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Rockhopper says it has made ‘good progress’ in Falklands but project milestones are coming from Egypt

Key contracts have been extended as Rockhopper and Premier Oil work to 'unlock' the Sea Lion field, and, in the meantime, the AIM-quoted firm has been advancing its Egypt portfolio
oil and gas operations
An active well programme will start later this quarter in Egypt

A wide-ranging investor update from Rockhopper Exploration Plc (LON:RKH) reported ‘good progress’ with the Sea Lion project in the Falklands whilst noting that existing letters of intent with contractors for the project have been extended by up to twelve months.

"Our focus for Sea Lion remains on putting the financing together and we continue to work closely with the operator to unlock the project during 2019,” said Sam Moody, Rockhopper chief executive.

Elsewhere, Rockhopper reports success in Egypt where it is receiving 840 barrels of oil equivalent per day net from the Abu Sennan concession (which is producing around 3,800 boepd gross), and, it has now seen a new discovery in the ASZ-1X well.

READ: Rockhopper Exploration “very encouraged” as Sea Lion moves towards sanction

ASZ-1X, located on Prospect S, is one of two commitment wells drilled in a first phase programme of a new concession and it has confirmed an oil discovery in the Abu Roash-C reservoir level. The well is presently being prepared for testing and subject to results, will be put into production.

At the same time, the Al Jahraa-10 well (which was drilled into the Abu Roash-D and C reservoirs in Q4 2018) has been tested and is now producing from the C reservoir at a rate of 130 bopd.

Rockhopper highlighted that it has agreed to an active drill programme in Egypt – with one exploration well, two producers and one water injection well slated.

The programme is due to get underway in the first quarter and Rockhopper’s 22% share of the costs has been estimated to total some US$4mln. It also noted a continuing improvement in the payment situation in Egypt, noting that at the end of December its receivable balance stood at around US$1.5mln.

In Italy, the company’s transaction to sell its stake in the Civita assets will no longer proceed.

It had previously agreed to sell Civita to Cabot Energy but the transaction failed to satisfy all conditions, including receipt of requisite regulatory approvals in Italy.

Rockhopper will, therefore, retain the asset and will continue to receive the cash flows it generates. The field produces around 130 boepd.

Also in relation to Italy, the company’s international arbitration proceedings over the Ombrina Mare field are scheduled to reach hearings in early February.

The company told investors it continues to believe it has strong prospects of recovering very significant monetary damages, on the basis of lost profits, and, it highlighted that the process is being funded via a non-recourse arrangement with a specialist arbitration funder.

Rockhopper said it ended 2018 with a US$40mln cash balance, and it had some US$5mln of accrued but unpaid costs related to Sea Lion pre-development expenditures.

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