TIDMRKH
RNS Number : 6743J
Rockhopper Exploration plc
09 April 2015
9 April 2015
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Final Results for the Nine Months Ended 31 December 2014
Rockhopper Exploration plc (AIM: RKH), the oil and gas
exploration and production company with interests in the North
Falkland Basin and the Greater Mediterranean region, is pleased to
announce its final results for the nine months ended 31 December
2014.
Highlights
During the Period:
-- Rig secured for four well exploration drilling campaign in the North Falkland Basin
-- Phased, lower cost development solution adopted for the Sea Lion field
-- Revised commercial arrangements agreed with Premier Oil
(subject to negotiation of fully termed documentation)
-- Completion of recommended offer for Mediterranean Oil & Gas plc
-- Progressing recently acquired Greater Mediterranean portfolio
o Plans advancing to increase production at Guendalina
o Civita onshore gas project sanctioned
o Award of acreage in first Croatian offshore licensing
round
-- Cash resources at 31 December 2014 of $200 million
Post 31 December 2014:
-- North Falkland drilling campaign commenced
o Exploration success at Zebedee well
o Isobel Deep well spudded
-- Confirmation of Falkland Island Capital Gains Tax Liability Deferment
Pierre Jungels, Chairman of Rockhopper, commented:
"The Zebedee well result represents a fantastic start to the
2015 Falklands drilling campaign and provides early proof of the
significant remaining potential in the North Falkland Basin.
The adoption of a phased, lower cost development solution for
Sea Lion significantly de-risks the project and should allow us to
capture further cost savings as we progress through the FEED and
draft FDP submission processes in 2015 and early 2016.
Since the acquisition of Mediterranean Oil & Gas plc, steady
progress has been made in advancing the Mediterranean portfolio.
Our recent Croatian offshore licence award represents an
outstanding low cost opportunity to increase our acreage position
in an area with proven hydrocarbons.
Rockhopper's balance sheet remains strong and the Company is
well placed to take advantage of potential growth opportunities
which may present themselves as a result of the current market
environment."
For further information, please contact:
Rockhopper Exploration plc
Tel: (via Vigo Communications) - 020 7016 9571
Sam Moody - Chief Executive
Fiona MacAulay - Chief Operating Officer
Stewart MacDonald - Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Joint Broker)
Tel: 020 7523 8000
Henry Fitzgerald-O'Connor
Liberum Capital (Joint Broker)
Tel: 020 3100 2227
Clayton Bush
Vigo Communications
Tel: 020 7016 9571
Peter Reilly
Patrick d'Ancona
Chairman and Chief Executive Officer's Review
Despite a difficult commodity price backdrop, Rockhopper has had
a busy period both in building up to a new exploration campaign in
the Falklands whilst continuing to further progress the Sea Lion
development.
The dramatic fall in the global price of oil during the second
half of 2014 introduced significant risks and challenges for the
wider industry with a resultant impact on sentiment towards the
listed oil & gas sector.
However, Rockhopper responded quickly to the changing market
environment, most notably, through the adoption of a revised
development concept on Sea Lion and is now well placed to capture
the opportunities that are likely to emerge as a result. Such
opportunities include capturing lower costs for the Sea Lion
project and leveraging our relative balance sheet strength to
target value accretive growth opportunities.
Our long anticipated exploration campaign has now commenced and
Rockhopper will participate in all four wells drilled in the North
Falkland Basin. This campaign, which we believe is probably one of
the most exciting taking place across the industry in 2015,
commenced with the successful Zebedee well which initial management
estimates suggest discovered in excess of 50 mmbbls recoverable oil
in the Zebedee reservoir alone. Work is ongoing to determine the
upside in the Hector and Ninky South reservoirs.
In addition, we were pleased to finalise our tax deferral
arrangements with the Falkland Island Government which is addressed
in more detail in the Chief Financial Officer's Review.
North Falkland Exploration Campaign commenced
Having retained the subsurface lead for exploration in our joint
venture with Premier, we are delighted that our 2015 North Falkland
exploration campaign, which has been years in the planning, has now
commenced.
In June 2014, we announced that the Eirik Raude drilling unit
had been contracted for a joint campaign across the North and South
Falkland Basins. A temporary dock facility located in Stanley
Harbour has been built to support the exploration campaign. The rig
commenced mobilisation from West Africa in late January 2015 and
arrived in Falklands water in late February, ahead of schedule.
The exploration campaign will consist of at least four wells in
the North Falkland Basin ("NFB"), with each well targeting multiple
stacked fans in licences PL004 and PL032.
Planned drilling order
Well RKH% Location
------------------------ ------ ----------------------
1 Zebedee 24.0% NFB, Licence PL004b
------------------------ ------ ----------------------
2 Isobel Deep 24.0% NFB, Licence PL004a
------------------------ ------ ----------------------
3 Humpback 0.0% SFB, southern licence
area
------------------------ ------ ----------------------
4 Jayne East 24.0% NFB, Licence PL004c
------------------------ ------ ----------------------
5 Chatham 40.0% NFB, Licence PL032
------------------------ ------ ----------------------
6 Second Noble operated 0.0% South or East FB,
well to be decided
------------------------ ------ ----------------------
On 2 April 2015, we were delighted to announce that the Zebedee
well had successfully made an oil & gas discovery, encountering
27.9 metres of net oil pay and 18.5 metres of net gas pay. The
second well in the program, Isobel Deep, was spudded on 8
April.
As a result of accessing the full Exploration Carry from
Premier, Rockhopper's expected share of costs for the four wells in
PL004 and PL032 is estimated at $25 million.
Phased, lower cost development concept for Sea Lion
In November 2014, the company announced that a phased, lower
cost development solution for Sea Lion with the initial phase
targeting the commercialisation of approximately 160 mmbbls in the
North East segment of the field over a 15 year period.
The concept is likely to consist of 14 wells (comprising 8
producers, 5 water injectors and 1 gas producer/injector) with
production via a leased floating, production, storage and
offloading vessel ("FPSO") and will target a gross plateau of
50,000 to 60,000 barrels of oil per day from a single subsea drill
centre.
Based on cost analysis as at November 2014, the capital
expenditure to first oil for the initial phase is anticipated at
approximately $1.8 billion, significantly less than previous
estimates for the Tension Leg Platform ("TLP") concept. One direct
impact of the fall in oil prices is the reduction in the cost of
services to the industry - a good example of this is the day rate
for drilling rigs. Based on the November analysis, approximately a
third of Sea Lion project costs are estimated to be drilling costs
and we have seen these costs fall by between 30% and 40% since mid
2014. As the Sea Lion project progresses towards sanction over the
course of 2015 and early 2016 we anticipate taking advantage of the
weaker supply and service market to negotiate further cost savings
prior to project sanction.
Phase 1A cost estimates (Nov US$bn
2014)
------------------------------ ------
Pre-sanction 0.1
------------------------------ ------
SURF and installation 0.7
------------------------------ ------
Project management 0.4
------------------------------ ------
Pre-first oil drillex 0.6
------------------------------ ------
Total (pre-first oil) 1.8
------------------------------ ------
The project continues to make good progress through the pre-FEED
stage with over 80 people within the operator's Falkland Island
Business Unit contributing to various aspects of the project's
development. The joint venture partners approved a budget for
pre-sanction spend on Sea Lion during 2015 of $70 million
gross.
Looking ahead, a FEED contract award is expected in the second
quarter of 2015 with the submission of a draft Field Development
Plan ("FDP") to the Falkland Island Government ("FIG") anticipated
around the end of the year. Project sanction for the first phase of
development is targeted during mid 2016 and the precise timing will
be driven by not just the cost reductions that can be achieved but
the long-term oil price outlook at that time.
Premier has confirmed that while a project of this size could
likely be funded from existing facilities and cash flows, they will
continue to seek a partner for the Sea Lion development.
Revised commercial terms
In light of the move to a phased development, Rockhopper and
Premier have agreed to amend their commercial arrangements, under
which:
-- Rockhopper to access the full $48 million Exploration Carry for the 2015 drilling campaign
-- Rockhopper to fund its share of pre-sanction costs, currently
estimated at $100 million gross ($40 million net to Rockhopper)
-- Rockhopper to retain $337 million Development Carry for the
initial phase; a further $337 million Development Carry deferred to
the next phase of development
-- Existing Standby Finance arrangements to be simplified to a
more traditional loan of up to $750 million
The amendments outlined above are subject to negotiating fully
termed agreements but importantly, Rockhopper remains fully funded
through a combination of Development Carry and amended loan from
Premier.
As a consequence of the move to a phased development Rockhopper
and Premier have made a request to FIG to extend the validity of
the Discovery Area in PL032 to October 2016. Such request has been
approved by FIG and the Secretary of State and is currently being
documented.
Building a second core area in the Greater Mediterranean / North
Africa Region
In August 2014 we completed the acquisition of AIM listed
Mediterranean Oil & Gas plc ("MOG"). Through MOG, Rockhopper
acquired a portfolio of production, development and exploration
interests in Italy, Malta and France with a combined 2C contingent
resource of over 32 million barrels of oil equivalent. The
acquisition price represented less than $1 per barrel of oil
equivalent.
Since the acquisition of MOG, steady progress has been made in
advancing the portfolio and new legislation passed through the
Italian Parliament suggests that development projects in the
country should now be easier to progress.
Technical work on the Monte Grosso prospect in the Southern
Appennine confirms our view that this remains a highly attractive
exploration target, on trend with the world class Val D'Agri and
Tempa Rossa oil fields. Discussions continue with a wide variety of
stakeholders to expedite the planning and drilling process.
In addition, in January 2015 we were pleased to be awarded an
offshore Block in the Croatian licencing round in partnership with
Eni.
Outlook
The Zebedee well result represents a fantastic start to the 2015
Falklands drilling campaign and provides early proof of the
significant remaining potential of the North Falkland Basin.
The adoption of a phased, lower cost development solution for
Sea Lion significantly de-risks the project and should allow us to
capture further cost savings as we progress through the FEED and
draft FDP submission processes in 2015 and early 2016.
While the spot price for Brent oil today is below $60 per
barrel, when assessing the economics of projects such as Sea Lion
it is the long-term price outlook which is most important. We could
well find ourselves in a position that we will sanction Sea Lion in
a low oil price-low cost environment but start producing oil in
2019 or 2020 when the oil price could be materially higher.
Rockhopper's balance sheet remains strong with cash resources of
$200 million as at 31 December 2014 and the company is well placed
to take advantage of potential growth opportunities which may
present themselves as a result of the current market
environment.
Dr Pierre Jungels CBE Samuel Moody
Chairman Chief Executive Officer
8 April 2015
Chief Operating Officer's Review
NFB Exploration Commenced
Rockhopper were delighted to be able to announce in early April
2015 the results of the Zebedee Well (the first well of 2015
exploration programme in the North Falklands Basin) as a successful
oil and gas discovery.
Having retained the sub-surface lead for exploration in the farm
out to Premier Oil in 2012, Rockhopper had proposed a series of
well locations of which Zebedee was the first to be drilled. All
seven reservoir targets were penetrated on or close to prognosis
with an eighth reservoir (Ninky South) being tagged at its
margin.
Three of the eight sands were proven to be hydrocarbon bearing
through wireline logging and formation testing. A total of 18.5m of
net gas pay and 27.9m of net oil pay were encountered in the well
in sands of the F2 stratigraphic interval and good oil shows were
recorded throughout the deeper F3 stratigraphic section.
Hector
The Hector sand was encountered on prognosis near the crest of
the structure and penetrated a gross reservoir package of 27.6m.
Net gas pay was 18.5m and initial indications are of good reservoir
properties.
No gas oil contact was observed within the reservoir, and
pressure data indicates that the gas gradient is offset from the
gas gradient observed previously in the Beverley and Casper South
reservoirs. Hector therefore may be oil bearing in a downdip
location (the Hector 'oil rim') and potential oil volumes are being
generated. The well also proved an additional Pmean recoverable gas
resource of approximately 280bcf (approximately 50mmboe).
Zebedee
The Zebedee sand was encountered on prognosis, penetrating a
gross reservoir package of 29.3m with net oil pay of 25.3m. This
reservoir was the principal target of the well, and proves the
presence of a further fan system to the south of Sea Lion and the
previously discovered satellites.
The reservoir quality is amongst the best encountered to date
and no oil water contact was observed in the well. The entire
section of the Zebedee formation was cored and the results of core
data analyses will benefit the planning of the future
development.
Initial management estimates of discovered recoverable resources
in the Zebedee reservoir are in excess of 50 mmbbls.
Ninky South
In addition to the two principal reservoirs a further F2
reservoir was encountered above the Zebedee fan at 2,436.6m
measured depth which was also oil bearing. The well gross reservoir
thickness was 6.4m and net oil pay was 2.6m.
The sand, which Rockhopper currently map to form part of the
Ninky South prospect which is fully developed south of the well,
was tagged in a very marginal position and was not therefore
included in the pre-drill stack prognosis but which has the
potential to contain recoverable resources (within the better
developed reservoir area) of around 20mmbbls.
F3 Reservoirs
Whilst good oil shows were recorded throughout the F3 sequence
and the Parker, Catriona and Jayne West (Orinoco) reservoirs were
all penetrated, the reservoir quality at this location means that
only limited oil pay was measured. Wireline logs indicate 1.4m of
net oil pay developed in the Jayne West reservoir. The Company were
however much encouraged that there is an apparent deeper
hydrocarbon system operating to the south of Sea Lion.
Operations
The Zebedee well has now been plugged and abandoned as a
successful exploration well. The rig has now moved to the second
well of the campaign, the Isobel Deep well, which spudded on 8
April 2015.
The Isobel Deep well is located on licence PL004a in which
Rockhopper has a 24% working interest and is an exploration well on
the Isobel Deep prospect. This well will be the first test of the
F3 fan system entering the basin from the South East margin and
developed as a sequence of stacked reservoirs. This well will be
targeting the Isobel Deep fan in an area of maximum mapped
reservoir thickness and has a GCoS of 20%. The well is targeting
Gross Pmean resources of 72mmbbls (range 9 - 207mmbbls) although
the complex as a whole in this area has gross Pmean prospective
resources of just over 500mmbbls.
Drilling operations are expected to take approximately 30 days
and no coring or testing is planned for this well.
Success at Isobel Deep could, subject to partner agreement, lead
to a follow-on appraisal well on the wider Elaine/Isobel
complex.
Impact of exploration campaign on Sea Lion development
While the outcome of this exploration campaign, which has the
potential to significantly increase the discovered resource in the
North Falkland Basin, will have limited impact on the initial phase
of Sea Lion development, it will determine the shape of subsequent
development phases in the area.
In particular, in the event that the Chatham/West Flank gas cap
well is successful, we would expect to add at least 60 million
barrels gross to the already discovered 160 million barrels that we
expect to commercialise through Phase 1b.
The Phase 2 development will be impacted by success at Jayne
East while success at Isobel Deep expands the development area
significantly.
Building a Greater Mediterranean presence
In May 2014, Rockhopper announced a recommended cash and share
offer to acquire AIM listed Mediterranean Oil & Gas plc. The
transaction completed in August 2014.
Through the acquisition Rockhopper acquired 2P/2C resource base
of 32.5 million barrels of oil equivalent and a material portfolio
of producing, development, appraisal and exploration assets. Key
assets in the portfolio include:
Guendalina, Italy (Rockhopper 20%)
Operated by Eni, the Guendalina gas field, located in the
Northern Adriatic, has been on production since 25 October
2011.
Rockhopper are working closely with Eni to sidetrack one of the
two gas production wells on the Guendalina field that has been shut
in following damage to the wellbore experienced in 2012. The
sidetrack is anticipated to enhance production levels and is
currently scheduled to commence in Q4 2015.
Ombrina Mare, Italy (Rockhopper 100%)
Operated by Rockhopper, the Ombrina Mare oil & gas discovery
is an appraisal/development project located off the Abruzzo region
in the shallow waters of the Central Adriatic. Subject to necessary
approvals and the granting of the field concession permit,
Rockhopper would be hoping to be in a position to drill an
appraisal well on the field by the end of 2016 following which it
would be able to optimise the development plans for the asset.
Monte Grosso, Italy (Rockhopper 23%)
Operated by Rockhopper, the Monte Grosso oil prospect is located
in the Southern Appennine thrust-fold belt on trend with the
largest on shore oil production and development area in Western
Europe of Val D'Agri and Tempa Rossa. Monte Grosso remains one of
the largest undrilled prospects onshore in Western Europe and, with
its partners Eni and Total, Rockhopper is progressing the
permitting process to enable drilling.
Civita, Italy (Rockhopper 100%)
Operated by Rockhopper, the Civita gas field development is
located onshore Abruzzo in the Aglavizza concession. Development
activities are commencing for the pipeline and site facilities
construction, with the aim of production commencing in Q4 2015.
Area 3, Malta (Rockhopper 40%)
A 2D seismic survey was completed in April 2014 and the
processing of such seismic has recently been completed. The seismic
has identified a number of leads of sufficient size to potentially
be of interest. The joint venture has agreed to request a one year
extension of the Exploration Study Agreement prior to making a
decision to enter a Production Sharing Contract.
Block 9, Croatia (Rockhopper 40%)
In January 2015, Rockhopper was awarded a 40% interest in
offshore Block 9 in Croatia in partnership with Eni (60% interest
and operator). The block is located in the relatively shallow water
of the prolific Northern Adriatic gas province and contains the
previously discovered Ksenija accumulation along with the Klaudija
prospect. The anticipated work programme consists of seismic
acquisition, processing and re-processing during the first
exploration phase (3 years) with the drilling of a well in the
second exploration phase (if Rockhopper elects to proceed to the
second phase). Signature of a Production Sharing Contract with the
Croatian Hydrocarbon Authority is now expected in mid 2015.
Montenegro licensing round
Rockhopper has applied for acreage in the first offshore
licensing round in Montenegro. Rockhopper awaits the outcome of
such application but to date no awards have been made.
Fiona MacAulay
Chief Operating Officer
8 April 2015
Chief Financial Officer's Review
From a finance perspective, the most significant events of the
year include:
- Revision of the commercial terms for Sea Lion with Premier
- Confirmation of Falkland Island Capital Gains Tax Liability Deferment
- The acquisition of Mediterranean Oil & Gas plc ("MOG")
Revised commercial terms on Sea Lion
As outlined in the Chairman's and CEO's review, in light of the
move to a phased development, Rockhopper and Premier have agreed,
subject to negotiation of fully termed documentation and respective
board approvals, to amend their commercial arrangements, under
which:
-- Rockhopper to access the full $48 million Exploration Carry for the 2015 drilling campaign
-- Rockhopper to fund its share of pre-sanction costs, currently
estimated at $100 million gross ($40 million net to Rockhopper)
-- Rockhopper to retain $337 million Development Carry for the
initial phase; a further $337 million Development Carry deferred to
the next phase of development
-- Existing Standby Finance arrangements to be simplified to a
more traditional loan of up to $750 million
Documentation of the revised commercial arrangements is
progressing.
Based on the Operator's November 2014 cost estimates, capital
expenditure to first oil on Sea Lion is expected to be $1.8 billion
gross ($720 million net to Rockhopper). As such, Rockhopper remains
fully funded through a combination of the $337 million Development
Carry and simplified $750 million loan from Premier.
Tax settlement with Falkland Island Government
Rockhopper has agreed binding documentation with the Falkland
Island Government ("FIG") in relation to the tax arising from the
Company's 2012 farm-out to Premier.
The Tax Settlement Deed confirms the quantum and deferment of
the outstanding tax liability and reflects the principles agreed
between Rockhopper and FIG in December 2013 and is made under
Falkland Islands Extra Statutory Concession 16. The highlights of
which include:
-- Outstanding tax liability confirmed at GBP64.4 million
(approximately $95.7 million) and payable on the first royalty
payment date on Sea Lion (or earlier subject to certain events)
-- First royalty payment date anticipated to occur within six
months of first oil production which itself is estimated to occur
in late 2019 (assuming Sea Lion project sanction in mid 2016)
-- Outstanding tax liability amount may be revised downwards if
the Falkland Islands' Commissioner of Taxation is satisfied that
either (i) the Exploration Carry from Premier is used to fund
exploration activities in the Falkland Island license areas; or
(ii) any element of the Development Carry from Premier becomes
"irrecoverable"
-- Rockhopper provides certain "creditor protection"
undertakings to FIG while the tax liability remains outstanding
including (i) restriction on dividends or distributions; (ii)
granting of first ranking security over Rockhopper assets; and
(iii) while such security is in place, restrictions, subject to
conventional carve outs, on granting further security
-- Intention that at the point Rockhopper is able to secure
senior debt for the Sea Lion project, the security provided to FIG
will be released and FIG will be provided with a standby letter of
credit to preserve its creditor position
Under the amended commercial arrangements with Premier,
Rockhopper intend to access the full $48 million of Exploration
Carry during the 2015 drilling campaign. In the event that the full
Exploration Carry is utilised, under the terms of the Tax
Settlement Deed we expect the outstanding tax liability to reduce
by up to GBP4.7 million (approximately $7.0 million).
Further details of the Tax Settlement Deed
Quantum
-- Total Tax Liability agreed at GBP90.3 million with GBP26.0
million already paid by Rockhopper resulting in a Outstanding Tax
Liability of GBP64.4 million (figures subject to rounding)
-- Outstanding Tax Liability intended to be binding and final,
subject to the satisfaction of the Falkland Islands' Commissioner
of Taxation as to the following:
o If as anticipated the Exploration Carry is used to fund
exploration work or appraisal work in the Falkland Island licences,
Rockhopper will be entitled to make a deduction from the
computation of the Outstanding Tax Liability
o If any part of the Development Carry from Premier becomes
"irrecoverable", Rockhopper will be entitled to make an adjustment
to the Outstanding Tax Liability
Timing
-- Outstanding Tax Liability payable on the earlier of:
o First royalty payment date, which is expected to occur within
six months of the date of first oil (first oil anticipated in late
2019)
o The date on which Rockhopper disposes of all or a substantial
part of the Company's remaining interest in the Licences, or
otherwise realises value from the Licences
o A change of control of Rockhopper Exploration plc
Security and undertakings
-- Rockhopper to grant to FIG fixed and floating security over
all of its assets (with limited carve outs where such security
would conflict with applicable law or the terms of an existing
agreement)
-- While such security is in place, restrictions, subject to
conventional carve outs, on granting further security
-- Such security to be terminated upon earlier of:
o The Outstanding Tax Liability being paid
o Rockhopper procuring a standby letter of credit in an amount
equal to the full amount of the then outstanding Deferred Tax
Liability from a bank or other corporate entity
-- Rockhopper agrees to maintain a minimum 20% interest in licence PL032
-- Rockhopper undertakes not to make any dividends or
distributions while the tax liability remains outstanding (in whole
or in part)
As a result of the tax settlement, the tax liability will be
re-classified as a non-current liability in the Group's next
balance sheet and discounted.
Acquisition of Mediterranean Oil & Gas plc ("MOG")
The acquisition of MOG completed in August 2014. Through MOG,
Rockhopper acquired a portfolio of production, development and
exploration interests across Italy, Malta and France with a
combined 2C contingent resources of over 32 mmboe at an acquisition
price of less than $1 per barrel.
Under the terms of the agreement announced on 23 May 2014,
shareholders of MOG received 4.875 pence in cash and 0.0172 shares
of the company per MOG share.
The transaction has been accounted for by the purchase method of
accounting with an effective date of 11 August 2014 being the date
on which the group gained control of MOG. Information in respect of
the assets and liabilities acquired and the fair value allocation
to the MOG assets in accordance with the provisions of "IFRS3 -
Business Combinations" has been determined and is as follows:
Recognised values
on acquisition
$'000
------------------------------------ ------------------
Intangible exploration and
appraisal assets 30,288
------------------------------------ ------------------
Property, plant and equipment 15,663
------------------------------------ ------------------
Long term other receivables 625
------------------------------------ ------------------
Inventories 2,683
------------------------------------ ------------------
Trade and other receivables 4,634
------------------------------------ ------------------
Restricted cash 268
------------------------------------ ------------------
Trade and other payables (6,845)
------------------------------------ ------------------
Long-term provisions (23,872)
------------------------------------ ------------------
Net identifiable assets and
liabilities 23,444
------------------------------------ ------------------
Goodwill 12,074
------------------------------------ ------------------
Satisfied by:
------------------------------------ ------------------
Cash ($35,700,000 less $11,663,000
of cash acquired) 24,037
Equity instruments 7,481,816
ordinary shares 11,481
------------------------------------ ------------------
Total consideration 35,518
------------------------------------ ------------------
The fair value of equity instruments has been determined by
reference to the closing share price on the trading day immediately
prior to the completion of the acquisition.
Goodwill arises due to the difference between the fair value of
the net assets and the consideration transferred and relates to the
portfolio of exploration and appraisal assets, which together have
the optionality and potential to provide value in excess of this
fair value as well as the strategic premium associated with a
significant presence in a new region.
Since the acquisition date, MOG has contributed $1.9 million to
group revenues and added $4.4 million to the group loss. This
contribution to group loss includes depreciation and impairments.
The EBITDA of MOG since acquisition is actually a much smaller loss
of $0.5 million.
Impairment testing
Given recent declines in oil and gas prices, Rockhopper has
tested the carrying value of our assets for impairment. Carrying
values are compared to the fair value of the assets based on
discounted cash flow models.
With no cash flow generation from Sea Lion anticipated until
2019, the impact of the current low oil price environment on the
fair value calculations is limited as Rockhopper has maintained its
longer-term oil price assumption on the basis of the current oil
futures market. As such, no impairment arises on the Group's Sea
Lion project.
A modest impairment of $1.5 million has been recognised on the
Mediterranean portfolio acquired through MOG. The impairment
relates to the expected reduction in price realised from the sale
of gas as well as a small increase in expected capital costs and
revised production outlook for Guendalina.
Cash and cash movement
Rockhopper's cash resources at the year end are $200 million (31
March 2014: $247 million). The Group has no borrowings.
$m
------------------------------------- -----
Opening cash balance (1 April
2014) 247
------------------------------------- -----
MOG acquisition consideration
and costs (26)
------------------------------------- -----
NFB exploration and pre-development
spend (10)
------------------------------------- -----
Admin and miscellaneous expenses (11)
------------------------------------- -----
Closing cash balance (31 December
2014) 200
------------------------------------- -----
Outlook
With $200 million of cash on our balance sheet, Rockhopper is
well positioned to fund its share of expenditure on the North
Falkland exploration campaign and Sea Lion pre-sanction costs,
which are estimated at $25 million and $28 million respectively
during 2015. Capital expenditure on the Mediterranean portfolio is
estimated at approximately $10 million primarily related to the
side-track well on Guendalina and the completion of the Civita
onshore gas development, both of which are expected to be completed
during Q4 2015 and have a positive impact on the group's revenue
and cash flow generation going forward.
As a result of the tax settlement, Rockhopper now has much
greater certainty in respect of both the quantum and timing of the
tax liability. The security arrangements and undertakings agreed
provide credit protection to FIG while preserving Rockhopper's
strong balance sheet and ability to obtain senior debt for the Sea
Lion development on a cost effective basis.
As we progress towards the award of the FEED contract during Q2
2015 and now that we have the certainty of the tax settlement in
place, our ability to progress discussions with external debt
providers (as an alternative to the standby loan from Premier) for
our uncarried portion of Sea Lion development costs is
significantly enhanced.
Stewart MacDonald
Chief Financial Officer
8 April 2015
Group income statement
for the nine months ended 31 December 2014
Nine months
ended Year
ended
31 December 31 March
2014 2014
$'000 $'000
-------------------------------------------- ------------ ---------
Revenue 1,910 -
Other cost of sales (554) -
Depreciation and impairment of oil and (3,416) -
gas assets
Total cost of sales (3,970) -
-------------------------------------------- ------------ ---------
Gross profit (2,060) -
Exploration and evaluation expenses (1,782) (1,461)
Administrative expenses (10,033) (12,341)
Charge for share based payments (672) (797)
Foreign exchange movement 6,516 (2,631)
--------------------------------------------- ------------ ---------
Results from operating activities (8,031) (17,230)
Finance income 657 1,499
Finance expense (209) -
-------------------------------------------- ------------ ---------
Loss before tax (7,583) (15,731)
Tax (5) (62,542)
--------------------------------------------- ------------ ---------
Loss for the year attributable to the
equity shareholders of the parent company (7,588) (78,273)
--------------------------------------------- ------------ ---------
Loss per share: cents (basic & diluted) (2.63) (27.54)
--------------------------------------------- ------------ ---------
All operating income and operating gains and losses relate to
continuing activities.
Group statement of comprehensive income
for the nine months ended 31 December 2014
Nine months
ended Year
ended
31 December 31 March
2014 2014
$'000 $'000
------------------------------------------- ------------ ---------
Loss for the period
Items that may be reclassified to profit
and loss (7,588) (78,273)
Exchange differences on translation (4,217) -
of foreign operations
------------------------------------------- ------------ ---------
Total comprehensive loss for the period (11,805) (78,273)
------------------------------------------- ------------ ---------
Group balance sheet
as at 31 December 2014
31 December 31 March
2014 2014
$'000 $'000
----------------------------------------- ------------ ----------
Non-current assets
Exploration and evaluation assets 204,164 153,656
Property, plant and equipment 12,146 353
Goodwill 10,940 -
Other receivables 566 -
Current assets
Inventories 2,188 -
Other receivables 4,681 1,932
Restricted cash 1,384 309
Term deposits 100,000 185,000
Cash and cash equivalents 99,726 62,482
------------------------------------------ ------------ ----------
Total assets 435,795 403,732
------------------------------------------ ------------ ----------
Current liabilities
Other payables 19,358 3,084
Tax payable 100,439 107,056
Non-current liabilities
Provisions 21,816 -
Deferred tax liability 39,144 39,137
------------------------------------------ ------------ ----------
Total liabilities 180,757 149,277
------------------------------------------ ------------ ----------
Equity
Share capital 4,854 4,711
Share premium 662 170
Share based remuneration 4,960 4,597
Own shares held in trust (628) (354)
Merger reserve 11,112 (243)
Foreign currency translation reserve (4,217) 4,123
Special reserve 536,976 541,964
Retained losses (298,681) (300,513)
------------------------------------------ ------------ ----------
Attributable to the equity shareholders
of the company 255,038 254,455
------------------------------------------ ------------ ----------
Total liabilities and equity 435,795 403,732
------------------------------------------ ------------ ----------
These financial statements were approved by the directors and
authorised for issue on 8 April 2015 and are signed on their behalf
by:
Stewart MacDonald
Chief Financial Officer
Group statement of changes in equity
for the nine months ended 31 December 2014
Foreign
currency
Share Share Share Shares Merger translation Special Retained Total
based held
capital premium remuneration in reserve reserve reserve losses equity
trust
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance
at 31 March
2013 4,710 578,754 3,999 (212) (243) 4,123 - (259,234) 331,897
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Total
comprehensive
loss for
the year - - - - - - - (78,273) (78,273)
Share based
payments - - 797 - - - - - 797
Share issues
in relation
to SIP 1 175 - (142) - - - - 34
Cancellation
of share
premium
account - (578,759) - - - - 541,964 36,795 -
Exercise
of SARs - - (199) - - - - 199 -
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance
at 31 March
2014 4,711 170 4,597 (354) (243) 4,123 541,964 (300,513) 254,455
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Total
comprehensive
loss for
the period - - - - - (4,217) - (7,588) (11,805)
Acquisition
of subsidiary 127 - - - 11,355 - - - 11,482
Share based
payments - - 672 - - - - - 672
Share issues
in relation
to SIP 1 77 - (49) - - - - 29
Exercise
of share
options 15 415 (309) - - - - 309 430
Purchase
of own shares - - - (225) - - - - (225)
Other
transfers - - - - - (4,123) (4,988) 9,111 -
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Balance
at 31
December
2014 4,854 662 4,960 (628) 11,112 (4,217) 536,976 (298,681) 255,038
--------------- -------- ---------- ------------- ------- -------- ------------ -------- ---------- ---------
Group cash flow statement
for the nine months ended 31 December 2014
Nine months
ended Year
ended
31 December 31 March
2014 2014
$'000 $'000
--------------------------------------------- ------------ ----------
Cash flows from operating activities
Net loss before tax (7,583) (15,731)
Adjustments to reconcile net profits/losses
to cash utilised:
Depreciation 2,186 282
Impairment on property, plant and 1,465 -
equipment
Share based payment charge 672 797
Exploration impairment expenses 258 2
Loss on disposal of tangible fixed
assets 3 13
Finance expense 208 -
Interest (470) (1,003)
Foreign exchange (6,349) 2,672
---------------------------------------------- ------------ ----------
Operating cash flows before movements
in working capital (9,610) (12,968)
Changes in:
Inventories 495 -
Other receivables 1,682 (325)
Payables (3,812) 459
Movement on other provisions 8 -
--------------------------------------------- ------------ ----------
Cash utilised by operating activities (11,237) (12,834)
---------------------------------------------- ------------ ----------
Cash flows from investing activities
Capitalised expenditure on exploration
and evaluation assets (10,150) (2,485)
Purchase of equipment (1,111) (65)
Acquisition of subsidiary, net of (24,037) -
cash acquired
Proceeds on disposal of exploration
and evaluation assets - 665
Interest 673 955
Taxation - (40,382)
Investing cash flows before movements
in capital balances (34,625) (41,312)
Changes in:
Restricted cash (953) -
Term deposits 85,000 (104,623)
Cash flow by investing activities 49,422 (145,935)
---------------------------------------------- ------------ ----------
Cash flows from financing activities
Share options exercised 430 -
Share incentive plan 29 34
Purchase of own shares (225) -
Finance expense (20) -
--------------------------------------------- ------------ ----------
Cash flow from financing activities 214 34
---------------------------------------------- ------------ ----------
Currency translation differences relating
to cash and cash equivalents (1,155) 3,853
Net cash flow 38,399 (158,735)
Cash and cash equivalents brought forward 62,482 217,364
---------------------------------------------- ------------ ----------
Cash and cash equivalents carried forward 99,726 62,482
---------------------------------------------- ------------ ----------
The financial information set out above does not constitute the
group's statutory accounts for the nine months ended 31 December
2014 or the year ended 31 March 2014, but is derived from those
accounts. Statutory accounts for 31 December 2014 will be available
towards the end of April 2015. The auditors have reported on those
accounts: their report was unqualified and did not draw attention
to any matters by way of emphasis.
Note regarding Rockhopper oil and gas disclosure
This announcement has been approved by Rockhopper's geological
staff who include Fiona MacAulay (Chief Operating Officer), who is
a Fellow of the Geological Society of London and a Member of the
Petroleum Exploration Society of Great Britain and American
Association of Petroleum Geologists with over 25 years of
experience in petroleum exploration and management, and who is the
qualified person as defined in the Guidance Note for Mining, Oil
and Gas Companies issued by the London Stock Exchange in respect of
AIM companies. In compiling its resource estimates, Rockhopper has
used the definitions and guidelines as set forth in the 2007
Petroleum Resources Management System approved by the Society of
Petroleum Engineers.
Glossary
All hydrocarbon volumes quoted are Rockhopper Management initial
estimates and in the case of oil volumes utilise a 30% RF on STOIIP
volumes. Gas volumes converted at 5.6 bcf = 1 mmboe
bcf : billions of standard cubic feet
GIIP : Gas Initially in Place
mmbbls : millions of barrels of oil
Pmean : average (mean) probability of occurrence
Prospective resource : the resource estimated to exist in
prospect areas considered viable to drill, but which have not yet
been proven by drilling
RF : Recovery Factor
STOIIP : Stock Tank Oil Initially In Place
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UWUKRVNASRAR
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