Rockhopper says report reclassified Sea Lion oil commercially viable

(Alliance News) - Rockhopper Exploration PLC on Thursday said that an updated technical report on the Sea Lion offshore oil field in the South Atlantic Ocean has reclassified some of the area's volumes from contingent resources to reserves.

The reclassification, which marks the difference between discovered but not commercially viable oil and gas reserves and volumes expected to be produced, has been possible following the company's final investment decision made last December, Rockhopper said.

Rockhopper shares were up 6.6% to 82.68 pence each on Thursday at midday in London.

Rockhopper holds a 35% working interest in the Sea Lion field, which it discovered in 2010 some 220 kilometres north of the Falkland Islands. It appears to be holding around 313.8 million barrels of proved and probable oil, plus an additional 94.3 million possible, according to the updated technical report produced by Netherland, Sewell & Associates Inc.

Given the Salisbury, England-based oil and gas miner's working interest in the field, Rockhopper estimated an undiscounted future net revenue of USD3.10 billion when accounting for proven and probable reserves alone, or USD4.50 billion if all possible reserves were to be commercialised. It expects first oil to be produced in early 2028.

The estimate has already deducted shares of state royalties, capital and abandonment costs, operating expenses, and corporate income taxes imposed by the Falkland Islands. It is based on a Brent price adjusted for quality, transportation fees, and differentials, of USD62.99 per barrel this year, USD64.79 in 2027, and USD73.63 from 2028 onwards.

The company added that it had a cash balance of about USD179 million at December 31 following the completion of the placing, which it anticipates will be enough to cover Rockhopper's proportion of the capital expenditure required for the first phase of the field's development plan.

The Falkland Islands government approved the field development and production programme for phases 1 and 2 of the northern development area within the Sea Lion field in December. Rockhopper expects phase 1 to generate enough cash flow to support the development of phase 2.

Rockhopper also added that the floating production, storage, and offloading operator Bluewater has served notice on the Aoka Mizu vessel, which is expected to leave its current location in mid-2026 ahead of a period of refurbishment work prior to deployment at Sea Lion.

Chief Executive Officer Sam Moody said: "We are delighted to book in excess of 100 million barrels of [proven and probable] reserves following the sanction of Sea Lion Phase 1...Navitas, our operator, has recently reported good progress on the project and has reiterated its target for first oil in early 2028".

By Martin Miraglia, Alliance News reporter

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