Rockhopper Exploration, the oil and gas exploration and production company with key interests in the North Falkland Basin, announces its unaudited results for the six months ended 30 June 2021.

Year to date highlights

Sea Lion

• Announcement by Harbour Energy plc ("Harbour") in September 2021 that the Sea Lion project does not fit its corporate strategy and therefore that it will seek to exit the project and its North Falkland Basin licences
• Rockhopper to continue to pursue the Sea Lion project with a handover process to commence shortly
• Discussions ongoing with Navitas Petroleum LP ("Navitas") regarding its potential entry to the Sea Lion project
• Extension of the Company's North Falkland Basin Petroleum Licences, including the Sea Lion Discovery Area, to 1 November 2022

Corporate and financial

• Continued focus on corporate costs resulted in reduced administrative expenses - G&A US$1.6 million in H1 2021 (H1 2020: US$2.7 million)
• Further corporate cost savings implemented post period end
• Cash resources of US$7.1 million as at 30 June 2021

Outlook

• Formal exit by Harbour - Rockhopper expects to regain operatorship and 100% working interest in Sea Lion and key North Falkland Basin licences, subject to necessary consents
• Progress an alternative, lower-cost development scheme for Sea Lion utilising the existing extensive design and engineering work undertaken for the project in recent years
• Potential farm-out of Sea Lion project to Navitas
• Outcome awaited in relation to Ombrina Mare arbitration - seeking significant monetary damages

Keith Lough, Chairman of Rockhopper, commented: 
"Harbour Energy's decision not to proceed with Sea Lion is both a disappointment and an opportunity, affording us greater control through our expected regaining of operatorship and a 100% working interest.

"Sea Lion is a world-class oil field with the scale and potential to create very material value for Rockhopper, its partners and the Falkland Islands as a whole.

"Work will continue on a number of fronts over the coming weeks, including: (1) progressing Harbour's orderly exit from the Falklands; (2) advancing plans for an alternative, lower cost, development of Sea Lion; and (3) progressing discussions with Navitas Petroleum around their potential entry to the project."

Sea Lion development

The recent decision by Harbour Energy plc ("Harbour") that Sea Lion does not fit its strategy and therefore that it will not proceed with the project is a disappointment. Nonetheless, whilst this is a difficult moment for Rockhopper it is also a very real opportunity.

The Sea Lion project (with independently audited 2C resources in excess of 500 million barrels) was discovered and appraised by Rockhopper 100% as Operator. The Company has unrivalled knowledge of Sea Lion and the North Falkland Basin having held the acreage since 2004 and plans to continue to pursue the development of the project.

Work has already commenced on an alternative, lower-cost development scheme utilising the existing extensive design and engineering work undertaken for the project in recent years.

Rockhopper is in discussions with Navitas Petroleum LP ("Navitas") around its potential entry to the Sea Lion project following Harbour's decision not to proceed. In August this year, Navitas and partners raised project financing in excess of US$900 million and have taken final investment decision on the 330 million barrel deep water Shenandoah project in the US Gulf of Mexico, demonstrating their ability to raise capital for large-scale offshore oil developments.

The previously announced Heads of Terms with Harbour and Navitas expires on 30 September 2021 and as a result Harbour will have an initial 90 days to elect how to proceed with their exit. Rockhopper will continue to be funded (excluding licence fees, taxes and project wind down costs) by Harbour during that period under the terms announced on 7 January 2020 and 30 April 2020.

Rockhopper has commenced discussions with Harbour and the Falkland Islands Government ("FIG") to ensure an orderly exit by Harbour from the Falkland Islands.

Ombrina Mare arbitration

Rockhopper commenced international arbitration proceedings against the Republic of Italy in relation to the Ombrina Mare field in March 2017. The hearing took place in early February 2019 in Paris. In June 2019, the Tribunal rejected Italy's request for the suspension of the arbitration and Italy's related intra-EU jurisdictional objections.

Post-hearing briefings were submitted in October and November 2019. The Tribunal confirmed in May 2021 that it anticipated being in a position to render its award in the course of July 2021. In late September 2021, Italy made a request, and the Tribunal agreed, to admit a recent European Court of Justice judgment related to inter-EU Energy Charter Treaty disputes. The Tribunal has requested Rockhopper's legal advisers to respond to the European Court of Justice judgment by 6 October 2021.

Rockhopper continues to believe it has strong prospects of recovering very significant monetary damages - on the basis of lost profits - as a result of the Republic of Italy's breaches of the Energy Charter Treaty. All of Rockhopper's costs associated with the arbitration to date have been funded on a non-recourse ("no win - no fee") basis from a specialist arbitration funder.

With the expectation that the Ombrina Mare arbitration is approaching a conclusion, the Company is considering options to exit its legacy gas interests in Italy.

KeyFacts Energy: Rockhopper Falkland Islands country profile