News Column

Rockhopper Exploration Promises "Transformational" Year

June 6, 2014

Rowena Harris-Doughty

LONDON (Alliance News) - Rockhopper Exploration PLC said it swung to a pretax loss in its recently completed financial year, due to a significant exceptional gain the prior year.

For the year ended March 31, the oil and gas exploration company reported a pretax loss of USD16 million, compared with a pretax profit of USD47 million the prior year, primarily due to the prior year benefiting from an exceptional gain made on farm-out agreement with Premier Oil PLC of USD59 million. It also saw a significant increase in administrative expenses to USD12.3 million from only USD7.0 million a year earlier.

Rockhopper reported a net loss of USD78.3 million, compared with USD75.2 million a year earlier. In the year earlier period, Rockhopper was hit with a USD122.4 million tax bill, compared to USD62.5 million in the recent year.

The company said that significant progress has been made in relation to the Sea Lion development in the Atlantic Ocean north of the Falkland Islands.

"The year ahead has the potential to be transformational for the company," said Chairman Pierre Jungels in a statement.

Post year-end, Rockhopper Exploration agreed to acquire fellow AIM member Mediterranean Oil & Gas PLC in a deal that values Mediterranean Oil & Gas at GBP29.3 million and will create an oil and gas company with a market value of GBP294.5 million.

Under the terms of the deal, Mediterranean Oil & Gas shareholders will receive 6.5 pence per share in cash and Rockhopper shares, for each Mediterranean Oil & Gas share held. Mediterranean Oil & Gas shareholders will also receive a contingent consideration offer of up to a maximum amount of 3.550 pence in cash for each share held in the company.

The companies said the contingent consideration offer is a contractual, non-transferable, unsecured, interest-free obligation of Rockhopper to make an additional one-off cash payment of between GBP11.9 million and GBP16.0 million in total, but will be determined by the success of a high-risk exploration well at the Hagar Qim prospect offshore Malta.

The transaction is expected to complete in late July or early August.

In a statement earlier this week, Rockhopper said that a rig has been secured for a four well exploration drilling campaign in North Falkland Basin, which is expected to commence in the second quarter of 2015.

The rig has been contracted by Premier Oil PLC for the Isobel/Elaine prospect, for which it is the operator, and the company said the campaign will comprise of at least four wells which will test prospects to the south of Sea Lion site, assessing the potential for another Sea Lion-scale discovery.

Rockhopper "is well placed financially with USD247 million cash on the balance sheet, no debt, and through the exploration carry, development carry and standby financing arrangement with Premier Oil, we are fully funded for our share of Sea Lion development costs and a significant proportion of the expected 2015 exploration costs," the company said in a statement Friday.

Rockhopper shares were trading 1.6% lower at 93.50 pence Friday morning.

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Source: Alliance News

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