Rockhopper revised CPR and corporate update
Friday, April 20, 2012
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").
- 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
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 $4.8 billion, based on a purchased new-build FPSO and inclusion of contingency. A breakdown of GCA's Capex is set out in the table below:
| Component || Gross Capital |
Costs US$ 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 || |
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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
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."
This article is for information and discussion purposes only and does not form a recommendation
to invest or otherwise. The value of an investment may fall. The investments referred to in this
article may not be suitable for all investors, and if in doubt, an investor should seek advice from
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