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").

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 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




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."

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 a qualified investment adviser. More

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