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Rockhopper making good progress at Sea Lion and in the Med
Oil and gas exploration and production company Rockhopper Exploration told shareholders on Friday that it had continued to balance the progression of the Sea Lion project in the North Falkland Basin with building a material production base in the Greater Mediterranean throughout 2017, as the investors met for the annual general meeting.
The AIM-traded firm added that 2018 had the potential to be "transformational", with all efforts focussed on securing the funding required to sanction the Sea Lion project and move into the development phase.
"The selection of the main contractors for the project, and finalising letters of intent to underpin the contractual arrangements and the provision of vendor funding for $400m, is near completion," said chairman David McManus.
"Following a comprehensive commercial bank market engagement process, with a number of banks expressing a desire to support the project, a pathfinder bank will be appointed imminently to assist with the arrangement of senior debt facilities for the project."
McManus said that, with Brent oil prices currently above $75 per barrel, combined with the cost efficiencies secured through FEED and engagement with the contractors, the economics for the Sea Lion project were "highly attractive".
"Our Greater Mediterranean portfolio continues to meet its primary objective, namely to provide a production and cash flow base to fund our corporate and operating costs and protect our balance sheet.
"Balance sheet cash is preserved for capital investment, primarily in the Falkland Islands."
Looking forward, McManus added that the firm had an "exciting" four-well drilling campaign in Egypt, expected to commence in mid-2018, with a combination of infill development and exploration across our Abu Sennan and El Qa'a Plain interests.
"In March 2017, we commenced international arbitration proceedings against the Republic of Italy in relation to the Ombrina Mare field.
"The hearing has been scheduled for early February 2019 with an outcome expected in mid-2019."
McManus said Rockhopper believed it had "strong prospects" of recovering 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 costs associated with the arbitration are funded on a non-recourse basis from a specialist arbitration funder.
"We look forward to providing further updates as we progress through this exciting phase for the company."