The information contained within this Announcement is deemed
by Rockhopper Exploration plc to constitute inside information as
stipulated under the Market Abuse Regulation (EU) No. 596/2014 as
it forms part of UK law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR").
14 October 2024
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Ombrina Mare Insurance and
disposal of Italian assets
Rockhopper Exploration plc (AIM:
RKH), the oil and gas company with key interests in the North
Falkland Basin ("NFB"), is pleased to announce it has put in place
an insurance policy to cover the event that the Italian Republic
succeeds in its attempt to have the Rockhopper Ombrina Mare
Arbitration Award (the "Award") annulled and has also signed a
share purchase agreement ("SPA") with Zodiac Energy Limited
("Zodiac") to exit its other Italian assets.
Ombrina Mare Insurance
Whilst both the Company and its
advisors remain confident of its position it has decided, in line
with normal market practice, that insuring to protect shareholders
against loss resulting from an annulment of the Award to be the
most prudent course of action.
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
payment1 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.
The total cost of the policy,
including applicable taxes and underwriting fees, is €4 million.
Following placing the policy, Rockhopper's cash balance will be
approximately $24 million.
Italian Disposal
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
consideration, 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 annulment1).
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 both
Italian and Falkland Island Government regulatory approval, the
timing of which is uncertain but is anticipated within 12
months.
Following completion of the
transaction, Rockhopper will have no remaining liabilities relating
to its Italian licences, its P&A liability will have been
reduced by some $15 million (unaudited as at 30 June 2024) and its
annual cash burn reduced by approximately €500,000 - €750,000. In
the year ended 31 December 2023, Rockhopper Civita contributed a
$1.6 million loss to the Group.
Samuel Moody, CEO commented:
"The steps announced today provide
us with further strategic and commercial clarity as we continue to
focus on progressing the Sea Lion development. The combination of
the insurance policy and transaction with Zodiac allows us to
refocus the Company on Sea Lion by further reducing both short and
long term costs, reducing risk, protecting our balance sheet whilst
maintaining some potential upside in two Italian
licences."
1 see RNSs dated 20 December
2023, 17 June 2024 and 21 June 2024 for further background on the
monetisation of the Award
Enquiries:
Rockhopper Exploration
plc
Sam Moody - Chief Executive
Officer
Tel. +44 (0) 20 7390 0234 (via Vigo
Consulting)
Canaccord Genuity Limited (NOMAD and
Joint Broker)
Henry Fitzgerald-O'Connor/Charlie
Hammond
Tel. +44 (0) 20 7523 8000
Peel Hunt LLP (Joint
Broker)
Richard Crichton/Georgia
Langoulant
Tel. +44 (0) 20 7418 8900
Vigo Consulting
Patrick d'Ancona/Ben Simons/Fiona
Hetherington
Tel. +44 (0) 20 7390 0234
