RNS Number : 3701P

Rockhopper Exploration plc

22 May 2024

Rockhopper Exploration plc

("Rockhopper", the "Group" or the "Company")

Full-Year Results for the Year Ended 31 December 2023

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 2023.

2023 HIGHLIGHTS

Sea Lion Development

Navitas Petroleum LP ("Navitas") provided details of the updated Field Development Plan ("FDP") and additional independent resource report by Netherland Sewell & Associates ("NSAI").*

· New independent resource report commissioned by Navitas Petroleum LP

o Optimised for the specifications of identified and available redeployable Floating Production and Offloading vessels ("FPSO"s)

o 2C resource base 791mmbbls, up from 712mmbbls

o Initial development stage targeting 312mmbbls, up from 269mmbbls

o Peak rate up to 55k bopd

o Prolonged plateau of c.8 years

o Improved economics, reduced breakeven at US$25/bbl cost life of field

§ Cost to first oil US$1.2bn

§ Capex per bbl US$8 life of field

§ Opex per bbl US$17 life of field

§ NPV 10 > US$4bn gross to the JV at US$77/bbl Brent **

· Environment Impact Statement ("EIS") pre-consultation started in November 2023

· Navitas continues to refine Field Development Plan ("FDP")

· Navitas actively working with leading industry vendors to secure all long lead equipment

Ombrina Mare Arbitration Award (the "Award")

Monetisation of the Award

· Monetisation of Award to Specialist Fund payable in 3 tranches:

o Tranche 1 - Rockhopper will retain approximately €15million (pre-tax) of an initial gross payment of €45million, the balance going to pay the initial litigation funder and available for legal success fees;

o Tranche 2 - Rockhopper will retain 100% of a payment of €65million upon a successful annulment outcome. This amount to be reduced on a partial annulment; and

o Tranche 3 - Rockhopper will retain 100% of a profit share of 20% on recovery above amounts in excess of 200% of the Specialist Funds total investment costs.

· Transaction requires Falkland Island Government ("FIG") consent to complete

o Work continues with FIG to secure consent which should be obtained by end June 2024

· Should consent not be obtained by end June 2024, either side has right to terminate

o The Specialist Fund is paying the legal costs associated with the Award from 20 December 2023

o In case of non-completion, Rockhopper will compensate the Specialist Fund based on their legal fees incurred

Annulment Proceedings

· Italy requested to annul Arbitration Award in October 2022

· Annulment hearing completed April 2024

· Rockhopper and advisors remain confident in merits of legal case

· Continue to be hopeful a decision is possible before the end of 2024

Corporate and Financial

· High calibre, experienced and independent Board

· Focus on maintaining balance sheet strength

· Continued management of costs

* Rockhopper is not an addressee and has not been party to the production of the 2024 NSAI Independent Report. The 2024 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 517mmbbls. See RNS dated 22 January 2024.

** Post royalty, pre-tax.

Simon Thomson, Chair of Rockhopper, commented:

"I am delighted to have joined Rockhopper at such a pivotal point in the Company's history. Whilst risks plainly remain, it is possible that by this time next year we will have both completed the monetisation of our Ombrina Mare Arbitration and seen FID at Sea Lion. Both would be hugely significant catalysts for the Company, and represent the culmination of many years of hard work by our dedicated team. I look forward to working with the team to unlock real shareholder value over the years to come."

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/James Asensio/Ana Ercegovic

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

Note regarding financial information disclosure

The financial information set out below does not constitute the Group's statutory accounts for the year ended 31 December 2023, but is derived from those accounts. References within the document may refer to information in the statutory accounts and these will be sent to shareholders and published on the Company's website imminently.

CHAIR AND CEO REVIEW

INTRODUCTION

Global uncertainty continued during the year, with conflict in the Middle East as well as the continued war in Ukraine, and continued underinvestment in new oil projects leading to oil prices averaging over US$80/bbl during the year.

Navitas Petroleum LP ("Navitas") continued to refine the Sea Lion development which we believe is now in the most advanced stage in its history.

The monetisation of the Ombrina Mare Arbitration Award (the "Award"), subject to the approval of FIG, will provide material near term capital certainty and should, assuming a successful annulment outcome, provide most and potentially all the required Rockhopper equity for Phase 1 of the Sea Lion development.

The refined Sea Lion development is, in our view, highly competitive in a global market. We believe the main impediment to sanction remains the Argentine sovereignty claim of the Falkland Islands. The claim does mean certain service providers and financial institutions choose not to provides services for fear of a potential impact an association may have on their businesses in Argentina.

SEA LION DEVELOPMENT

Over the course of the year, Navitas continued to refine and improve the Sea Lion development and we believe the project is now at its most advanced stage to date. In January 2024, a new independent Netherland Sewell & Associates ("NSAI") report was produced and is available on the Navitas website ("2024 NSAI Report")*. This report confirms an increase in both the overall 2C resource base and recovery during the first phase of the development. The refined development plan continues to be based on a phased approach utilising a drill to fill approach, with the first phase now targeting 312mmbbls from a total of 23 wells with a peak rate of up to 55k bopd, an increase of some 16% in recovery. This optimised development scheme is based on the use of identified Floating Production, Storage and Offtake vessels ("FPSO") which are both suitable and available. Discussions are advanced with a number of contractors who are available and interested in offering all services required to bring the project into production. Environmental Impact Statement ("EIS") pre-consultation began in November 2023.

Per barrel cost life of field (rounded):

Capex	US$8
Opex	US$17
Total cost	US$25

In January 2024, Navitas published the 2024 NSAI Report which is available on Navitas' website, and contains the following resource estimates:

	1C (mmbbls)	2C (mmbbls)	3C (mmbbls)
Development Pending	228	312	406
Development Unclarified	281	479	757
Total	509	791	1,163

The project break even oil price has been lowered during the year, with capex per barrel under US$10 per bbl and opex under US$20 per bbl on a life of field basis for the first phase. The updated independent NSAI report confirms an NPV 10 in excess of US$4bn to the JV (comprising Navitas and Rockhopper) at US$77/bbl Brent on a post royalty, pre tax basis.

These numbers highlight that our 35% working interest in Sea Lion, which benefits from two attractive loans from Navitas, will be a highly valuable asset once sanctioned at current oil prices. The next steps towards securing Final Investment Decision ("FID") and Project Sanction will be the aforementioned EIS public consultation, securing contractors and putting in place a viable financing plan. All of this work is currently ongoing.

Ombrina Mare Monetisation

As announced on 20 December 2023, we signed an agreement with a regulated specialist fund (the "Specialist Fund") to accelerate the monetisation (the "Monetisation") of our Ombrina Mare Arbitration award (the "Award").

Details of the payment structure of the Monetisation are below:

Tranche 1

Rockhopper will retain approximately €15 million of an upfront payment of €45million on completion. As previously disclosed, Rockhopper entered into a litigation funding agreement in 2017 under which all costs relating to the Arbitration from commencement to the rendering of the Award were paid on its behalf by a separate specialist arbitration funder (the "Original Arbitration Funder"). That agreement entitles the Original Arbitration Funder to a proportion of any proceeds from the Award or any monetisation of the Award. Rockhopper has entered into an agreement with the Original Arbitration Funder to pay €26 million of the Tranche 1 proceeds to discharge all of its liabilities under the agreement with the Original Arbitration Funder. In addition, on successfully contesting the annulment Rockhopper owes previously disclosed success fees to its legal representatives. After making these payments, Rockhopper will retain approximately €15million of the Tranche 1 payment and 100 per cent of all Tranche 2 and 3 payments.

Tranche 2

Additional contingent payment of €65 million upon a successful annulment outcome. Should the Award be partially annulled, and the quantum reduced as a result, then Tranche 2 will be reduced such that the amounts under Tranche 1 and Tranche 2 shall be adjusted downward on a pro-rata basis. For example, if the quantum of the Award is reduced by 20%, then the amounts under Tranche 1 and Tranche 2 shall be reduced by 20%. For the avoidance of doubt, the amounts under Tranche 1 and Tranche 2 shall not reduce below €45m in any circumstance.

Tranche 3

Potential payment of 20% on recovery of amounts in excess of 200% of the Specialist Fund's total investment including costs.

Tax will also be payable on Rockhopper's share of the proceeds from the monetisation of the Award. These calculations are complex and are unlikely to be resolved for some months, but Rockhopper currently estimates that the approximate effective tax rate of between 10-15% is likely.

The transaction requires consent from FIG by 30 June 2024 in order to complete. We are currently working with FIG to secure this consent. Should FIG consent not be obtained by the end of June, either side can terminate the agreement with Rockhopper compensating the Specialist Fund from any eventual monetisation or recovery on the basis of legal fees incurred.

On 11 and 12 April 2024, a 2-day annulment hearing was held before an ad hoc Panel put together by ICSID under the relevant rules. Following the hearing, the ad hoc committee considering the annulment request has instructed that it will shortly provide questions to both parties who are to respond in writing by 18 June 2024. Based on post-hearing legal advice, Rockhopper remains confident in the strength of its legal case and remains hopeful that a decision will be reached on the annulment by the end of 2024.

We believe that, should we secure a positive annulment outcome and the Award monetisation completes, we will be in a strong position to provide our share of the required equity for the Sea Lion project.

Corporate and Financial

Following the completion of our capital raise in 2022, we enjoyed a very high take up of warrants issued with 93.9% being exercised. Our balance sheet remains strong with some US$8.0 million in cash at year end, with a further US$2.0 million received post year end through warrant proceeds and an additional c.€15million in cash due on completion of the Award Monetisation. Normal working capital requirements and projected recurring expenditure remain low at only US$4.0 million per annum, representing a reduction of over 60% compared to 2014. We maintain a small, highly experienced team of technical experts and have an unparalleled history of success in the North Falkland Basin, in depth knowledge of operating in the Falklands, and of Sea Lion itself.

We were delighted to welcome both Simon Thomson and Paul Mayland to the Board in October, both of whom bring direct and highly relevant knowledge, not only of offshore oil field developments but also listed E&P companies and international arbitration.

We take this opportunity to thank Keith Lough and John Summers for their time on the Board and wish them every success in the future.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE

As always, ESG remains a focus for Rockhopper. We maintain a highly experienced Board and have a long-term relationship with the Falkland Islands, visiting regularly. As Operator, Navitas will determine the manner in which the Sea Lion oil field will be developed, and we are confident they will do so in a responsible manner. We reaffirm our commitment to report transparently and mitigate our own emissions as far as it is practicable.

Outlook

Whilst there continue to be some risks, with a strong balance sheet, a signed transaction to monetise the Ombrina Mare Arbitration and a highly economic Sea Lion development plan in place, we believe your Company remains well placed to deliver long term value to its shareholders.

FINANCIAL REVIEW

OVERVIEW

From a finance perspective, the most significant event in 2023 was announcement of the Monetisation as discussed in detail in the Chair and CEO's Review. From a financial perspective, this has no impact on the results for the period to 31 December 2023 as the Monetisation did not complete before year end.

The Award was made in September 2022 and Italy applied to have the Award annulled in October 2022. As such, the Award is still considered a contingent asset and is not recognised in the financial statements.

RESULTS FOR THE YEAR

For the year ended 31 December 2023, the Group had no revenues (2022: US$0.7 million) and a loss after tax of US$4.6 million (2022: profit after tax of US$35.5 million). The loss for the year is in line with expectations and further details are provided below.

REVENUE AND COST OF SALES

Following cessation of production in Italy, the Group had no revenues during the year (2022: US$0.7 million). Revenues in the prior year related entirely to the sale of natural gas in the Greater Mediterranean (specifically Italy) region.

Cost of sales amounted to US$0.9 million (2022: US$2.0 million). The prior year cost of sales included US$1.0 million in costs associated with increasing decommissioning provisions. Excluding these amounts, which were driven by particularly high global inflation rates, cost of sales reduced slightly. Even though there has been no revenue in the period there are costs associated with maintaining the various production concessions whilst potential options for redevelopment are considered.

OPERATING COSTS

Exploration and evaluation expenses are not material in the year. The impairment in the current year of US$0.2 million (2022: US$0.3 million) due to cost write offs relating to the South Falkland Basin and areas of the North Falkland Basin which will not be developed as part of the Sea Lion Phase 1 project.

The Group continues to manage corporate costs and has achieved significant reductions in recurring G&A costs over the last five years. In light of the sharp reduction in oil prices experienced in the first half of 2020, initiatives to further reduce corporate costs commenced in May 2020. As part of this ongoing focus on costs the Rome office was closed during 2023.

Administrative expenses have increased during the year to US$4.3 million (2022: US$3.6 million). These costs include legal fees in relation to contesting the Annulment of the Award of US$1.6 million (2022: US$0.2 million). The Group chose to use existing resources to fund all legal costs arising from contesting the request by Italy for Annulment while it explored all acceptable funding possibilities. Following signing of the Monetisation agreement, the Specialist Fund are responsible for all legal fees, therefore no costs have been incurred in relation to the Arbitration in 2024 to date. Administrative expenses excluding these legal fees have reduced by approximately US$0.7 million.

In prior years foreign exchange movements were impacted by the tax liability arising from the Group's 2012 farm-out, a GBP denominated balance. This liability also impacted on finance expenditure as it was deferred and hence discounted. During the prior year this liability was derecognised and so has no impact in the current year. The foreign exchange gain in the year of US$0.3 million (2022: gain of US$6.6 million) is therefore materially smaller, something that is expected to continue going forward. The tax liability is discussed further below.

Finance expenses have reduced significantly to US$0.5 million (2022: US$4.2million). As well as prior year exchange differences on tax balances there was a loss on fair value of derivative financial liabilities of US$0.5 million. This related to fair value adjustments on Warrants issued as part of the 2022 Placing and Subscription ("Warrants") which were treated as derivative financial liabilities and as such carried at fair value on the balance sheet.

Full year 2023 saw a gain on derivative financial liabilities of US$0.9 million. This, along with an increase in interest receivable on term deposits, explains the finance income during the year of US$1.2 million as opposed to negligible amounts in 2022.

CASH MOVEMENTS AND CAPITAL EXPENDITURE

At 31 December 2023, the Group had cash and term deposits of US$8.0 million (31 December 2022: US$9.8 million).

Cash and term deposit movements during the period:

	US$m
Opening cash balance (31 December 2022)	9.8
Cost of sales	(0.9)
Falkland Islands	(1.3)
Administrative expenses	(4.3)
Net proceeds of warrant exercises	3.7
Miscellaneous	1.0
Closing cash balance (31 December 2023)	8.0

Miscellaneous includes foreign exchange and movements in working capital during the period.

The additions to intangible exploration and evaluation assets during the year of US$5.4 million relate principally to the Sea Lion development. Management considered whether there were any indicators of impairment to the carrying value of the intangible as it relates to the first phase of the Sea Lion development and concluded there were none.

We continue to impair amounts capitalised in relation to licences that hold discovered barrels of oil that would be produced in any subsequent phases of development. This is in line with accounting standards given the limited capital we are currently spending on these licences. We continue to believe that these licences are hugely valuable and the Group's long‐term strategy is still for multiple phases of development in the North Falkland Basin which would eventually include these licences. This is discussed in more detail in note 14 to the financial statements.

TAXATION

On the 8 April 2015, the Group agreed binding documentation ("Tax Settlement Deed") with the FIG in relation to the tax arising from the Group's 2012 farm out. The Tax Settlement Deed confirms the quantum and deferment of the outstanding tax liability and is made under Extra Statutory Concession 16. The Tax Settlement Deed also states that the Group is entitled to make adjustment to the outstanding tax liability if and to the extent that the Commissioner is satisfied that any part of the Development Carry becomes irrecoverable.

In September 2022 the transaction enabling Harbour Energy plc ("Harbour") to exit and Navitas to enter the North Falkland Basin completed (the "Transaction"). Under the Transaction the balance of development carry, approximately US$670 million, has become irrecoverable.

Due to the irrecoverable Development Carry in the Group's judgment no further amounts are due on the Group's 2012 farm-out. Given the highly material nature of this judgment professional advice has been sought to confirm that it is probable that the Group is entitled to adjust the outstanding tax liability for the irrecoverable Development Carry. As such, in the prior year, the Group derecognised the tax liability to measure it at the most likely amount it will be settled for, US$nil. We understand that FIG still believe that the £59.6 million to be due and we are currently engaged with FIG to resolve this matter.

Separately, we have submitted tax returns in relation to the farm out to Navitas that occurred immediately after their acquisition from Harbour of the company that holds the North Falkland's Basin licences. The consideration for this transaction was the provision of loan funding to the Group to cover the majority of its share of Sea Lion phase 1 related costs from transaction completion up to FID through a loan from Navitas with interest charged at 8% per annum (the "Pre-FID Loan"). Subject to a positive FID, Navitas will provide an interest free loan to fund two-thirds of the Group's share of Sea Lion phase 1 development costs (for any costs not met by third party debt financing). Whilst we continue to engage with FIG on the value of this consideration, we are confident that we have sufficient losses to ensure no tax liability will arise.

Based on correspondence with FIG, Management does not believe that the farmout constitutes a substantial disposal and therefore would not have accelerated the £59.6 million liability should it be shown to still be payable.

The prior year derecognition of the tax liability led to a tax income of US$38.8 million. The tax liability had been treated as long term and hence discounted. In 2022, the unwinding of discounts on the previously recognised liability, prior to derecognition, was US$3.4 million and treated as a finance expense. This was offset by prior year foreign exchange gains of US$7.8 million.

Warrants

During the prior year Rockhopper raised US$9.1 million, post expenses, by way of a Placing and Subscription in June 2022 and an Open Offer in July 2022 (together the "Fund Raising"). In each case at an issue price of 7 pence per Unit (the "Issue Price"). Each Unit offered comprised one new ordinary share ("New Ordinary Share") and, for every two New Ordinary Shares subscribed for, one warrant ("Warrant").

Each Warrant gave the holder the right to subscribe for one new Ordinary Share at a price of 9 pence per Ordinary Share (the "Strike Price") at any time from the issue of the Warrants up to (and including) 5.00 p.m. on 31 December 2023.

During the year 32.4 million Warrants were exercised, raising US$3.7 million. Immediately after the year end a further 20.3 million shares were issued in relation to Warrants that were validly exercised pre year end and prior to their expiry. This raised an additional US$2.0 million of net proceeds. Of the 60,917,237 Warrants issued as part of the Fund Raising, 93.9% were exercised.

LIQUIDITY, COUNTERPARTY RISK AND GOING CONCERN

After the year end, the Group received the proceeds of warrants validly exercised pre year end but where shares were allotted in 2024. This raised additional net proceeds of approximately US$2.0 million.

Historically, the Group's largest annual expenditure has been pre-sanction costs associated with the Sea Lion development. Following completion of Navitas coming into the North Falkland Basin (the "Navitas Transaction"), the Group benefits from loan funding for its share of all Sea Lion pre-sanction costs (other than licence fees and taxes). Following the Navitas Transaction, normal working capital requirements and projected recurring expenditure is expected to be around US$4.0 million per year in addition to costs associated with maintaining the various licences and concessions in the Group's Italian portfolio.

Under these base assumptions the Group has sufficient financial headroom to meet forecast cash requirements for the twelve months from the date of approval of these consolidated financial statements but would need to raise additional funds to meet ongoing liabilities in the second half of 2025.

As detailed in note 26 on contingent assets, the Group was awarded approximately €190 million plus interest and costs pursuant to an International Centre for the Settlement of Investment Disputes ("ICSID") arbitration from Italy (the "Award"). In October 2022 Italy requested to have this Award annulled.

In December 2023 the Group entered into a funded participation agreement with a Specialist Fund (the "Monetisation") the key terms of which are also set out in note 26 and include a requirement for the approval of the Falkland Islands Government (the "Approval"). Under the terms of the Monetisation either party can terminate the agreement should the Approval not be received by 30 June 2024.

In the event the Approval is granted before termination of the Monetisation, regardless of whether Italy is successful in its request to have the Award annulled, the Group will receive net pre-tax proceeds of €15 million after discharging all of its liabilities under the agreement with the original Arbitration Funder and certain success fees to its legal representatives.

In the event the Approval is not granted, and the Award is annulled no amounts would fall due in relation to previously funded litigations as they are linked to receipt of proceeds from the Award. Similarly, no success fees would fall due. However, in the event Approval is not granted and the Award is not annulled the success fees of approximately £3 million would be due to our legal representatives. Under this downside scenario the Group would need to raise additional funds to meet ongoing liabilities at the beginning of 2025.

Accordingly, after making enquiries and considering the risks described above, the Directors have reviewed the Group's overall position and are of the opinion that the Group is able to operate as a going concern for at least the next twelve months from the date of approval of these financial statements and believe the use of the going concern basis is appropriate.

Nonetheless, for the avoidance of doubt, in the downside scenarios in which the Monetisation does not complete and additional funding is not raised, material uncertainties exist that may cast significant doubt upon the Group's ability to continue as a going concern and the Group may therefore be unable to realise its assets and discharge its liabilities in the ordinary course of business. The Consolidated and Parent Company financial statements do not include adjustments that would result if the Group was unable to continue as a going concern.

PRINCIPAL RISK AND UNCERTAINTIES

A detailed review of the potential risks and uncertainties which could impact the Group are outlined elsewhere in this Strategic Report. The Group identified its key risks at the end of 2023 as being:

1 oil price volatility;

2 availability and access to capital;

3 joint venture partner alignment; and

4 failure of joint venture partners to secure the requisite funding to allow a Sea Lion Final Investment Decision.

CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2023
	Notes	Year ended 31 December 2023 $'000	Year ended 31 December 2022 $'000
Revenue	3	-	652
Cost of sales	4	(870)	(1,965)
Gross loss		(870)	(1,313)
Exploration and evaluation expenses	5	(278)	(331)
Administrative expenses	6	(4,286)	(3,625)
Charge for share based payments	9	(117)	(393)
Foreign exchange movement	10	307	6,596
Results from operating activities		(5,244)	934
Finance income	11	1,191	23
Finance expense	11	(497)	(4,175)
Loss before tax		(4,550)	(3,218)
Tax income	12	-	38,763
(Loss)/profit for the year attributable to the equity shareholders of the parent company		(4,550)	35,545
(Loss)/profit per share attributable to the equity shareholders of the parent company: cents
Basic	13	(0.77)	6.77
Diluted	13	(0.77)	6.68
All operating income and operating gains and losses relate to continuing activities.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2023
	Year ended 31 December	Year ended 31 December
	2023	2022
	$'000	$'000
Loss/(profit) for the year	(4,550)	35,545
Items that may be reclassified to profit or loss Exchange differences on translation of foreign operations	(502)	1,683
Total comprehensive (loss)/profit for the year	(5,052)	37,228
The notes on pages 51 to 71 form an integral part of these consolidated financial statements.

CONSOLIDATED BALANCE SHEET
as at 31 December 2023
	Notes	31 December 2023 $'000	31 December 2022 $'000
Non current assets
Exploration and evaluation assets	14	257,228	251,970
Property, plant and equipment	15	29	68
Finance lease receivable		-	444
Current assets
Other receivables	16	1,241	1,406
Finance lease receivable		235	259
Restricted cash		529	519
Term deposits	17	4,501	8,736
Cash and cash equivalents		3,487	1,059
Total assets		267,250	264,461
Current liabilities
Other payables	18	7,176	3,383
Derivative financial liabilities	19	450	1,744
Lease liability		246	209
Non-current liabilities
Lease liability		-	344
Tax payable	20	-	-
Provisions	21	20,121	19,177
Deferred tax liability	22	39,137	39,137
Total liabilities		67,130	63,994
Equity
Share capital	23	9,196	8,771
Share premium	24	10,181	6,518
Share based remuneration	24	2,109	1,492
Own shares held in trust	24	(1,320)	(1,494)
Merger reserve	24	78,208	78,208
Foreign currency translation reserve	24	(8,501)	(7,999)
Special reserve	24	175,281	175,281
Retained losses	24	(65,034)	(60,310)
Attributable to the equity shareholders of the company		200,120	200,467
Total liabilities and equity		267,250	264,461

These financial statements on pages 47 to 71 were approved by the directors and authorised for issue on 21 May 2024 and are signed on their behalf by:

Samuel Moody

Chief Executive Officer

Rockhopper Exploration plc Registered Company Number: 05250250

The notes on pages 51 to 71 form an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2023
	Share capital	Share premium	Share based remuneration	Shares held in trust	Merger reserve	Foreign currency translation reserve	Special reserve	Retained losses	Total equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Balance at 31 December 2021	7,218	3,622	4,327	(3,342)	74,332	(9,682)	175,281	(97,235)	154,521
Profit for the year	-	-	-	-	-	-	-	35,545	35,545
Other comprehensive profit for the year	-	-	-	-	-	1,683	-	-	1,683
Total comprehensive profit for the year	-	-	-	-	-	1,683	-	35,545	37,228
Share based payments (see note 9)	-	-	393	-	-	-	-	-	393
Share issues (net of expenses)	1,553	2,896	-	-	3,876	-	-	-	8,325
Other transfers	-	-	(3,228)	1,848	-	-	-	1,380	-
Balance at 31 December 2022	8,771	6,518	1,492	(1,494)	78,208	(7,999)	175,281	(60,310)	200,467
Loss for the year	-	-	-	-	-	-	-	(4,550)	(4,550)
Other comprehensive loss for the year	-	-	-	-	-	(502)	-	-	(502)
Total comprehensive loss for the year	-	-	-	-	-	(502)	-	(4,550)	(5,052)
Share based payments (see note 9)	-	-	617	-	-	-	-	-	617
Share issues (net of expenses)	425	3,663	-	-	-	-	-	-	4,088
Other transfers	-	-	-	174	-	-	-	(174)	-
Balance at 31 December 2023	9,196	10,181	2,109	(1,320)	78,208	(8,501)	175,281	(65,034)	200,120

See note 24 for a description of each of the reserves of the Group.

Other transfers relate to amounts transferred from the Share based remuneration reserve to either Retained losses for options that have either not vested or expired or Shares held in trust where they have been used to satisfy exercised options.

The notes on pages 51 to 71 form an integral part of these consolidated financial statements.

CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2023
	Notes	Year ended 31 December 2023 $'000	Year ended 31 December 2022 $'000
Cash flows from operating activities
Loss before tax		(4,550)	(3,218)
Adjustments to reconcile net losses to cash:
Depreciation	15	39	122
Share based payment charge	9	117	393
Written off exploration costs	14	158	307
Disposal of property, plant and equipment		-	8
Finance expense	11	482	4,167
Finance income	11	(889)	-
Foreign exchange		(356)	(7,764)
Operating cash flows before movements in working capital		(4,999)	(5,985)
Changes in:
Other receivables		517	1,564
Payables		112	837
Movement on provisions		(41)	1,030
Cash utilised by operating activities		(4,411)	(2,554)
Cash flows from investing activities
Capitalised expenditure on exploration and evaluation assets		(1,293)	(1,797)
Investing cash flows before movements in capital balances		(1,293)	(1,797)
Changes in:
Term deposits		4,533	(8,697)
Cash flow from/(used in) investing activities		3,240	(10,494)
Cash flows from financing activities
Issue of ordinary shares		-	9,038
Expenses associated with issue of ordinary shares		-	(1,194)
Issue of warrants classified as derivative financial liabilities		-	1,250
Exercise of warrants and share options		3,682	481
Lease liability payments		(132)	(257)
Cash flow from financing activities		3,550	9,318
Currency translation differences relating to cash and cash equivalents		49	(33)
Net cash flow		2,379	(3,730)
Cash and cash equivalents brought forward		1,059	4,822
Cash and cash equivalents carried forward		3,487	1,059

The notes on pages 51 to 71 form an integral part of these consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the year ended 31 December 2023

1. Accounting policies

1.1 Group and its operations

Rockhopper Exploration plc, the 'Company', a public limited company quoted on AIM, incorporated and domiciled in the United Kingdom ('UK'), together with its subsidiaries, collectively 'the 'Group' holds certain exploration licences for the exploration and exploitation of oil and gas in the Falkland Islands. In addition, it has operations in the Greater Mediterranean based in Italy. The registered office of the Company is Warner House, 123 Castle Street, Salisbury, Wiltshire, SP1 3TB.

1.2 Statement of compliance

The consolidated financial statements of the Group have been prepared on a going concern basis in accordance with UK adopted International Accounting Standards in conformity with the requirements of the Companies Act 2006. The consolidated financial statements were approved for issue by the board of directors on 21 May 2024 and are subject to approval at the Annual General Meeting of shareholders on 25 June 2024.

1.3 Basis of preparation

The results upon which these financial statements have been based were prepared using the accounting policies set out below. These policies have been consistently applied unless otherwise stated.

These consolidated financial statements have been prepared under the historical cost convention with the exception of Share Based Payments which are at fair value.

Items included in the results of each of the Group's entities are measured in the currency of the primary economic environment in which that entity operates (the "functional currency"). The consolidated financial statements are presented in US Dollars ($), which is Rockhopper Exploration plc's functional currency.

All values are rounded to the nearest thousand dollars ($'000) or thousand pounds (£'000), except when otherwise indicated.

1.4 Change in accounting policy

Changes in accounting standards

In the current year the following new and revised Standards and Interpretations have been adopted. None of these have a material impact on the Group's annual results.

- IFRS 17 Insurance Contracts;

- Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

- Definition of Accounting Estimates (Amendments to IAS 8);

- Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).); and

- International Tax Reform - Pillar Two Model Rules (Amendment to IAS 12 Income Taxes).

New accounting pronouncements

At 31 December 2023, the following Standards, Amendments and Interpretations were in issue but not yet effective:

The following amendments are effective for the period beginning 1 January 2024:

- IFRS 16 Leases (Amendment - Liability in a Sale and Leaseback);

- IAS 1 Presentation of Financial Statements (Amendment - Classification of Liabilities as Current or Non-current);

- IAS 1 Presentation of Financial Statements (Amendment - Non-current Liabilities with Covenants); and

- Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash flows and IFRS 7 Financial Instruments: Disclosures).

The following amendments are effective for the period beginning 1 January 2024:

- Lack of Exchangeability (Amendments to IAS 21 The Effects of changes in Foreign Exchange Rates)

The Directors do not expect that the adoption of the above Standards, Amendments and Interpretations will have a material impact on the Financial Statements of the Group in future periods.

1.5 Going concern

The Group monitors its cash position, cash forecasts and liquidity on a regular basis and takes a conservative approach to cash management. At 31 December 2023, the Group had cash and cash equivalents and term deposits of US$8.0 million. After the year end the Group received the proceeds of warrants validly exercised pre year end but where shares were allotted in 2024. This raised additional net proceeds of approximately $2.0 million.

Historically, the Group's largest annual expenditure has been pre-sanction costs associated with the Sea Lion development. Following completion of Navitas coming into the North Falkland Basin (the "Navitas Transaction") the Group benefits from loan funding for its share of all Sea Lion pre-sanction costs (other than licence fees and taxes). Following the Navitas Transaction normal working capital requirements and projected recurring expenditure is expected to be around US$4.0 million per year and in addition there are costs associated with maintaining the various licences and concessions in the Group's Italian portfolio.

As detailed in note 26, Contingent assets, the Group was awarded approximately €190 million plus interest and costs pursuant to an ICSID arbitration from Italy (the "Award"). In October 2022 Italy requested to have this Award annulled.

In the event the Approval is granted before termination of the Monetisation, regardless of whether Italy is successful in its request to have the Award annulled, the Group will receive net pre tax proceeds of €15 million after discharging all of its liabilities under the agreement with the original Arbitration Funder and certain success fees to its legal representatives.

In the event the Approval is not granted and the Award is annulled no amounts would fall due in relation to previously funded litigations as they are linked to receipt of proceeds from the Award. Similarly, no success fees would fall due. However, in the event Approval is not granted and the Award is not annulled the success fees of approximately £3 million would be due to our legal representatives. Under this downside scenario the Group would need to raise additional funds to meet ongoing liabilities at the beginning of 2025.

1.6 Significant accounting policies

(A) Basis of accounting

The Group has identified the accounting policies that are most significant to its business operations and the understanding of its results. These accounting policies are those which involve the most complex or subjective decisions or assessments, and relate to the capitalisation of exploration expenditure. The determination of this is fundamental to the financial results and position and requires management to make a complex judgement based on information and data that may change in future periods.

Since these policies involve the use of assumptions and subjective judgements as to future events and are subject to change, the use of different assumptions or data could produce materially different results. The measurement basis that has been applied in preparing the results is historical cost.

The significant accounting policies adopted in the preparation of the results are set out below.

(B) Basis of consolidation

The Group financial statements consolidate the financial statements of the Company and its subsidiary undertakings drawn up to 31 December 2023. Subsidiaries are those entities over which the Group has control. Control is achieved where the Group has the power over the subsidiary, is exposed, or has rights to variable returns from the subsidiary and has the ability to use its power to affect its returns. All subsidiaries are 100 per cent owned by the Group and there are no non-controlling interests.

The results of subsidiaries acquired or disposed of during the year are included in the income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries acquired to bring the accounting policies used into line with those used by other members of the Group.

All intercompany balances have been eliminated on consolidation.

(C) Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker as required by IFRS8 Operating Segments. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the board of directors.

The Group's operations are made up of three segments, the oil and gas exploration and production activities in the geographical regions of the Falkland Islands and the Greater Mediterranean region as well as its corporate activities centred in the UK.

(D) Oil and gas assets

The Group applies the successful efforts method of accounting for exploration and evaluation ("E&E") costs, having regard to the requirements of IFRS6 - 'Exploration for and evaluation of mineral resources'.

Exploration and evaluation ("E&E") expenditure Expensed exploration & evaluation costs

Expenditure on costs incurred prior to obtaining the legal rights to explore an area, geological and geophysical costs are expensed immediately to the income statement.

Capitalised intangible exploration and evaluation assets

All directly attributable E&E costs are initially capitalised in well, field, prospect, or other specific, cost pools as appropriate, pending determination.

Treatment of intangible E&E assets at conclusion of appraisal activities

Intangible E&E assets related to each cost pool are carried forward until the existence, or otherwise, of commercial reserves have been determined, subject to certain limitations including review for indicators of impairment. If commercial reserves have been discovered, the carrying value, after any impairment loss, of the relevant E&E assets, are then reclassified as development and production assets within property plant and equipment. However, if commercial reserves have not been found, the capitalised costs are charged to expense.

Development and production assets

Development and production assets, classified within property, plant and equipment, are accumulated generally on a field-by-field basis and represent the costs of developing the commercial reserves discovered and bringing them into production, together with the E&E expenditures incurred in finding commercial reserves transferred from intangible E&E assets.

Depreciation of producing assets

The net book values of producing assets are depreciated generally on a field-by-field basis using the unit-of-production method by reference to the ratio of production in the year and the related commercial reserves of the field, taking into account the future development expenditure necessary to bring those reserves into production.

Disposals

Net cash proceeds from any disposal of an intangible E&E asset are initially credited against the previously capitalised costs. Any surplus proceeds are credited to the income statement.

Decommissioning

Provision for decommissioning is recognised in full when the related facilities are installed. The amount recognised is the present value of the estimated future expenditure. A corresponding amount equivalent to the provision is also recognised as part of the cost of the related oil and gas property. This is subsequently depreciated as part of the capital costs of the production facilities. Any change in the present value of the estimated expenditure is dealt with prospectively as an adjustment to the provision and the oil and gas property. The unwinding of the discount is included in finance cost.

(E) Leases

The Group as lessee

The Group assesses whether a contract is, or contains, a lease, at inception of the contract. The Group recognises a right-of-use asset and

a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases and leases of low value assets.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. Lease payments included in the measurement of the lease liability comprise fixed lease payments. The lease liability is presented as a separate line in the consolidated statement of financial position. The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The Group has not had to remeasure the lease liability (and makes a corresponding adjustment to the related right-of-use asset).

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs. They are subsequently measured at cost less accumulated depreciation and impairment. Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the notes to the financial statements.

Payment associated with short term leases and leases of low value assets are recognised on a straight-line basis as an expense in profit or loss. Short term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.

The Group as lessor

The Group enters into lease agreements as a lessor with respect to some sublets on its rented offices. Leases for which the Group is a lessor are classified as a finance lease as the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group's net investment outstanding in respect of the leases.

(F) Foreign currency translation Functional and presentation currency:

Items included in the results of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates, the functional currency. The consolidated financial statements are presented in US$ as this best reflects the economic environment of the oil exploration sector in which the Group operates. The Group maintains the financial statements of the parent and subsidiary undertakings in their functional currency. Where applicable, the Group translates subsidiary financial statements into the presentation currency, US$, using the closing rate

method for assets and liabilities which are translated at the rate of exchange prevailing at the balance sheet date and rates at the date of transactions for income statement accounts. Differences are taken through the Statement of Comprehensive Income to reserves.

Transactions and balances:

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are expensed in the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.

The year end rates of exchange were:

	31 December 2023	31 December 2022
£ : US$	1.27	1.21
€ : US$	1.10	1.07

(G) Revenue and income

(i) Revenue from contracts with customers

Revenue arising from the sale of goods is recognised when a performance obligation is satisfied by transferring control over a product or service to a customer, which is typically at the point that title passes, and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods provided in the normal course of business, net of discounts, customs duties and sales taxes.

(ii) Investment income

Investment income consists of interest receivable for the period. Interest income is recognised as it accrues, taking into account the effective yield on the investment.

(H) Non-derivative financial instruments

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group has become a party to the contractual provisions of the instrument.

(i) Other receivables

Other receivables are initially measured at fair value. They are subsequently measured at amortised cost using the effective interest method, less loss allowance. A provision for impairment is made where there is objective evidence that amounts will not be recovered in accordance with original terms of the agreement. The Group recognises an allowance for expected credit losses for all debt instruments not held at fair value through profit or loss. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate.

(ii) Restricted cash

Restricted cash is disclosed separately on the face of the balance sheet and denoted as restricted when it is not under the exclusive control of the Group. All amounts relate to balances held as security in relation to property leases.

(iii) Term deposits

Term deposits are disclosed separately on the face of the balance sheet when their term is equal or greater than one month and they are unbreakable.

(iv) Cash and cash equivalents

They are stated at carrying value which is deemed to be fair value. Cash and cash equivalents comprise instant access bank balances as well as a small amount of cash in hand.

(v) Financial liabilities and equity

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities.

(vi) Account and other payables

Account payables are initially recognised at fair value and subsequently at amortised cost using the effective interest method.

(vii) Derivative financial liabilities

Derivative financial liabilities are initially recognised and carried at fair value with changes in fair value recognised in the consolidated statement of comprehensive income.

(viii) Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

(I) Income taxes and deferred taxation

The current tax amount is based on the taxable profits or losses of the year, after any adjustments in respect of prior years. Tax, including tax relief for losses if applicable, is allocated over profits before tax and amounts charged or credited to reserves as appropriate.

Deferred taxation is recognised in respect of all taxable temporary differences that have originated but not reversed at the balance sheet date where a transaction or events have occurred at that date that will result in an obligation to pay more, or a right to pay less or to receive more, tax, with the

exception that deferred tax assets are recognised only to the extent that the directors consider that it is probable that there will be suitable taxable profits from which the future reversal of the underlying temporary differences can be deducted.

Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which temporary differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.

(J) Share based remuneration

The Group issues equity settled share based payments to certain employees. Equity settled share based payments are measured at fair value (excluding the effect of non market based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity settled share based payments is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest and adjusted for non market based vesting conditions.

Fair value is typically measured by use of either Binomial or Monte-Carlo simulation. The main assumptions are disclosed in note 9.

Cash settled share based payment transactions result in a liability. Services received and liability incurred are measured initially at fair value of the liability at grant date, and the liability is remeasured each reporting period until settlement. The liability is recognised on a straight line basis over the period that services are rendered.

(K) Capital commitments

Capital commitments include all projects for which specific board approval has been obtained up to the reporting date. Projects still under investigation for which specific board approvals have not yet been obtained are excluded.

2. Use of estimates, assumptions and judgements

The Group makes estimates, assumptions and judgements that affect the reported amounts of assets and liabilities. Estimates, assumptions and judgements are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed in the relevant note as is sensitivity analysis as required. The key areas identified and the relevant note are as follows:

Going concern (note 1.5) - judgements

Carrying value of intangible exploration and evaluation assets (note 14) - judgements

Tax payable (note 20) - judgements

Decommissioning costs (note 21) - judgements and estimates

3. Revenue and segmental information

The Group's operations are located and managed in three geographically distinct business units; namely the Falkland Islands, the Greater Mediterranean, and Corporate (or UK). Some of the business units currently do not generate any revenue or have any material operating income. The business is only engaged in one business, that of upstream oil and gas exploration and production.

	Falkland Islands	Greater Mediterranean	Corporate	Total
Year ended 31 December 2023	$'000	$'000	$'000	$'000
Revenue	-	-	-	-
Cost of sales	-	(870)	-	(870)
Gross loss	-	(870)	-	(870)
Exploration and evaluation expense	(158)	(3)	(117)	(278)
Administrative expenses	-	(446)	(3,840)	(4,286)
Charge for share based payments	-	-	(117)	(117)
Foreign exchange gain/(loss)	-	(21)	328	307
Results from operating activities and other income	(158)	(1,340)	(3,746)	(5,244)
Finance income	-	-	1,191	1,191
Finance expense	(110)	(376)	(11)	(497)
Loss before tax	(268)	(1,716)	(2,566)	(4,550)
Tax	-	-	-	-
Loss for year	(268)	(1,716)	(2,566)	(4,550)
Reporting segments assets	256,847	1,352	9,051	267,250
Reporting segments liabilities	47,294	17,697	2,139	67,130
Depreciation and impairments	158	-	39	197
	Falkland	Greater
Year ended 31 December 2022	Islands $'000	Mediterranean $'000	Corporate $'000	Total $'000
Revenue	-	652	-	652
Cost of sales	-	(1,965)	-	(1,965)
Gross loss	-	(1,313)	-	(1,313)
Exploration and evaluation expense	(307)	(1)	(23)	(331)
Administrative expenses	-	(1,109)	(2,516)	(3,625)
Charge for share based payments	-	-	(393)	(393)
Foreign exchange gain/(loss)	7,756	-	(1,160)	6,596
Results from operating activities and other income	7,449	(2,423)	(4,092)	934
Finance income	-	-	23	23
Finance expense	(3,394)	(272)	(509)	(4,175)
Profit/(loss) before tax	4,055	(2,695)	(4,578)	(3,218)
Tax	38,763	-	-	38,763
Profit/(loss) for year	42,818	(2,695)	(4,578)	35,545
Reporting segments assets	251,589	1,785	11,087	264,461
Reporting segments liabilities	43,995	16,287	3,712	63,994
Depreciation and impairments	307	50	72	429

During the year the group had no revenue. In the prior year all of the Group's worldwide sales revenues of oil and gas US$652 thousand arose from contracts to one customer.

4. Cost of sales
	Year ended	Year ended
	31 December	31 December
	2023	2022
	$'000	$'000
Other cost of sales	870	927
Increase in decommissioning provisions (see note 21)	-	1,038
	870	1,965

Even though there has been no revenue in the year there are fixed costs associated with maintaining the various production concessions whilst potential options for redevelopment are considered.

5. Exploration and evaluation expenses
	Year ended	Year ended
	31 December	31 December
	2023	2022
	$'000	$'000
Allocated from administrative expenses (see note 6)	-	22
Exploration and evaluation assets written off (see note 14)	158	307
Other exploration and evaluation expenses	120	2
	278	331
6. Administrative expenses
	Year ended	Year ended
	31 December	31 December
	2023	2022
	$'000	$'000
Directors' remuneration excluding benefits (see note 7)	785	1,066
Other employees' salaries	1,148	1,175
National insurance costs	382	383
Pension costs	79	91
Employee benefit costs	57	53
Total staff costs	2,451	2,768
Amounts reallocated	(1,004)	(648)
Total staff costs charged to administrative expenses	1,447	2,120
Auditors' remuneration (see note 8)	178	164
Other professional fees	2,120	666
Other	807	857
Depreciation	39	117
Amounts reallocated	(305)	(299)
	4,286	3,625

The average number of full time equivalent staff employed during the year was 7 (2022: 8). As at the year end the Group employed (including part time) 9 staff, 7 of which were in the UK and 2 in Italy.

Amounts reallocated relate to the costs of staff and associated overhead in relation to non administrative tasks. These costs are allocated to cost of sales, exploration and evaluation expenses or capitalised as part of the intangible exploration and evaluation assets as appropriate.

Other professional fees include legal fees in relation to contesting the Annulment of the Award of US$1.6 million (2022: US$0.2 million).

7. Directors' remuneration	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
Executive salaries	475	746
Company pension contributions to money purchase schemes & pension cash allowance	58	62
Benefits	11	7
Non-executive fees	252	258
	796	1,073
The total remuneration of the highest paid director in GBP, was:
	Year ended 31 December 2023 £'000	Year ended 31 December 2022 £'000
Annual salary	381	513
Money purchase pension schemes & pension cash allowance	47	47
Benefits	5	4
	433	564

Interest in outstanding share options, LTIPs and SARs, by director, are also separately disclosed in the directors' remuneration report.

8. Auditors' remuneration	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
Fees payable to the Company's auditors for the audit of the Company's annual financial statements	146	130
Fees payable to the Company's auditors and its associates for other services:
Audit of the accounts of subsidiaries	26	26
Assurance related non-audit services	6	8
	178	164
9. Share based payments
The charge for share based payments relate to options granted to employees of the Group.
	Year ended 31 December 2023 $'000	Year ended 31 December 2022 $'000
Charge for option scheme	117	156
Charge for the long term incentive plan options	-	237
Charge for share based payments	117	393
Charge for services outside the Group	500	-
	617	393

During the year 4.5 million options were issued at 7.0p per share in connection with the delivery of the Sea Lion project to an individual employed outside of the Rockhopper group. These options vest in three tranches of 1.5 million each at project sanction, first oil, and reaching project completion. The value of these options was $500,000 and made with reference to the services received.

The cost of the options was offset against the liability in relation to the service provided.

9. Share based payments (continued)

The models and key assumptions used to value each of the other grants and hence calculate the above charges are set out below:

Option scheme

A one-off equity option package was implemented during 2020 (the "Option Scheme") to replace the existing long term incentive plan. In place of the LTIP scheme, executive directors and senior staff received options to subscribe for Ordinary Shares, exercisable at a price of 6.25 pence per new Ordinary Share (the "Market Price Options"). The Market Price Options will vest in equal tranches after three, four and five years' further continuous employment.

Executive directors and staff in lieu of their contractual notice periods also received options to subscribe for an aggregate new ordinary shares in the capital of the Company ("Ordinary Shares"), exercisable at a price of 1 pence per new Ordinary Share (the "1p Options").

The options have been valued using a binomial model the key inputs of which are summarised below:

Grant date:	18 May 2020	18 May 2020	18 May 2020
Vesting date	18 May 2023	18 May 2024	18 May 2025
Closing share price (pence)	6.25	6.25	6.25
Number granted	7,949,997	7,950,000	7,950,003
Weighted average volatility	50.0%	50.0%	50.0%
Weighted average risk free rate	0.10%	0.12%	0.14%
Exercise price (pence)	6.25	6.25	6.25
Dividend yield	0%	0%	0%

Weighted average volatility has been selected with reference to historic volatility but taking into account exceptionally high volatility in the year preceding the grant of the options.

The following movements occurred during the year:

Issue date	Vesting date	Expiry date	At 31 December 2022	(Lapsed/Granted	At 31 December 2023
18 May 2020	18 Nov 2020	18 May 2030	1,986,972	-	1,986,972
18 May 2020	18 May 2021	18 May 2030	6,357,616	(3,085,699)	3,271,917
18 May 2020	18 May 2023	18 May 2030	5,116,664	-	5,116,664
18 May 2020	18 May 2024	18 May 2030	5,116,667	-	5,116,667
18 May 2020	18 May 2025	18 May 2030	5,116,669	-	5,116,669
25 January 2023	Variable	25 January 2033	-	4,500,000	4,500,000
			23,694,588	1,414,301	25,108,889

Long term incentive plan

LTIP awards vest or become exercisable subject to the satisfaction of a performance condition measured over a three year period ("Performance Period") determined by the Remuneration Committee at the time of grant. All LTIPs as at the year end have vested.

The LTIP has been valued using a Monte Carlo model the key inputs of which are summarised below:
Grant date:		31 July 2019
Closing share price		20.75
Number granted		7,200,000
Weighted average volatility		50.0%
Weighted average volatility of index		70.0%
Weighted average risk free rate		0.35%
Correlation in share price movement with comparator group		5%
Exercise price		0p
Dividend yield		0%

The following movements occurred during the year:

Issue date	Expiry date	At 31 December 2022	Expired/Exercised	At 31 December 2023
8 October 2013	8 October 2023	546,145	(546,145)	-
10 March 2014	10 March 2024	70,391	(70,391)	-
16 June 2017	16 June 2027	3,216,000	(864,000)	2,352,000
31 July 2019	31 July 2029	3,300,001	(962,500)	2,337,501
		7,132,537	(2,443,036)	4,689,501

Share appreciation rights

All SARs have expired during the year.

The following movements occurred during the year:

Issue date	Expiry date	Exercise price (pence)	At 31 December 2022	Expired	At 31 December 2023
30 January 2013	30 January 2023	159.00	277,162	(277,162)	-
			277,162	(277,162)	-
10. Foreign exchange
				Year ended	Year ended
				31 December	31 December
				2023 $'000	2022 $'000
Foreign exchange gain on Falkland Islands tax liability (see note 20)				-	7,756
Other foreign exchange movements				307	(1,160)
Total net foreign exchange gain				307	6,596
11. Finance income and expense				Year ended	Year ended
				31 December	31 December
				2023 $'000	2022 $'000
Warrants (see note 19)				889	-
Bank and other interest receivable				302	23
Total finance income				1,191	23

Warrants (see note 19)				-	494
Unwinding of discount on Falkland Islands Tax Liability (see note 20)				-	3,354
Unwinding of discount on decommissioning provisions (see note 21)				482	304
Other				15	23
Total finance expense				497	4,175

12. Taxation
	Year ended 31 December 2023 $'000	Year ended 31 December 2022 $'000
Current tax:
Overseas tax	-	-
Adjustment in respect of prior years (see Note 20)	-	38,763
Total current tax	-	38,763
Deferred tax:
Overseas tax	-	-
Total deferred tax credit - note 22	-	-
Tax on loss on ordinary activities	-	38,763
Loss on ordinary activities before tax	(4,550)	(3,218)
Loss on ordinary activities multiplied at 26% weighted average rate (31 December 2022: 26%)	(1,183)	(837)
Effects of:
Income and gains not subject to taxation	-	(2,017)
Expenditure not deductible for taxation	41	872
Depreciation in excess of capital allowances	10	32
IFRS2 Share based remuneration cost	30	102
Losses carried forward	1,102	1,848
Adjustments in respect of prior years (see Note 20)	-	38,763
Current tax credit for the year	-	38,763
The total carried forward losses and carried forward pre trading expenditures potentially available for relief are as follows:
	Year ended 31 December 2023 $'000	Year ended 31 December 2022 $'000
UK	81,729	81,124
Falkland Islands	623,323	621,765
Italy	69,748	66,808

No deferred tax asset has been recognised in respect of temporary differences arising on losses carried forward, outstanding share options or depreciation in excess of capital allowances due to the uncertainty in the timing of profits and hence future utilisation. Losses carried forward in the Falkland Islands includes amounts held within entities where utilisation of the losses in the future may not be possible. As disclosed in Note 20 Tax payable, we are in the process of agreeing our tax returns in relation to the farm-out to Navitas that completed in September 2022. The carried forward losses is based on our returns to FIG and may be revised leading to fewer losses carried forward.

13. Basic and diluted (loss)/profit per share	31 December	31 December
	2023 Number	2022 Number
Weighted average number of Ordinary Shares	595,630,305	527,767,197
Weighted average of shares held in Employee Benefit Trust	(1,304,500)	(2,539,227)
Weighted average number of Ordinary Shares for the purposes of basic earnings per share	594,325,805	525,227,970
Effects of
Share options and warrants	-	6,740,654
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share	594,325,805	531,968,624

	$'000	$'000
Net (loss)/ profit after tax for purposes of basic and diluted earnings per share	(4,550)	35,545
(Loss)/profit per share - cents
Basic	(0.77)	6.77
Diluted	(0.77)	6.68

The weighted average number of Ordinary Shares takes into account those shares which are treated as own shares held in trust. As at the year end the Group had 1,304,500 Ordinary shares held in an Employee Benefit Trust (2022: 1,304,500) which have been purchased to settle future exercises of options. As the Group is reporting a loss in the current year then in accordance with IAS33 the share options are not considered dilutive because the exercise of the share options would have the effect of reducing the loss per share.

14. Intangible exploration and evaluation assets
	Falkland Islands	Greater Mediterranean	Total
	$'000	$'000	$'000
At 31 December 2021	249,211	372	249,583
Additions	2,685	31	2,716
Written off exploration costs	(307)	-	(307)
Foreign exchange movement	-	(22)	(22)
At 31 December 2022	251,589	381	251,970
Additions	5,416	-	5,416
Written off exploration costs	(158)	-	(158)
Foreign exchange movement	-	-	-
At 31 December 2023	256,847	381	257,228

Falkland Islands Licences

The amounts for intangible exploration and evaluation assets represent active exploration and evaluation projects. The additions during the year of US$5.4 million relate principally to the Sea Lion development.

Given the quantum of intangible exploration and evaluation assets potential impairment could have a material impact on the financial statements. As such whether there are indicators of impairment is a key judgement. Management looked at a number of factors in making a judgement as to whether there are any indicators of impairment during the year. In particular with regard to the carrying value of the Falkland Islands assets, which relates to the Sea Lion Phase one development these include, but are not limited to;

• The Operator published an updated CPR in January 2024 which continued to evidence a robust project;

• Rockhopper and Navitas have used the extensive engineering work already carried out to create a lower cost developmen;

• Licences expire at the end of 2024. A license extension has been requested across all the licences. Whilst there is no guarantee this will be granted historically the Falkland Islands Government have been supportiveand Management believe that an extension will be receieved; and

• Current market conditions, including oil price and security of supply, provide stronger prospects for ultimate sanction of Sea Lion.

Management concluded that for these reasons, currently for Phase 1 of the Sea Lion development, there were no indicators of impairment.

Management made the judgement that the limited near term capital being invested outside of the Phase 1 project is still an indicator of impairment in the subsequent phases of the project. Accordingly the decision continues to be to write off historic exploration costs associated with the resources which will not be developed as part of the Sea Lion Phase 1 project. This impairment has no impact on the Group's long‐term strategy for multiple phases of development in the North Falkland Basin. This will be re-evaluated when the Phase 1 project has been sanctioned and investment resumes on the Phase 2 project.

15. Property, plant and equipment
	Oil and gas assets	Other assets	Total
	$'000	$'000	$'000
Cost At 31 December 2021	24,503	812	25,315
Foreign exchange	(1,441)	(18)	(1,459)
Disposals	-	(244)	(244)
At 31 December 2022	23,062	550	23,612
Foreign exchange	782	-	782
Disposals	-	(255)	(255)
At 31 December 2023	23,844	295	24,139
Depreciation and impairment At 31 December 2021	24,503	611	25,114
Charge for the year	-	122	122
Foreign exchange	(1,441)	(19)	(1,460)
Disposals	-	(232)	(232)
At 31 December 2022	23,062	482	23,544
Charge for the year	-	39	39
Foreign exchange	782	-	782
Disposals	-	(255)	(255)
At 31 December 2023	23,844	266	24,110
Net book value at 31 December 2022	-	68	68
Net book value at 31 December 2023	-	29	29

All oil and gas assets relate to the Greater Mediterranean region, specifically former producing assets in Italy.

16. Other receivables
	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
Current
Receivables	675	294
Other	566	1,112
	1,241	1,406
The carrying value of receivables approximates to fair value.
17. Term deposits	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
Maturing after the period end
Within three months	4,501	6,324
Six to nine months	-	1,206
Nine months to one year	-	1,206
	4,501	8,736

Term deposits relate to amounts placed on fixed term deposit with various A rated deposit banks.

18. Other payables and accruals	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
Accounts payable	2,309	1,428
Accruals	4,586	1,692
Other creditors	281	263
	7,176	3,383

All amounts are expected to be settled within twelve months of the balance sheet date and so the book values and fair values are considered to be the same.

19. Derivative financial liabilities	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
Brought forward	1,744	-
Warrant liabilities - initial value on grant	-	1,250
Changes in fair value taken to finance (income)/expense (see note 11)	(889)	494
Exercise of warrants	(405)	-
	450	1,744

Warrants issued as part of the Placing and Subscription ("Warrants") were treated as derivative financial liabilities and as such carried at fair value on the balance sheet with changes in fair value recognised in finance income or expenses in the income statement as appropriate. They are not designated as hedging instruments.

The Warrants had an expiry date of 31 December 2023. The value as at 31 December 2023 relates to validly exercised Warrants where the corresponding ordinary shares were issued after 31 December 2023. Fair value of the Warrants as at 31 December 2023 was determined to be the premium of the share price over and above the exercise price of the Warrants. Fair value at the prior year end and on grant were determined using a black scholes model the key inputs of which are summarised below.

	Grant	31 December 2022
Time to maturity	1.5 year	1.0 year
Closing share price (pence)	8.00	9.00
Number	41,091,388	41,091,388
Weighted average volatility	80.0%	98.4%
Weighted average risk free rate	1.90%	3.22%
Exercise price (pence)	9.00	9.00

20. Tax payable
	Year ended 31 December	Year ended 31 December
	2023 $'000	2022 $'000
	-	-
Non current tax payable	-	-

On the 8 April 2015, the Group agreed binding documentation ("Tax Settlement Deed") with FIG in relation to the tax arising from the Group's 2012 farm out. The Tax Settlement Deed confirms the quantum and deferment of the outstanding tax liability and is made under Extra Statutory Concession 16. The Tax Settlement Deed also states that the Group is entitled to make adjustment to the outstanding tax liability if and to the extent that the Commissioner is satisfied that any part of the Development Carry becomes irrecoverable.

In September 2022 the transaction enabling Harbour Energy plc to exit and Navitas to enter the North Falkland Basin completed. Under the transaction the balance of Development Carry, approximately $670 million, has become irrecoverable .

Due to the irrecoverable Development Carry in the Group's judgment no further amounts are due on the Group's 2012 farm-out. Given the highly material nature of this judgment professional advice has been sought to confirm that it is probable that the Group is entitled to adjust the outstanding tax liability for the Development Carry that has become irrecoverable. As such, in the prior year, the Group derecognised the tax liability to measure it at the most likely amount it will be settled for, US$nil. We understand that FIG still believe that the £59.6 million still to be due. We are currently engaged with FIG to resolve this matter.

20. Tax payable (continued)

Should it be proven that there is no entitlement to adjustment under the Tax Settlement Deed then the outstanding tax liability would be £59.6 million and still payable on the earlier of: (i) the first royalty payment date on Sea Lion; (ii) the date of which Rockhopper disposes of all or a substantial part of the Group's remaining licence interests in the North Falkland Basin; or (iii) a change of control of Rockhopper Exploration plc. In this improbable instance Management believes the most likely timing of payment is in line with the first royalty payment. Based on correspondence with FIG, Management does not believe that the farmout constitutes a substantial disposal and therefore would not have accelerated the £59.6 million liability should it be shown to still be payable. The prior year derecognition of the tax liability led to a tax income of US$38.8 million.

Separately we have submitted tax returns in relation to the farm out to Navitas that occurred immediately after their acquisition, from Harbour Energy plc of the company that holds the North Falkland's Basin licences. The consideration for this transaction was the provision of loan funding to the Group to cover the majority of its share of Sea Lion phase 1 related costs from transaction completion up to FID through a loan from Navitas with interest charged at 8% per annum (the "Pre-FID Loan"). Subject to a positive FID, Navitas will provide an interest free loan to fund two-thirds of the Group's share of Sea Lion phase 1 development costs (for any costs not met by third party debt financing). Whilst we continue to engage with FIG on the value of this consideration, we are confident that we have sufficient losses to ensure no tax liability will arise.

21. Provisions			Year ended	Year ended
	Decommissioning	Other	31 December	31 December
	provision $'000	provisions $'000	2023 $'000	2022 $'000
Brought forward	19,099	78	19,177	18,287
Amounts utilized	-	(48)	(48)	(17)
Amounts arising in the year	-	2	2	1,367
Unwinding of discount	482	-	482	304
Foreign exchange	507	1	508	(764)
Carried forward at year end	20,088	33	20,121	19,177

The decommissioning provision relates to the Group's licences in the Greater Mediterranean region and facilities in the Falkland Islands. The provision covers both the plug and abandonment of wells drilled as well as removal of facilities and any requisite site restoration. Of amounts arising in the prior year $320 thousand has been capitalised in intangible exploration and evaluation assets and US$1,038 thousand taken to cost of sales.

Judgements are made based on the long term economic environment around appropriate inflation and discount rates to be applied as well as the timing of any future decommissioning. In the Falkland Islands costs are most likely to be in $US or GB£ so management consider the UK economic environment when informing these judgements. In the Greater Mediterranean all assets are in Italy and so costs are likely to be in Euros and as such management consider the Italian as well as the broader Eurozone region to inform these judgements.

Recognising short term inflationary pressures have eased, the Group believe it appropriate to use an inflation rate of 2.0 per cent (2022: 2.5 per cent) and a discount rate of 2.0 per cent (2022: 2.5 per cent).

Decommissioning costs are uncertain and management's cost estimates can vary in response to many factors, including changes to the relevant legal requirements, the emergence of new technology or experience at other assets. The expected timing, work scope and amount of expenditure may also change. Therefore, significant estimates and assumptions are made in determining the costs associated with the provision for decommissioning. The estimated decommissioning costs are reviewed annually, and the results of the most recent available review used as a basis for the amounts in the Consolidated Financial Statements. Provision for environmental clean-up and remediation costs is based on current legal and contractual requirements, technology and price levels. However, actual decommissioning costs will ultimately depend upon future market prices for the necessary decommissioning works required which will reflect market conditions at the relevant time.

The estimated costs associated with the decommissioning works are those that are likely to have a material impact on the provision. A 10 per cent increase in these estimates would increase both the provision and the loss in the year by US$1,507 thousand. Similarly, a 10 per cent reduction in these estimated costs would decrease both the provision and the loss in the year by US$1,507 thousand.

Other provisions include amounts due for accrued holiday and leaving indemnity to staff in Italy, that will become payable when they cease employment.

22. Deferred tax liability	Year ended	Year ended
	31 December	31 December
	2023 $'000	2022 $'000
At beginning of period	39,137	39,137
Foreign exchange	-	-
Movement in period	-	-
At end of period	39,137	39,137

The deferred tax liability arises due to temporary differences associated with the intangible exploration and evaluation expenditure. The majority of the balance relates to historic expenditure on licences in the Falklands, where the tax rate is 26%, being utilised to minimise the corporation tax due on the consideration received as part of the farm out disposal during 2012.

Total carried forward losses and carried forward pre-trading expenditures available for relief on commencement of trade at 31 December 2023 are disclosed in note 12 Taxation. No deferred tax asset has been recognised in relation to these losses due to uncertainty that future suitable taxable profits will be available against which these losses can be utilised.

23. Share capital

	Year ended 31 December 2023		Year ended 31 December 2022
	$'000	Number	$'000	Number
Authorised, called up, issued and fully paid: Ordinary shares of £0.01 each	9,196	620,229,436	8,771	586,485,319
			31 December	31 December
			2023 Number	2022 Number
Shares in issue brought forward			586,485,319	458,482,117
Shares issued
- Issued as part of Placing and Subscription			-	82,182,776
- Issued as part of Open offer			-	39,652,160
- Issued on exercise of warrants and share options			33,744,117	6,168,266
Shares in issue carried forward			620,229,436	586,485,319

During the prior year Rockhopper raised funds by way of a Placing and Subscription as well as through an Open Offer. New Shares were issued at an issue price of 7 pence per Unit (the "Issue Price"). Each Unit offered comprises one New Ordinary Share and, for every two New Ordinary Shares subscribed for, one Warrant. Each Warrant gave the holder the right to subscribe for one new Ordinary Share at a price of 9 pence per Ordinary Share (the "Strike Price") at any time from the issue of the Warrants up to (and including) 5.00 p.m. on 31 December 2023 (the "Warrant Exercise Period").

On 8 January 2024 the Company issued 20,349,328 Ordinary shares of £0.01 each pursuant to the final exercise of Warrants. The warrants were validly exercised prior to their expiry on 31 December 2023 but due to logistics of validating this fact they were not issued until post year end.

24. Reserves

Set out below is a description of each of the reserves of the Group:

Share premium	Amount subscribed for share capital in excess of its nominal value.
Share based remuneration	The share incentive plan reserve captures the equity related element of the expenses recognised for the issue of options, comprising the cumulative charge to the income statement for IFRS2 charges for share based payments less amounts released to retained earnings upon the exercise of options.
Own shares held in trust	Shares held in trust by the Employee Benefit Trust which have been purchased to settle future exercises of options.
Merger reserve	The difference between the nominal value and the fair value of shares issued on acquisition of subsidiaries.
Foreign currency translation reserve	Exchange differences arising on consolidating the assets and liabilities of the Group's subsidiaries are classified as equity and transferred to the Group's translation reserve.
Special reserve	The reserve is non distributable and was created following cancellation of the share premium account on 4 July 2013. It can be used to reduce the amount of losses incurred by the Parent Company or distributed or used to acquire the share capital of the Company subject to settling all contingent and actual liabilities as at 4 July 2013. Should not all of the contingent and actual liabilities be settled, prior to distribution the Parent Company must either gain permission from the actual or contingent creditors for distribution or set aside in escrow an amount equal to the unsettled actual or contingent liability.
Retained losses	Cumulative net gains and losses recognised in the financial statements.

25. Capital commitments

Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is US$0.7million (2022: US$0.7 million) relating to the Group's intangible exploration and evaluation assets.

26. Contingent assets

In August 2022, pursuant to an ICSID arbitration which commenced in 2017, Rockhopper was awarded approximately €190 million plus interest and costs following a unanimous decision by the ICSID appointed arbitral Tribunal that Italy had breached its obligations under the Energy Charter Treaty (the "Award").

Rockhopper submitted a letter to the Italian Republic in September 2022 formally requesting payment of €247 million, representing the Award amount plus accrued interest from 29 January 2016 to 23 August 2022 and costs. Interest was paused for four months following the date of the Award (being 23 August 2022) and is now accruing at EURIBOR + 4% which Rockhopper estimates at between €1.25 million and €1.5 million per calendar month. Interest compounds annually.

As announced, Italy requested that this Award be annulled in October 2022. When Italy applied for the Award to be annulled, a provisional Stay of Enforcement was automatically put in place by ICSID pursuant to the ICSID Convention and Arbitration Rules.

Following Italy's request to seek annulment of the Award, an ad hoc Committee was constituted to hear relevant arguments and make a ruling on Italy's application for a continuation of the provisional Stay of Enforcement pending the determination of Italy's request to annul the Award. A hearing on whether the ad hoc Committee will continue or lift the provisional Stay of Enforcement was held on 6 March 2023. On the 24 April 2023 the Committee issued the following orders,

1: that Italy and Rockhopper shall confer - in good faith and using their best efforts to cooperate and find an effective arrangement - for the mitigation of the risk of non-recoupment using a first-class international bank outside the European Union (or as Italy and Rockhopper otherwise agree) to be put into place in anticipation of the termination of the provisional stay of enforcement of the Award. This is to mitigate the perceived risk that, in the event the Award is annulled, Italy may not be able to recover Italian assets seized or frozen by Rockhopper (before the ad hoc Committee issues its decision on annulment) in court enforcement proceedings.

2: that Rockhopper shall, within 30 days of the date of the decision, apprise the Committee of arrangements agreed with Italy for the mitigation of the risk of non-recoupment or that negotiations have failed and, in the latter event, propose concrete arrangements in accordance with the decision for the mitigation of the risk of non-recoupment. Italy may then briefly comment on Rockhopper's proposal within 10 days, constructively highlighting any areas of disagreement between the Parties.

26. Contingent assets (continued)

Italy has refused to comply with the Panel's instructions. Rockhopper intends to continue to work in good faith to resolve the issues raised regarding non- recoupment and has submitted to the Panel its proposal to mitigate this risk.

The decision on whether to continue or lift the provisional Stay of Enforcement is unrelated to the merits of Italy's annulment request. A final hearing in relation to Italy's request to annul the Award took place in April 2024. There is no set timetable for the decision ad hoc committee to publish their decision with regard Italy's request for annulment, however we are hopeful that a decision will be published before the end of 2024.

On 20 December 2023, Rockhopper announced its entry into a funded participation agreement (the "Agreement") with a regulated specialist fund with over $4bn of investments under management that has experience in investing in legal assets (the "Specialist Fund") to monetise its Award.

Key terms of the Agreement

Rockhopper to retain legal and beneficial ownership of the Award.

Under the terms of the Agreement, the Specialist Fund will make cash payments to Rockhopper in up to three tranches:

Tranche 1 - Rockhopper will retain approximately €15 million of an upfront payment of €45million on completion. As previously disclosed, Rockhopper entered into a litigation funding agreement in 2017 under which all costs relating to the Arbitration from commencement to the rendering of the Award were paid on its behalf by a separate specialist arbitration funder (the "Original Arbitration Funder"). That agreement entitles the Original Arbitration Funder to a proportion of any proceeds from the Award or any monetisation of the Award. Rockhopper has entered into an agreement with the Original Arbitration Funder to pay €26 million of the Tranche 1 proceeds to discharge all of its liabilities under the agreement with the Original Arbitration Funder. In addition, Rockhopper is due to pay certain success fees to its legal representatives. After making these payments, Rockhopper will retain approximately €15million of the Tranche 1 payment and 100 per cent of all Tranche 2 and 3 payments.

Tranche 2 - Additional contingent payment of €65 million upon a successful annulment outcome. Should the Award be partially annulled and the quantum reduced as a result, then Tranche 2 will be reduced such that the amounts under Tranche 1 and Tranche 2 shall be adjusted downward on a pro-rata basis. For example, if the quantum of the Award is reduced by 20%, then the amounts under Tranche 1 and Tranche 2 shall be reduced by 20%. For the avoidance of doubt, the amounts under Tranche 1 and Tranche 2 shall not reduce below €45m in any circumstance.

Tranche 3 - Potential payment of 20% on recovery of amounts in excess of 200% of the Specialist Fund's total investment including costs.

Tax will also be payable on Rockhopper's share of the proceeds from the monetisation of the Award. These calculations are complex and are unlikely to be resolved for some time but Rockhopper currently estimates that the approximate effective tax rate of between 10-15% is likely.

The Specialist Fund will cover all costs related to the Arbitration from the 20 December 2023.

Approval will be required from the Falkland Islands Government to complete the transaction (the "Precedent Condition"). A further announcement will be made on completion. Should completion not occur by 30 June 2024 either side has the right to termination. In the case of non-completion Rockhopper will use proceeds of the Award to provide compensation to the Specialist Fund based on the costs they have incurred in relation to the Arbitration from 20 December 2023 up to the date of termination.

Rockhopper is extremely confident in the strength of its case, as was reflected in the unanimous decision underpinning the Award in August 2022. As at the year end the Precedent Condition had not been met and that fact along with the ongoing annulment request the virtual certainty required by IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" which would allow recognition of an asset on the Balance Sheet has not been met. The receivable under the Award therefore remains classified as a contingent asset at this time.

27. Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed. Subsidiaries are listed in notes of the Company financial statements.

The remuneration of directors, who are the key management personnel of the Group, is set out below in aggregate. Further information about the remuneration of individual directors, including deferred salary and bonus amounts, is provided in the Directors' Remuneration Report on pages 28 to 37.

	Year ended 31 December	Year ended 31 December
	2023 $'000	2022 $'000
Short term employee benefits	796	1,076
Share based payments	72	235
	868	1,311

On 6 April 2023, Alison Baker, Senior Independent Director, in order to effect a "Bed and ISA" transaction, sold 142,865 Ordinary shares of 1 pence each (Ordinary Shares) at a price of 10.725 pence per Ordinary Share and then purchased into an Individual Savings Account (ISA) 142,753 Ordinary Shares at the same price.

During the prior year the Company announced a successful Placing and Subscription. This involved the Placing of, and Subscription for 82,182,776 Units in each case at the Issue Price of 7 pence per Unit. Each Unit comprises one New Ordinary Share and, for every two New Ordinary Shares subscribed for, one Warrant.

Pursuant to the Subscription, the following Directors agreed to subscribe for the following Units comprising Subscription Shares and Warrants.

	Number of subscription shares	Number of subscription Warrants)
Sam Moody	1,428,570	714,285
Keith Lough	428,570	214,285
Alison Baker	142,856	71,428
John Summers	142,856	71,428

On the 20 December 2023 the Company received notifications from all of the above Directors and former Directors of the exercise of all of their above Warrants. In total an aggregate 1,071,426 new Ordinary Shares of £0.01 each ("Ordinary Shares") in the Company were issued at an exercise price of 9 pence per ordinary share, providing the Company with proceeds of £96,428.

28. Risk management policies

The risks and uncertainties facing the Group are set out in the risk management report. Risks which require further quantification are set out below.

Foreign exchange risks: The Group is exposed to foreign exchange movements on monetary assets and liabilities denominated in currencies other than US$, in particular the tax liability with the Falkland Island Government which is a GB£ denominated balance. In addition a number of the Group's subsidiaries have a functional currency other than US$, where this is the case the Group has an exposure to foreign exchange differences with differences being taken to reserves.

The Group has cash and cash equivalents, term deposits and restricted cash of US$8.5 million of which US$1.0 million was held in US$ denominations. The Group has expenditure in GB£ and Euro and accepts that to the extent current cash balances in those currencies are not sufficient to meet those expenditures they will need to acquire them. The following table summarises the split of the Group's assets and liabilities by currency:

Currency denomination of balance

$'000

€

$'000

Assets

31 December 2023

258,152

7,743

1,355

31 December 2022

253,415

8,482

1,787

Liabilities

31 December 2023

47,180

2,249

17,697

31 December 2022

43,452

3,475

15,220

28. Risk management policies (continued)

The following table summarises the impact on the Group's pre-tax (loss)/profit and equity of a reasonably possible change in the US$ to GB£ exchange rate and the US$ to euro exchange:

	Pre tax profit	/(loss)	Total equity
	+10% US$ rate	-10% US$ rate	+10% US$ rate	-10% US$ rate
	increase	decrease	increase	decrease
	$'000	$'000	$'000	$'000
US$ against GB£ 31 December 2023	549	(549)	549	(549)
31 December 2022	501	(501)	501	(501)
US$ against euro 31 December 2023	(1,634)	1,634	(1,634)	1,634
31 December 2022	(1,450)	1,450	(1,450)	1,450

Capital risk management: the Group manages capital to ensure that it is able to continue as a going concern whilst maximising the return to shareholders. The capital structure consists of cash and cash equivalents and equity. The board regularly monitors the future capital requirements of the Group, particularly in respect of its ongoing development programme. Further information can be found in the going concern assessment contained in Note 1.5.

Credit risk: the Group recharges partners and third parties for the provision of services and for the sale of Oil and Gas. Should the companies holding these accounts become insolvent then these funds may be lost or delayed in their release. The amounts classified as receivables as at the 31 December 2023 were $910,000 (31 December 2022: $2,109,000). Credit risk relating to the Group's other financial assets which comprise principally cash and cash equivalents, term deposits and restricted cash arises from the potential default of counterparties. Investments of cash and deposits are made within credit limits assigned to each counterparty. The risk of loss through counterparty failure is therefore mitigated by the Group splitting its funds across a number of banks.

Interest rate risks: the Group has no debt and so its exposure to interest rates is limited to finance income it receives on cash and term deposits. The Group is not dependent on its finance income and given the current interest rates the risk is not considered to be material.

Liquidity risks: The Group monitors the liquidity position by preparing cash flow forecasts to ensure sufficient funds are available. Further information can be found in the going concern assessment contained in Note 1.5.

Maturity of financial liabilities

The table below analyses the Group's financial liabilities, which will be settled on a gross basis, into relevant maturity groups based on the remaining period at the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

	Within 1 year	2 to 5 years	More than 5 years	Total contractual cashflows	Carrying amount
At 31 December 2023	$'000	$'000	$'000	$'000	$'000
Other payables	7,176	-	-	7,176	7,176
Lease liability	246	-	-	246	246
	7,422	-	-	7,422	7,422
	Within 1 year	2 to 5 years	More than 5 years	Total contractual cashflows	Carrying amount
At 31 December 2022	$'000	$'000	$'000	$'000	$'000
Other payables	3,383	-	-	3,383	3,383
Lease liability	574	286	-	860	553
	3,957	286	-	4,243	3,936

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RKH Rockhopper Exploration Plc

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Samuel Moody

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(A) Basis of accounting

(B) Basis of consolidation

(C) Segmental reporting

(D) Oil and gas assets

Disposals

Decommissioning

(E) Leases

The Group as lessee

The Group as lessor

(F) Foreign currency translation Functional and presentation currency:

Transactions and balances:

(G) Revenue and income

(H) Non-derivative financial instruments

(I) Income taxes and deferred taxation

(J) Share based remuneration

(K) Capital commitments

9. Share based payments (continued)

The models and key assumptions used to value each of the other grants and hence calculate the above charges are set out below:

Option scheme

Long term incentive plan

Share appreciation rights

Falkland Islands Licences

20. Tax payable (continued)

23. Share capital

24. Reserves

25. Capital commitments

26. Contingent assets

26. Contingent assets (continued)

27. Related party transactions

28. Risk management policies

28. Risk management policies (continued)

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