Last checked at 19 May 2020 07:00
19 May 2020
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Cost Reductions and PDMR Dealing
Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and production company with key interests in the North Falkland Basin, announces several measures to materially reduce its cost base following a Board review of expenditure.
The Board has initiated a considered plan in response to recent external events affecting the sector, to further reduce ongoing G&A costs and re-balance executive director remuneration from cash to equity while ensuring retention of key staff, capabilities and knowledge within the business.
Further to the Company's full-year results announcement on 8 April 2020, cost reductions have been initiated which are aimed at reducing corporate overheads by approximately 30 per cent compared with 2019 levels. These measures include, but are not limited to:
· Permanent reduction to executive director base remuneration
· Employee headcount reduced including certain roles transitioning to part-time
· Reductions to adviser and contractor costs
· Decreased head office costs through relocation outside of London
Certain of these cost reductions will result in a one-off cost to the Company during 2020.
Executive director remuneration
As part of the review of remuneration, the Board sought independent remuneration advice and consulted with several of the Company's largest institutional shareholders. As a result of this review, the following initiatives are being implemented:
Cash compensation
Base salaries for executive directors have been permanently reduced by 20 per cent. All benefits related to base salary, in addition to the existing cap on any annual bonus awards, will be linked to the newly reduced base salary. It is anticipated that any base salary increases over the next five years will be restricted to the rate of inflation only, other than in exceptional circumstances.
Existing long-term incentive plan ("LTIP")
The current LTIP scheme, which has been in operation for eight years, will be discontinued for the next five years. All historically issued LTIPs will remain in place subject to the same relative performance criteria as disclosed in the Company's annual reports and accounts.
Share incentive plan
The monthly Share Incentive Plan will be discontinued.
New equity incentive and retention package
As part of the review of remuneration, taking into account the material forgoing of future LTIP share awards, and the need to retain the requisite skill sets to support progression of the Company's asset base, a one-off equity option package has been implemented (the "Option Scheme"). Taken alongside the base salary reductions, the Option Scheme represents a rebalancing of executive director remuneration more heavily towards equity in order to achieve greater alignment with shareholders, in particular in the event of the successful progression of Sea Lion and associated future share price upside.
The Option Scheme is one off and designed to cover the next five years, during which time it is anticipated that no further equity incentivisation will be offered other than in exceptional circumstances. Further details on the Option Scheme are in the appendix below.
In addition, each of the Company's non-executive directors have committed that 20 per cent of their fees, after tax and national insurance, will be used to purchase shares in the Company.
Keith Lough, Chairman, commented:
"It is very important that Rockhopper maintains its balance sheet strength against the current volatile and challenging macro backdrop. The measures we have implemented aim both to lower our costs but also retain and incentivise our staff at what is a very important time for the Company as we look to finalise the farm out of Sea Lion to Navitas, further progress the financing of the project and hope to conclude the Ombrina Mare arbitration successfully. The savings arising should result in a circa 30 per cent reduction to 2019 G&A levels, which in themselves reflect a circa 50 per cent reduction compared to 2014/15 levels. These are material and permanent reductions and demonstrate our commitment to a strong balance sheet and leaner organisation."
Enquiries:
Rockhopper Exploration plc
Sam Moody - Chief Executive Officer
Stewart MacDonald - Chief Financial Officer
Tel. +44 (0) 20 7390 0234 (via Vigo Communications)
Canaccord Genuity Limited (NOMAD and Joint Broker)
Henry Fitzgerald-O'Connor/James Asensio
Tel. +44 (0) 20 7523 8000
Peel Hunt LLP (Joint Broker)
Richard Crichton
Tel. +44 (0) 20 7418 8900
Vigo Communications
Patrick d'Ancona/Ben Simons
Tel. +44 (0) 20 7390 0234
Appendix
Further details on the Option Scheme
In lieu of their contractual notice periods for the 20 per cent base remuneration reduction, executive directors will receive options to subscribe for an aggregate 3.1 million new ordinary shares in the capital of the Company ("Ordinary Shares"), exercisable at a price of 1 pence per new Ordinary Share (the "1p Options"). No payment will be made for any variable elements of pay. These options will vest after one year's further continuous employment.
In place of the LTIP scheme, executive directors will receive options to subscribe for an aggregate 18.0 million Ordinary Shares, exercisable at a price of 6.25 pence per new Ordinary Share (the "Market Price Options"), being the same quantum as the aggregate LTIP awarded over the past five years. The Market Price Options will vest in equal tranches after three, four and five years' further continuous employment. Previous LTIP awards were for nil cost options but subject to relative performance criteria.
Summary of the 1p Options and Market Price Options for executive directors
Director | Number of options | Exercise price (pence) | Vesting date |
Sam Moody, CEO | 1,691,048 | 1.0 | 19 May 2021 |
3,166,666 | 6.25 | 19 May 2023 | |
3,166,667 | 6.25 | 19 May 2024 | |
3,166,667 | 6.25 | 19 May 2025 | |
Stewart MacDonald, CFO | 1,388,762 | 1.0 | 19 May 2021 |
2,833,333 | 6.25 | 19 May 2023 | |
2,833,333 | 6.25 | 19 May 2024 | |
2,833,334 | 6.25 | 19 May 2025 |
In addition, 5.3 million 1p Options and 5.9 million Market Price Options will, in aggregate, be issued to Company employees (excluding the executive directors) on similar terms to those of the executive directors.
Set out below is the information required by Article 19(3) of the EU Market Abuse Regulation No 596/2014 in relation to the award of options over Shares to certain Directors:
1 | Details of the person discharging managerial responsibilities/person closely associated | |
a) | Name | Samuel Moody |
2 | Reason for the notification | |
a) | Position/status | Chief Executive Officer |
b) | Initial notification/Amendment | Initial notification |
3 | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |
a) | Name | Rockhopper Exploration plc |
b) | LEI | 213800IPXW6XRLVCL581 |
4 | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted | |
a) | Description of the financial instrument, type of instrument
Identification code | Ordinary Shares of 1 pence each
GB00BOFVQX23 |
b) | Nature of the transaction | Award of options over Ordinary Shares of 1 pence each at an exercise price of 1 pence (1 Pence Options)
Award of options over Ordinary Shares of 1 pence each at an exercise price of 6.25 pence (Market Price Options) |
c) | Price(s) and volume(s)
| Date of transaction: 18 May 2020 Price: Nil Volume: 1,691,048 1 Pence Options Volume: 9,500,000 Market Price Options |
d) | Aggregated information
| Date of transaction: 18 May 2020 Aggregated volume: 11,191,048 Price: Nil |
e) | Date of the transaction | 18 May 2020 |
f) | Place of the transaction | Outside a trading venue |
1 | Details of the person discharging managerial responsibilities/person closely associated | |
a) | Name | Stewart MacDonald |
2 | Reason for the notification | |
a) | Position/status | Chief Financial Officer |
b) | Initial notification/Amendment | Initial notification |
3 | Details of the issuer, emission allowance market participant, auction platform, auctioneer or auction monitor | |
a) | Name | Rockhopper Exploration plc |
b) | LEI | 213800IPXW6XRLVCL581 |
4 | Details of the transaction(s): section to be repeated for (i) each type of instrument; (ii) each type of transaction; (iii) each date; and (iv) each place where transactions have been conducted | |
a) | Description of the financial instrument, type of instrument
Identification code | Ordinary Shares of 1 pence each
GB00BOFVQX23 |
b) | Nature of the transaction | Award of options over Ordinary Shares of 1 pence each at an exercise price of 1 pence (1 Pence Options)
Award of options over Ordinary Shares of 1 pence each at an exercise price of 6.25 pence (Market Price Options) |
c) | Price(s) and volume(s)
| Date of transaction: 18 May 2020 Price: Nil Volume: 1,388,762 1 Pence Options Volume: 8,500,000 Market Price Options
|
d) | Aggregated information
| Date of transaction: 31 July 2019 Aggregated volume: 9,888,762 Price: Nil |
e) | Date of the transaction | 18 May 2020 |
f) | Place of the transaction | Outside a trading venue |