable until the oil price and capital markets recover.
Following the conclusion of the FEED and optimization processes in 2019, operator Premier Oil and its partners have increased the targeted resources for the Phase 1 development from 220 MMbbl to 250 MMbbl, with capex to first oil now estimated at round US$ 1.8 billion.
Rockhopper expects 29 wells to be drilled under Phase 1, including 12 prior to first oil, with production ramping up to a plateau of around 85,000 b/d. The wells will be connected to a conventional FPSO.
Phase 1 will focus on reserves in the northern part of the PL032 license, in which Rockhopper has a 30% interest following the recent farm-out to Navitas. Phase 2 will commercialize the remaining 280 MMbbl in PL032 plus satellite accumulations in the north of PL004 (Rockhopper 30% post farm-out to Navitas).
In addition, a further 200 MMbbl of low-risk, near-field exploration potential could be included in either Phase 1 or Phase 2, the company said. Beyond that, Phase 3 will entail the development of the Isobel/Elaine fan complex in the south of PL004, subject to further appraisal drilling.
Engagement continues with the Falkland Islands government on various environmental, fiscal and regulatory matters with a view to obtaining consents and agreements for the FID. Formal approval of the environmental impact statement and field development plan should come through at sanction.
Rockhopper added that the Sea Lion Discovery Area license, which had been due to expire on April 15, has now been extended to May 1, 2021, with no additional license commitments.