LONDON - Rockhopper Exploration plc (AIM: RKH), an oil and gas company with significant interests in the North Falkland Basin (NFB), has announced developments in the Sea Lion project following updates from Navitas Petroleum LP, the operator of the project. The recent independent resource report by Netherland Sewell & Associates (NSAI) for October 2024 reveals an increase in certified recoverable oil resources in the NFB.
The Environmental Impact Statement (EIS) for the Northern Development Area's first and second phases was submitted in July 2024, and the Falkland Islands Government (FIG) confirmed in November that no further public consultation was required. An agreement for a redeployed Floating Production Storage and Offloading (FPSO) vessel has been signed, with Front-End Engineering Design (FEED) work commencing this month. The FPSO is expected to produce up to 55,000 barrels of oil per day at peak.
The updated capital expenditure (capex) for reaching first oil is now estimated at US$1.4 billion, including contingency, due to ongoing industry cost inflation. However, the project's economics are still considered robust. The Final Investment Decision (FID) is scheduled for mid-2025, with first oil anticipated in Q4 2027.
According to the October 2024 NSAI report, which Rockhopper has not independently reviewed, the certified gross 2C recoverable oil resources in the NFB have increased from 791 million barrels (MMbbls) to 917 MMbbls, marking a 16% increase compared to the previous January 2024 report. Additionally, 2.1 trillion cubic feet (TCF) of 2C recoverable gas resources have been certified.
The Sea Lion field's development concept involves a phased approach with 35 wells across three phases. The total barrels developed through all three phases are projected to be 532 MMbbls, with peak production rates potentially reaching 120,000 barrels per day once all phases are developed. The breakeven production cost is estimated at approximately US$24 per barrel.
Rockhopper holds a 35% working interest in Sea Lion and the associated NFB licenses. This update is based on a press release statement and includes certified development plans for the Northern and Central Development Areas. The announcement also notes loans from Navitas related to the development, as detailed in previous announcements.
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