Last checked at 20 Apr 2012 07:00
Embargoed: 0700hrs 20 April 2012
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Revised CPR and Corporate Update
Rockhopper Exploration, the North Falkland Basin oil and gas company, is pleased to announce the publication of a Competent Person's Report ("CPR") prepared by Gaffney, Cline & Associates ("GCA").
CPR highlights
·; 355.6 MMbbls net to Rockhopper 2C contingent oil resources attributed to Sea Lion and adjacent discoveries
·; Sea Lion and adjacent discoveries estimated to have net to Rockhopper 2C risked NPV10 of US$ 4.1 billion and an unrisked NPV10 of US$ 4.7 billion
Resource and Economic Evaluation
The new CPR assigns a 90% chance of the Sea Lion field being progressed to successful development with the discoveries adjacent to Sea Lion assigned a 75% chance of development.
The probabilistic 1C, 2C and 3C resource numbers are based on low, best and high estimates of STOIIP of 0.65, 1.07 and 1.56 billion barrels respectively for the Sea Lion field. GCA has also indicated a deterministic best estimate STOIIP for the Sea Lion field of 1.3 billion barrels. The CPR also indicates significant additional prospectivity on licence PL032.
The new CPR contains the following table of resources net to Rockhopper. In arriving at the numbers below GCA used a probabilistic analysis with recovery factors ranging from 20 to 40 %.
Net Contingent Resources (MMbbls) | |||
1C | 2C | 3C | |
Sea Lion | 194.7 | 307.4 | 446.3 |
Casper | 13.6 | 20.4 | 28.4 |
Casper South | 15.1 | 24.3 | 36.0 |
B15 | 0.5 | 0.7 | 1.0 |
SL05 | 1.7 | 2.8 | 4.2 |
Total | 225.6 | 355.6 | 515.9 |
The table below, extracted from the CPR, shows the Sea Lion risked and unrisked post tax net present value net to Rockhopper using a US$ 3/bbl discount to GCA's internal Brent oil pricing scenario and a 10 per cent discount rate.
Risked | Unrisked | |
1C | US$ 1,471 MM | US$ 1,635 MM |
2C | US$ 3,512 MM | US$ 3,902 MM |
3C | US$ 6,240 MM | US$ 6,993 MM |
Using the same assumptions the discoveries adjacent to Sea Lion are deemed to have risked and unrisked post tax net present value net to Rockhopper of:
Risked | Unrisked | |
2C | US$ 615 MM | US$ 827 MM |
Accordingly, Sea Lion and adjacent discoveries are estimated to have net to Rockhopper 2C risked NPV10 of US$ 4.1 billion and an unrisked NPV10 of US$ 4.7 billion
Field Development
The CPR also reports on a development concept for the Sea Lion field using a Floating Production Storage and Offloading vessel ("FPSO"). The principal assumptions of the development conceptinclude first oil being achieved at the start of 2016, with a plateau production rate 70,000 barrels per day for the first three years (based on the 2C scenario) and life-of-field development costs of $4.8 billion, based on a purchased new-build FPSO and inclusion of contingency. A breakdown of GCA's Capex is set out in the table below:
Component | Gross CapitalCosts US$ MM | Comment |
Drilling | 2,369 | 34 wells |
FPSO Vessel | 294 | Market driven, subject to variation |
Topside Facilities | 522 | |
Subsea Facilities | 320 | |
Flowlines | 481 | |
Mobilisation | 100 | |
Project Management, Insurance, Owners Costs | 246 | |
Contingency | 493 | (on Facilities and Subsea costs) |
Total CAPEX | 4,825 |
GCA has not provided an estimate of capital cost to achieve first oil production, however the Company's internal calculation of cost to first oil remains at approximately US$2 billion. This estimate is based on the Company's planned development of Sea Lion via a leased FPSO scenario, rather than the purchased new-build scenario assumed in GCA's costing, and a phased drilling programme.
The full CPR is available on the Company's website at www.rockhopperexploration.co.uk
Corporate Update
As previously announced the Company has prepared a data room to enable potential industry partners and debt providers access to the Sea Lion data. Collection and analysis of the field data is now complete and interested parties are actively reviewing the available information.
The Falkland Islands Government has recently clarified the position around the submission date for the Final Development Plan ("FDP") for the Sea Lion development. Whilst the licence issued to the Company states that a plan is to be submitted within three years of spudding the discovery well, the 2000 Model Clauses allow for five years if appraisal work has been undertaken. The Falkland Islands Government has therefore recently confirmed the final submission date for an FDP on Sea Lion is 15 April 2015. This does not change the Company's plans to develop Sea Lion as soon as practically possible.
Sam Moody, Chief Executive of Rockhopper, commented:
"We are delighted by the progression that the publication of today's CPR demonstrates as we continue to move forward our development for Sea Lion and nearby discoveries. We are particularly pleased by the results of the CPR due to the standing of consultants Gaffney, Cline & Associates Ltd and its reputation for thoroughness in the analysis of reservoir data and field development planning. The study has strongly reinforced our view of the potential of Sea Lion for commercial development."
Enquiries:
Rockhopper Exploration plc
Sam Moody - Chief Executive
Tel. +44 (0)20 7920 2340 (via M: Communications)
M: Communications
Patrick d'Ancona or Ben Simons
Tel. +44 (0)20 7920 2340
Canaccord Genuity Limited
Robert Finlay / Henry Fitzgerald-O'Connor
Tel. +44 (0) 20 7050 6500
Glossary of technical terms
Contingent Resources | those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent Resources are further categorised as 1C, 2C and 3C in accordance with the level of certainly associated with the estimates and may be sub-classified based on project maturity and/or characterised by their economic status.
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Deterministic Method | The deterministic approach, which is the one most commonly employed worldwide, involves the selection of a single value for each parameter in the reserves calculation. The discrete value for each parameter is selected based on the estimator's determination of the value that is most appropriate for the corresponding reserves category.
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MM
| millions |
MMbbls
| million barrels |
NPV10 | net present value at a 10 per cent discount rate
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Probabilistic Method | Probabilistic analysis involves describing the full range of possible values for each unknown parameter. This approach typically consists of employing computer software to perform repetitive calculations to generate the full range of possible outcomes and their associated probability of occurrence.
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STOIIP
| Stock tank oil initially in place |
Notes to Editors
Rockhopper was established in February 2004 with a strategy to invest in and carry out an offshore oil exploration programme to the north of the Falkland Islands. The Company floated on AIM in August 2005 and holds a 100 per cent. interest in four offshore production licences: PL023, PL024, PL032 and PL033 which cover approximately 3,800 sq. km. Rockhopper also farmed in (7.5% working interest) to licences PL003 and PL004, which are operated by Desire Petroleum. In addition to the original farm-in, and in consideration for drilling one well on the north-western acreage of licence PL004, known as Area 1, which contains the extension to the Sea Lion field as well as the Beverley, Casper and Casper South features, Rockhopper farmed-in with operatorship and an aggregate 60% interest in Area 1.
An extensive work programme has been carried out over a number of years on the licences operated by Rockhopper. This has included 2D and 3D Seismic and Controlled Source Electromagnetic Mapping (CSEM). In February 2010, the Ocean Guardian drilling rig arrived in Falkland waters to carry out a multi-well drilling campaign. Rockhopper drilled an exploration well on its Sea Lion prospect during April and May 2010, the result of which was the first oil discovery and Contingent Oil Resource in the North Falkland Basin. The Sea Lion discovery was successfully tested during September 2010 and June 2011 and was the first oil to flow to surface in Falkland Islands waters. Rockhopper's drilling campaign lasted from 16 April 2010 to 8 January 2012 and resulted in seven successful wells of the ten drilled, with three oil discoveries, three gas discoveries, multiple successful Sea Lion appraisal wells and a successful appraisal well on Casper.
Rockhopper Exploration plc www.rockhopperexploration.co.uk
NB: This statement has been approved by the Company's geological staff who include David Bodecott (Exploration Director), who is a Member of Petroleum Exploration Society of Great Britain (PESGB) and the American Association of Petroleum Geologists (AAPG) with over 30 years of experience in petroleum exploration and management, for the purpose of the Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in respect of AIM companies, which outline standards of disclosure for mineral projects.