Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and production company with key interests in the North Falkland Basin, is pleased to announce its audited results for the year ended 31 December 2024.

2024 AND POST PERIOD HIGHLIGHTS

Sea Lion Development

Financing

• Lead technical and lending bank mandate signed
• Financing plan now includes senior bank debt
• Positive initial feedback from potential providers of capital to the financing
• New timing for Final Investment Decision ("FID") expected H2 2025 to allow for bank to complete due diligence ("DD")

Resources

• Updated independent report commissioned by Navitas*

o  Gross 917 mmbbls 2C with additional upside (Rockhopper 35% working interest)
o  Phased development
o  5 phases
o  2 FPSOs
o  First 2 phases developed via a single FPSO with 2 drilling campaigns

• Rockhopper commissioned an independent resource update to be published shortly

Corporate and Financial

• US$20.9 million cash and term deposits at 31 December 2024
• Share Purchase Agreement ("SPA") signed to dispose of Italian business

o  Awaiting consents from Falkland Islands Government ("FIG") and the Italian regulators

• Cost control remains a focus

Ombrina Mare Arbitration Award

• No outcome of annulment to date
• Monetisation of the Award with a regulated specialist fund ("Specialist Fund")

o  Completion and First Tranche payment received, €19 million retained
o  If successful in defending annulment, Second Tranche payment of €65 million due from Specialist Fund

• Insurance in place to ensure minimum of €31 million even in the event of annulment

Sam Moody, Chief Executive of Rockhopper Exploration, commented:
"This has been a very important period for Rockhopper and an exciting time for the Company and its shareholders as we continue to work with operator Navitas in moving the Sea Lion project towards FID. With work on financing for the development beginning to gather pace and continued progress on the technical side, we look forward to providing the market with further updates."

* Rockhopper is not an addressee and has not been party to the production of the March 2025 NSAI Independent Report. The March 2025 NSAI Independent Report has been produced to PRMS standards. The last independent resource report commissioned directly by Rockhopper was the ERCE 2016 Report which had an estimated 2C value of 517 mmbbls. Rockhopper has commissioned it's own independent resource update to be published shortly

Sea Lion

The period under review and has subsequently seen the most material positive development to date in relation to the potential Sea Lion development financing. The Operator has signed a mandate with a well known international lead technical lending bank with expertise in lending to oil and gas projects. The Operator has indicated it is currently envisioned that the bank will cornerstone the project financing with additional capital provided by a number of other investors. We understand that initial discussions with these potential providers of capital have been positive.

The target is for that bank financing to be completed within 6 months, with FID now anticipated in H2 2025, giving the necessary time for the lead bank to complete all technical, regulatory, and other due diligence and for the wider financing scheme to be completed. 

A number of LOIs, MOUs, and contracts have been signed relating to the project, including for the provision of an FPSO along with various key pieces of subsea infrastructure.  Discussions are also currently ongoing for the provision of a suitable drilling unit.

The Operator continues to work closely with FIG to secure all required consents, which Rockhopper believes will be forthcoming in a timescale allowing formal FID in H2 of 2025. In the light of the positive developments on the financing, and in order to provide the most stable platform for that financing to be completed, the existing reciprocal pre-emption right contained within the Joint Operating Agreement ('JOA') that operates at the asset level, has been extended to cover a corporate change of control.  That pre-emptive right, which is reciprocal between Navitas and Rockhopper, will last until the earlier of formal project sanction or 31 December 2025.

Ombrina Mare

Having announced an agreement to monetise the Ombrina Mare Arbitration Award ('the "Award") on 20 December 2023 (the 'Monetisation'), Rockhopper received the Tranche 1 payment in June 2024 and retained €19mm. The annulment process has no formal timetable and may now slip into H2 2025, however, the Company remains hopeful of an outcome in the relatively near future. Should Rockhopper succeed in defending the annulment attempt, an additional payment of €65 million will become due from the Specialist Fund. During the period, Rockhopper put in place insurance to cover the event that the Italian Republic is successful in having the Award annulled. The insurance policy will ensure that, in the event that the Italian Republic succeeds in having the entire Award annulled or in the event of partial annulment, the combination of the Tranche 2 payment and the insurance payout shall entitle Rockhopper to a total no less than €31 million.

The policy has been placed via a FCA-registered specialist insurance brokerage. The policy has been underwritten by a specialist underwriting agency and subscribed to by a number of A-rated insurance carriers and syndicates.

Tax of approximately 12.5% to 15% is likely to be due on receipts from the Monetisation.

Italian disposal

As announced on 14 October 2024, Rockhopper signed an SPA to dispose its Italian interests, other than the Ombrina Mare arbitration, to Zodiac Energy, a locally run Italian E&P company.

The SPA is for the sale of Rockhopper Civita Limited (a wholly owned subsidiary of Rockhopper Exploration Plc). Rockhopper Civita Limited holds all Rockhopper's Italian assets and liabilities with the exception of the Ombrina Mare Arbitration Award.

Under the terms of the SPA, Rockhopper will pay Zodiac in two instalments, with a retained upside participation to Rockhopper in two undeveloped licences.

The first instalment of €3 million is payable to Zodiac on satisfaction of two precedent conditions ("Completion"), those being receipt of all necessary regulatory consents in Italy, as well as regulatory consents in the Falklands.

The second instalment of €2.5 million is payable to Zodiac on or after Completion, assuming the satisfaction of two additional conditions, those being successfully defending the Italian Republic's annulment application and receiving a minimum of €10 million from the Award monetisation (the Tranche 2 payment under the Award monetisation is €65 million, due on a successful defence of the annulment application, but can be reduced in the event of a partial annulment).

In addition, assuming the second instalment is payable, Rockhopper will retain a royalty on two assets within the Rockhopper Civita Limited portfolio, those being AC19 (a northern Adriatic licence with two gas discoveries and an additional adjacent prospect) and Serra San Bernado (which contains the Monte Grosso exploration prospect).

The royalties will take the form of either 10% of the revenues of the interests acquired by Zodiac or, should they realise value by on-selling the licences acquired, 25% of the gross proceeds received for the part sold.

The transaction is subject to regulatory approvals, the timing of which is uncertain but are anticipated within 12 months. 

The transaction will significantly reduce both Rockhoppers annual running costs and long run decommissioning liabilities.

Falklands Capital gains Tax ("CGT")

Rockhopper is in discussions with FIG to come to an agreement over the deferred CGT arising from the farm down to Premier Oil in 2012, as the current arrangements make the Sea Lion financing significantly more difficult. This is discussed in greater detail in the Financial Review.

Summary

With a lead lending bank appointed, positive feedback from potential funders, Sea Lion resources and values independently confirmed and FIG continuing to support the development of the field, the sanction of Sea Lion has never been closer with a target of H2 this year, an event that would represent the culmination of some 20 years of work for Rockhopper.

Whilst their balance sheet remains strong, it is possible that the Group will require additional funding in order to take FID.  The final amount of that funding will be a function of the outcome of the Ombrina Mare annulment process, final project costs and Sea Lion financing details.

The Navitas independent NSAI report confirms the scale of Sea Lion and the possibility for it to generate significant value for all stakeholders should sanctions be achieved. 

KeyFacts Energy: Rockhopper Falkland Islands country profile