London-listed Rockhopper Exploration has marked the year 2018 potentially transformational, as it works to secure funds and press ahead with the $1.5 billion Sea development in the Falkland Islands.
Rockhopper is a partner in the 520 mmbbls project with a 40% working interest. The Sea Lion project, located in the North Falkland basin, is operated by Premier with a 60% interest which Premier took as part of a farm-in deal with Rockhopper back in 2012.
In prepared remarks, ahead of Friday’s annual general meeting, David McManus, Chairman of Rockhopper said: “2018 has the potential to be transformational with all efforts focused on securing the funding required to sanction the Sea Lion project and move into the development phase.
He said the selection of the main contractors for the project, and finalizing letters of intent to underpin the contractual arrangements and the provision of vendor funding for $400 million, was near completion.
“Following a comprehensive commercial bank market engagement process, with a number of banks expressing a desire to support the project, a pathfinder bank will be appointed imminently to assist with the arrangement of senior debt facilities for the project,” McManus said.
“With Brent oil prices currently above US$75 per barrel, combined with the cost efficiencies secured through FEED and engagement with the contractors, the economics for the Sea Lion project are highly attractive,” McManus said.
“With Brent oil prices currently above US$75 per barrel…the economics for the Sea Lion project are highly attractive”
Earlier this week, Premier Oil, the operator of the project, also said it remained focused on securing funding for the project and appointing a pathfinder bank, ahead of final investment decision.
This time, the partners did not talk about the expected date of the final investment decision. According to the previous reports, the FID is expected by 2018 end.
The Sea Lion complex will be developed in two phases. Phase 1 will recover 220 mmbbls of reserves in the northeast and north-west of the field located in the PL032 license area. It will be developed using a conventional FPSO based scheme.
FEED on Sea Lion phase 1 was completed during 2016. As part of this, Premier worked with its four main contractors – SBM Offshore for the FPSO, Subsea 7 for the subsea installation, NOV for the flexible flowlines and One Subsea for the subsea production system – and optimized the facilities design and installation methodology of the development.
As a result, Premier reduced its estimate for gross capex to first oil from $1.8bn to $1.5bn. The company saw the breakeven cost of the project lowered from $55/bbl to less than $45/bbl.
First oil is expected to start flowing some 3,5 years after the project sanction.
Offshore Energy Today Staff