Proposed acquisition of 60 per cent. of Rockhopper Exploration plc’s (“Rockhopper”) licence interests in the Falkland Islands

abarrelfullabarrelfull wrote on 13 Jul 2012 08:00
Tags: deals falklands premier rockhopper s-america upstream

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Premier today announces that it has agreed to farm-in for 60 per cent. of Rockhopper’s licence interests in the Falkland Islands, which includes the Sea Lion development (the “Acquisition”). The initial payment will be $231 million in cash plus an exploration carry of up to $48 million and, subject to field development plan approval, a development carry of up to $722 million. These will be funded from a combination of Premier’s existing cash resources, facilities and cash flow from operations. Premier and Rockhopper have also agreed to pursue jointly exploration opportunities in the Falkland Islands and analogous plays in selected areas offshore Southern Africa.

Today, Premier has also released a Trading and Operations update, contained in a separate announcement.

Transaction rationale

• The Acquisition progresses Premier’s strategy of growth through investment in high quality development projects

• The Acquisition leverages Premier’s strong operatorship and FPSO development capabilities

• The Acquisition adds approximately 200 mmbbls of discovered 2C resources, together with risked prospective resources of 175 mmboe net to Premier

• The Sea Lion project is an excellent fit with Premier’s existing development portfolio. Timing of the Sea Lion development expenditure coincides with Premier's increasing cash flow profile as current developments come on-stream

• Once onstream, the Sea Lion development is expected to add 50 kbopd of production, net to Premier and significantly increase free cash flow.

Commenting on today’s announcement, Simon Lockett, Chief Executive, of Premier said:

“We are delighted to have reached this agreement with Rockhopper. Rockhopper has made excellent progress in commercialising the Sea Lion project which offers attractive returns and fits well with Premier’s proven operating and development skills. This transaction extends our strong growth profile beyond 2015 and offers both exploration and development upside for our shareholders. We look forward to working closely with Rockhopper and the Falkland Island Government on this very exciting project.

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