Rockhopper Regulatory News (RKH)

16 December 2014

Rockhopper Exploration plc

("Rockhopper" or the "Company")

Interim Results for the Six Months Ended 30 September 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 interim results for the six months ended 30 September 2014.

Operational and Financial Highlights

· Phased, lower cost development solution adopted for the Sea Lion field

· Revised commercial arrangements agreed with Premier Oil (subject to documentation and board approvals)

· Rig secured for four well exploration drilling campaign in North Falkland Basin - targeting spud on first well in early March 2015

· Completion of recommended offer for Mediterranean Oil & Gas plc

· Progressing recently acquired Greater Mediterranean portfolio

o Plans advancing to increase production at Guendalina gas field

o Civita onshore gas development project sanctioned

o Participation in Montenegro and Croatian licence rounds

· Cash resources at 30 September 2014 of $205 million

As previously announced, the Company's accounting reference date is being changed from 31 March to 31 December and as a result the next audited financial statements to be published will be for the 9 month period to 31 December 2014.

Pierre Jungels, Chairman of Rockhopper, commented:

"Adoption of a phased lower cost development solution for Sea Lion, together with revised commercial arrangements with Premier, significantly de-risks the development and allows us to move towards project sanction without the need to bring in a third party. While the expected date for project sanction has been delayed to mid 2016, we continue to target first oil during 2019.

With the multi-operator drilling programme in the North Falkland Basin expected to start in the first quarter next year, the four firm wells in which Rockhopper has an equity interest will target a total of approximately 160 mmbbls of prospective resources (Pmean) net to Rockhopper with further upside in the Isobel/Elaine region.

Since completion of the MOG takeover in August, encouraging progress has been made in our recently acquired Mediterranean portfolio - we will continue to grow that business in a low-cost, value accretive manner." 

For further information, please contact:

Rockhopper Exploration plc

Tel: (via Vigo Communications) - 020 7016 9571

Sam Moody - Chief Executive

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'S AND CHIEF EXECUTIVE OFFICER'S REVIEW

When we last wrote to you in June, we remarked that the year ahead had the potential to be transformational for your company. Since that time, and despite a material fall in the global price for oil, the company continues to make significant progress on the delivery of its strategy.

Phased, lower cost development concept for Sea Lion

In response to the fall in oil prices, Rockhopper and Premier have agreed to adopt a phased, lower cost development solution for the Sea Lion field with the initial phase targeting the commercialisation of approximately 160 mmbbls in the North East segment of the field, located in licence PL032.

The concept is likely to consist of 10-15 wells in total with production via a leased floating, production, storage and offloading vessel ("FPSO") and will target a gross plateau of approximately 50,000 to 60,000 barrels of oil per day. Cost to first oil for the initial phase is anticipated at less than $2 billion, significantly less than previous estimates for the TLP concept.

Importantly, Premier has confirmed that a project of this size can be funded from existing facilities and cash flows and that a farm-out is no longer a pre-requisite to sanction the project. As a result of the change in concept, sanction for Sea Lion has been delayed to mid 2016 although Rockhopper continues to target first oil in 2019.

Subsequent phases of the development, which will require separate project sanction, will then target the remaining resources in PL032, the already discovered resources in PL004 and any potential additional resources discovered during the 2015 exploration campaign.

In light of the move to a phased development, Rockhopper and Premier have agreed to amend their commercial arrangements. Details are outlined below, but most importantly, Rockhopper remains fully funded through a combination of Development Carry and amended loan from Premier.

Proposed revised commercial terms (subject to documentation and respective board approvals)

• Rockhopper to access the full $48 million Exploration Carry for the 2015 drilling campaign

• Rockhopper to contribute 40% of pre sanction costs, currently estimated at $100 million gross

• 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 structure of up to $750 million from Premier

Rockhopper's anticipated net cash outflow for Falklands activities during 2015 remains in line with previous guidance at approximately $50-70 million.

As a consequence of the move to a phased development, Rockhopper and Premier are seeking an extension to the licence term from FIG.

North Falkland exploration campaign imminent

On the exploration front, we are very excited that a rig has been contracted to drill four high impact exploration wells in the North Falkland Basin during 2015. The rig is currently due to arrive in the Falklands as early as March 2015 with the first well in the programme targeting the Zebedee prospect.

Recently acquired Mediterranean portfolio

Outside of the Falklands, in August 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 mmboe at an acquisition price of less than $1 per barrel.

Since the acquisition of MOG, Rockhopper has made good progress in advancing the portfolio including progressing options to increase production at the offshore Guendalina gas field, sanctioning the Civita onshore gas development and the application for licences in Montenegro and Croatia.

In November the Italian government passed new legislation through the Parliament which should accelerate planning processes and allow development projects in the country to progress.

Outlook

Adoption of a phased lower cost development solution for Sea Lion, together with revised commercial arrangements with Premier, significantly de-risks the development and allows us to move towards project sanction without the need to bring in a third party. While the expected date for project sanction has been delayed to mid 2016, we continue to target first oil during 2019.

With the multi-operator drilling programme in the North Falkland Basin expected to start in the first quarter next year, the four firm wells in which Rockhopper has an equity interest will target a total of approximately 160 mmbbls of prospective resources (Pmean) net to Rockhopper with further upside in the Isobel/Elaine region.

Since completion of the MOG takeover in August, encouraging progress has been made in our recently acquired Mediterranean portfolio - we will continue to grow that business in a low-cost, value accretive manner.

DR PIERRE JUNGELS CBE SAMUEL MOODY

CHAIRMAN CHIEF EXECUTIVE OFFICER

15 DECEMBER 2014

CHIEF OPERATING OFFICER'S REVIEW

Overview

In addition to the exciting high impact four well exploration programme in the North Falkland Basin which has the potential to double our net resources, Rockhopper will also have a busy year in its Greater Mediterranean region as we build our presence in our second core area in line with our strategy.

Italy

Onshore Italy in the 100% operated Aglavizza production concession we now have the final regional approvals enabling commencement of procurement and construction of the production facilities and pipeline from the Civita-1 wellhead through to the main gas pipeline entry point. First production from the Civita field is expected in H2 2015.

Technical work for this licence area is now focused on identification of additional drilling locations within the development concession allowing further low cost, high return activity.

Elsewhere in Italy we are working closely with ENI to sidetrack one of the two gas production wells on the Guendalina Field located offshore in the Northern Adriatic that has been shut in following damage to the wellbore experienced in 2012. The sidetrack is anticipated to restore production to close to the pre-damage levels (possibly to more than double the production rates today) and is currently scheduled to commence in Q4 2015.

The Ombrina Mare project offshore Italy in the Abruzzo region is still anticipating determination of the AIA (Integrated Environmental Assessment) submission in January 2015. In the case of a successful outcome we will be commencing the final award process of the production concession with the Ministry of Economic Development in Q1 2015.

Malta

In Malta we have informed the Ministry that we will be withdrawing from the Area 4 licence at the end of the first exploration phase on the 18th January 2015 following the integration of the results of the Hagar Qim well drilled in Q2/Q3 2014.

Elsewhere, in Area 3 the processing of the 2D broadband survey is nearing completion and its interpretation will enable a decision on whether an extension to the Exploration Study Agreement with a 3D survey commitment will be made.

Croatia and Montenegro

Rockhopper has applied for acreage in the first offshore licencing rounds in Croatia and Montenegro. The outcomes of such applications are expected later this month in the case of Croatia and early 2015 for Montenegro.

Asset Integration

We are delighted with the progress achieved in our review and integration of the assets since the completion of the acquisition of MOG in August and 2015 will be an important year to consolidate activities in the region.

FIONA MACAULAY

CHIEF OPERATING OFFICER

15 DECEMBER 2014

CHIEF FINANCIAL OFFICER'S REVIEW

Overview

From an accounting perspective, the main event during the period was the acquisition of Mediterranean Oil & Gas Plc ("the Acquisition"), an AIM listed exploration and production company with operations in the Greater Mediterranean region. This has had a material impact on the balance sheet of the group, particularly with the addition of production assets, goodwill arising on acquisition as well as a long term decommissioning provision in relation to the production assets.

Income Statement

The loss before tax for the period remained level at $3 million.

The revenue of $1 million reflects the gas sales since acquisition from the former MOG group's production assets. After cost of sales, the gross profit largely covers the incremental administrative expenses of the now enlarged group.

Exploration and evaluation expenses remained broadly level with the prior period.

Administrative expenses have increased by $3 million to $6 million. This primarily relates to non-recurring advisory and legal fees in relation to the Acquisition in the period as well as the aforementioned incremental administrative costs of the acquired Mediterranean operations based in Rome.

The share based payment charge has reduced slightly in the period, but additional share based incentives were awarded after the period end under the company's Long Term Incentive Plan and so the charge is expected to increase in future periods.

Foreign exchange translation gave rise to a $3 million gain in the period and this is almost entirely due to the tax liability, arising from the farm out in 2012, being a sterling denominated balance. Whilst this liability is partially offset by sterling denominated cash balances, following the Acquisition in the period the majority of the group's balances are dollar denominated.

Finance income has decreased significantly during the period. This is due to a decline in deposit rates as well as the average cash balances held during the current period being reduced. Returns on deposits are expected to be similarly flat during the remainder of the period to 31 December 2014.

There has been no tax charge during the period.

Statement of Comprehensive Income

The functional currency of the newly acquired MOG group is euros. As such the assets and liabilities are translated at the exchange rate at the end of the reporting period and income and expenses are translated at exchange rates at the dates of the relevant transactions. The resulting exchange differences, $3 million loss during the period, are recognised in the Statement of Comprehensive Income and taken to the Foreign Currency Translation Reserve.

Balance Sheet

The main movements during the period relate to the Acquisition and the provisional fair value of the assets and liabilities assumed as disclosed in note 6 Acquisition of subsidiaries.

As well as the acquired exploration and evaluation assets, the group capitalised $8 million of expenditure relating to the Falkland Island licences. Of this, $7 million related to Rockhopper's share, net of carry, of long lead items for the 2015 exploration campaign. Rockhopper's share of costs in relation to the Sea Lion development during the period was covered by the development carry from Premier, however $1 million was spent on independent validation studies and capitalised staff costs.

The increase in property, plant and equipment almost entirely relates to the fair value of the acquired production assets.

Inventories relate to wellheads and casing acquired as part of the Acquisition, with the majority of it being earmarked for a potential exploration well on the Monte Grosso licence.

Other receivables have increased by $3 million. Again the increase is in relation to the newly acquired Mediterranean business. As operator in the Mediterranean region of a number of production assets the increase in receivables is expected to be consistent going forward.

Other payables, for the same reason as other receivables, have increased by $4 million.

Current tax payable remains at £64 million although in dollar terms this has reduced to $105 million from $107 million at the year end. This movement is entirely due to a foreign exchange gain on the tax liability which is a sterling denominated balance. The company continues to engage in active and constructive dialogue with the Falkland Islands Government on the CGT position. Documentation of the agreement in principle in relation to this has progressed and is expected to be agreed in the near future.

Resources available are $205 million consisting of term deposits of $130 million and cash and cash equivalents of $75 million. This is a reduction of $42 million from the position at 31 March 2014 with the majority of this being the $24 million of net cash outflow on acquisition of MOG, $8 million in relation to intangible additions described above, $5 million of operating cash outflows including the $2 million of fees in relation to the Acquisition and $5 million in working capital adjustments.

The Acquisition was partly funded through a new issue of Rockhopper ordinary shares. The premium on these shares of $11 million, based on the market value at the closing market price on the last trading day before the deal became effective, has been credited to the Merger Reserve. Other movements relate to share options exercised during the period as well as shares awarded as part of the staff Share Incentive Plan.

As previously announced, the Company's accounting reference date is being changed from 31 March to 31 December and as a result the next audited financial statements to be published will be for the 9 month period to 31 December 2014.

OUTLOOK

With $205 million of cash on our balance sheet, we have the resources to fund the near term expenditure required for our share, after carries, of the upcoming 2015 Falkland exploration campaign and Sea Lion pre-sanction costs, which in aggregate are estimated at $50-70 million. Whilst Rockhopper is fully funded post project sanction through the development carry and the replacement loan from Premier, work continues investigating the merits of reserve based lending to potentially improve on the terms available through these existing agreements. In addition, we have the resources and technical ability to maximise the value in the portfolio of assets acquired as part of the MOG acquisition.

STEWART MACDONALD

CHIEF FINANCIAL OFFICER

15 DECEMBER 2014

Group income statement

for the six months ended 30 september 2014

All operating income and operating gains and losses relate to continuing activities.

Group statement of comprehensive income

for the six months ended 30 September 2014

Group balance sheet

as at 30 September 2014

These financial statements were approved by the directors and authorised for issue on 15 December 2014 and are signed on their behalf by:

StEWART MAcDONALD

CHIEF FINANCIAL OFFICER

Group statement of changes in equity

for the six months ended 30 september 2014

Group cash flow statement

for the six months ended 30 September 2014

Notes to the condensed group financial statements

for the six months ended 30 september 2014

1 Accounting policies

1.1 Group and its operations

Rockhopper Exploration plc ('the company'), a public limited company quoted on AIM, incorporated and domiciled in the United Kingdom ('UK'), together with its subsidiaries (collectively, 'the group') holds certain exploration licences granted in 2004 and 2005 for the exploration and exploitation of oil and gas in the Falkland Islands. During the period it diversified its portfolio through the acquisition of an exploration and production company with operations principally in Italy. The registered office of the company is Hilltop Park, Devizes Road, Salisbury, SP3 4UF.

1.2 Statement of compliance

These condensed consolidated interim financial statements of the group, as at and for the six months ended 30 September 2014, include the results of the company and all subsidiaries over which the company exercises control.

The condensed interim consolidated financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting as adopted by the European Union ("EU"). They do not include all information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the company and all its subsidiaries as at the year ended 31 March 2014.

The comparative figures for the financial year ended 31 March 2014 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditor and delivered to the registrar of companies. The report of the auditor was: (i) unqualified; (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying his report; and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The condensed interim consolidated financial statements were approved by the Board on 15 December 2014.

1.3 Basis of preparation

The results upon which these financial statements have been based were prepared using the accounting policies set out below. These policies have been consistently applied unless otherwise stated.

These consolidated financial statements have been prepared under the historical cost convention except, as set out in the accounting policies below, where certain items are included at fair value.

Items included in the results of each of the group's entities are measured in the currency of the primary economic environment in which that entity operates (the "functional currency"). The functional currency of the group acquired during the period is euros. All other members of the group have a functional currency of US$.

All values are rounded to the nearest thousand dollars ($'000) or thousand pounds (£'000), except when otherwise indicated.

1.4 Going concern

These condensed group interim financial statements have been prepared on a going concern basis as the directors are confident that the group has sufficient funds in order to continue in operation for the foreseeable future.

1.5 period end exchange rates

The period end rates of exchange actually used were:

2 Revenue and segmental information

Six months ended 30 September 2014

Six months ended 30 September 2013

3 Taxation

4 Basic and diluted loss per share

The calculation of the basic loss per share is based upon the loss for the period and the weighted average shares in issue. At the period end the group had the following unexercised options and share appreciation rights in issue.

However as the group is reporting a loss for all periods then in accordance with IAS33 the share options are not considered dilutive because the exercise of the share options would have the effect of reducing the loss per share.

5 intangible exploration and evaluation assets

Additions during the period predominantly relate to the fair value of acquired assets as disclosed in note 6.Other movements are principally in relation to the group's interests in the Falkland Islands, with $7 million being in relation to long lead items and infrastructure for the 2015 exploration campaign and $1 million relating to work undertaken on the Sea Lion development.

6 acquisition of subsidiaries

In August 2014 Rockhopper completed the acquisition of the entire issued share capital of Mediterranean Oil & Gas Plc ("MOG").

MOG was an AIM quoted exploration and production company with operations in Italy, Malta and France. The acquisition of MOG provides Rockhopper with a low cost entry into the Greater Mediterranean region as well as providing established production and revenue. MOG produces natural gas onshore and offshore in Italy and has a balanced portfolio of exploration, appraisal and development opportunities with reserves and contingent resources of 32 mmboe.

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 on a provisional basis and is as follows:

All balances with the exception of cash have been valued on a provisional basis pending completion of independent verification.

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.

In addition there was a contingent consideration of up to a maximum amount of 3.550 pence in cash for each MOG Share. The availability of the contingent consideration, and the amount of cash which would ultimately be payable was to be determined by the success of an exploration well targeting the Hagar Qim prospect in Offshore Malta Area 4, Block 7. As the Hagar Qim well was proved a dry hole during the measurement period the fair value of this contingent consideration was nil.

Goodwill arises due to the difference between the fair value of the net assets and the consideration transferred and relates to the portfolio of intangible exploration and appraisal assets, which together have the optionality and potential to provide value far in excess of this fair value as well as the strategic premium associated with a significant presence in a new region. The functional currency of MOG is euros. As such the goodwill is also expressed in the same functional currency and subject to retranslation at each reporting period end. The reduction in the period from acquisition to the period end of $655,000 is entirely due to this foreign currency difference. None of the goodwill recognised is expected to be deductible for tax purposes.

Acquisition costs of $1,899,000 arose as a result of the transaction. These have been recognised as part of administrative expenses in the statement of comprehensive income.

Since the acquisition date, MOG has contributed $821,000 to group revenues and $5,000 to group profit. If the acquisition had occurred on 1 April 2014, group revenue would have been $2,678,000 and group loss for the period would have been $5,093,000.

7 Tax payable

Current tax payable remains at £64 million although at the period end exchange rate in dollar terms this equates to $105 million, a reduction from $107 million.

8 reserves

Set out below is a description of each of the reserves of the group:

9 Post balance sheet events

SEA LION DEVELOPMENT UPDATE

On the 13 November Rockhopper and Premier Oil announced that they had agreed to adopt a phased, lower cost development solution for the Sea Lion field. In light of the move to a phased development Rockhopper and Premier have agreed amendments to their commercial arrangements (subject to documentation and internal approvals). Highlights of the phased development concept and amended commercial terms are disclosed in the Chairman and CEO review.

INDEPENDENT REVIEW REPORT TO ROCKHOPPER EXPLORATION PLC

Introduction

We have been engaged by the company to review the condensed set of financial statements in the Interim Report for the six months ended 30 September 2014 which comprises the group income statement, the group statement of comprehensive income, the group balance sheet, the group statement of changes in equity, the group cash flow statement and the related explanatory notes. We have read the other information contained in the Interim Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with the terms of our engagement. Our review has been undertaken so that we might state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The Interim Report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the AIM Rules.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this Interim Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the interim report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Interim Report for the six months ended 30 September 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the AIM Rules.

LYNTON RICHMOND

for and on behalf of KPMG LLPChartered Accountants8 Salisbury SquareLondonEC4Y 8BB15 December 2014