26 September 2024
Rockhopper Exploration plc
("Rockhopper", the "Group" or the "Company")
Half-Year Results for the Six
Months Ended 30 June 2024
Rockhopper Exploration plc (AIM:
RKH), the oil and gas company with key interests in the North
Falkland Basin ("NFB"), announces its unaudited results for the six
months ended 30 June 2024 ("H1 2024").
YEAR
TO DATE HIGHLIGHTS
Sea
Lion and North Falkland Basin
·
Rockhopper holds 35% working interest
·
Rockhopper benefits from pre and post Final
Investment Decision ("FID") loan from the operator Navitas
Petroleum Development and Production Limited 1
("Navitas" or "Operator")
·
Independent Resource Report commissioned by
Navitas2
o Sea
Lion initial development targeting 312mmbbls via two drilling
campaigns
o Sea
Lion total 2C resource base 791mmbbls
o Plateau production up to 55 kbbls/d for prolonged period of
eight years
o Life
of field costs US$25/bbls
o NPV
10 of first 312 mmbbls development > US$4bn gross to the JV pre
tax post Falkland Islands Government royalty at US$77
Brent
·
Environmental Impact Statement ("EIS") public
consultation period completed
Ombrina Mare Arbitration Award (the "Award")
·
Transaction to monetise the Award
completed
·
First Tranche payment received - €19m retained by
Rockhopper
·
Annulment hearing with ICSID convened ad hoc
committee (the "Committee") completed
·
Post hearing submissions completed
·
Cost submissions made to Committee (by Rockhopper
and Italy)
·
No formal timetable for outcome, hopeful a
decision is possible by year end 2024
Balance Sheet
·
Balance sheet strengthened following completion of
Award monetisation
·
Period end cash balance US$27.8m
·
Cost control maintained
Outlook
·
Strong balance sheet
·
Work continues on securing all permissions
required to launch Sea Lion financing, including EIS and licence
extension
·
Ombrina Mare annulment, hopeful a decision is
possible by year end 2024
Samuel Moody, CEO, commented:
"Rockhopper is in its strongest
position for some time. Monetisation of the Award delivers
increased financial flexibility and allows the Company to focus on
progressing Sea Lion to sanction, which remains our core focus. We
also welcome the news, announced on 24th September, of a new
general co-operation agreement between the Falklands and
Argentina.
"I would like to thank our team for
their continued commitment to driving progress at Rockhopper and
our shareholders for their continued support at this exciting time
for the Group."
1 Navitas is the legal entity
that holds and operates Sea Lion and our other NFB licences. The
company's ultimate and controlling parent is Navitas Petroleum LP,
a limited partnership established and registered in Israel and
listed on the Tel Aviv Stock Exchange.
2 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 517 MMbbls. See RNS dated 22 January
2024.
Enquiries:
Rockhopper Exploration
plc
Sam Moody - Chief Executive
Officer
Tel. +44 (0) 20 7390 0234 (via Vigo
Consulting)
Canaccord Genuity Limited (NOMAD and
Joint Broker)
Henry Fitzgerald-O'Connor/Charlie
Hammond
Tel. +44 (0) 20 7523 8000
Peel Hunt LLP (Joint
Broker)
Richard Crichton/Georgia
Langoulant
Tel. +44 (0) 20 7418 8900
Vigo Consulting
Patrick d'Ancona/Ben Simons/Fiona
Hetherington
Tel. +44 (0) 20 7390 0234
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S
REVIEW
Introduction
Rockhopper's strategy is to create
value for all our stakeholders through the safe and responsible
development of our assets in the NFB. The Company has been
operating offshore the Falkland Islands since 2004 and discovered
the Sea Lion oilfield in 2010. We are a long term partner of
the Falkland Islands Government ("FIG") and our aim has always been
to support the rights of the Falkland Islanders to develop their
natural resources.
Sea
Lion project
Our view remains unchanged: the Sea
Lion oil field and its associated follow on potential within the
NFB, represents a hugely important and valuable strategic asset for
the Falkland Islands, the UK and all of our stakeholders.
Since replacing Harbour Energy in 2022, Navitas, the field's
operator, has increased resources while reducing costs, resulting
in a field with highly attractive and robust
economics.
An independent report, commissioned
by Navitas, confirms that the first 312mmbbls of the total
791mmbbls of the field (on a 2C basis) has a gross NPV 10 of over
US$4bn on a pre tax, post FIG royalty at US$77 Brent. The
life of field cash breakeven is currently estimated to be US$25/bbl
making the project financially attractive at a range of commodity
prices.
An updated Environmental Impact
Statement was submitted to FIG in July 2024 and the statutory
public consultation period has now concluded. The next step will be
for FIG to consider the responses provided by the Operator.
Simultaneously we are engaged with FIG on licence extensions, prior
to their expiry in November 2024.
We continue to engage with the
Operator as they look to secure a financing package for Sea Lion
phase 1 and work towards FID. We will inform the market as and when
we receive material updates from the Operator, including associated
timing, in this regard.
Ombrina Mare
As announced on 24 August 2022, the
arbitration panel unanimously held that Italy breached its
obligations under the Energy Charter Treaty and awarded Rockhopper
compensation of approximately €190 million plus interest and
EURIBOR + 4% compounded annually from 29 January 2016 until the
time of payment (except for the four month period immediately
following the date of the Award).
Having announced a transaction to
monetise the Award in December 2023 (the "Monetisation"), the
Monetisation completed in June 2024 and Rockhopper received the
first payment of €19 million that month. All of Rockhopper's costs
associated with the Award from the date of signature in December
2023 are covered by the new funder ("Specialist Fund").
A hearing was held in Madrid in
April 2024 as part of Italy's request to have the Award annulled
following which post hearing submissions were made in response to
questions raised by the Committee. Additionally, during
September 2024 submissions detailing costs incurred both by
Rockhopper and Italy were made to the Committee.
Whilst there is no formal timetable,
we continue to be hopeful that a decision is possible before the
end of 2024 but otherwise expected in H1 2025.
Corporate matters
Following completion of the
Monetisation, our balance sheet is the strongest it has been for
some time, and we ended the period with approximately US$27.8
million in cash and term deposits.
We maintain a small core team with
unparalleled historic knowledge of the Sea Lion field and its
associated Falkland Islands oil and gas operations.
Environmental, Social and Governance ("ESG")
ESG and Corporate Responsibility
continue to be a key focus for Rockhopper. As an oil and gas
exploration and production business, our role is to discover and
produce hydrocarbons in an environmentally responsible manner,
supporting energy requirements during the energy
transition.
As noted previously, FIG established
an independent environment trust to receive and administer future
off-setting payments from the Sea Lion project and distribute those
funds for activities aimed at ensuring a positive environmental
legacy in the Falkland Islands.
Once FID on Sea Lion has been
achieved, the Company commits to defining measures, reporting
transparently, and mitigating our own emissions as far as
practicable.
Outlook
The completion of the Award
Monetisation puts our balance sheet in the best position it has
been for a number of years and we now await the outcome of the
annulment request from Italy.
Meanwhile, Navitas continues to
progress our core asset, Sea Lion, having not only completed the
EIS public consultation period but also developed the field
development plan to a highly advanced stage. We continue to
believe that our 35% interest in the field and all associated
upside represents a potentially hugely valuable asset.
In addition, we continue to focus on
ways in which we can strengthen and protect the Company's balance
sheet.
As a result, the coming 12 months
could see some of the most exciting developments at the Company for
some considerable time.
FINANCIAL REVIEW
Results for the period
For the period ended 30 June 2024,
the Group reported a profit after tax of US$16.5 million (H1 2023:
loss of US$2.6 million).
The
Monetisation
From a financial perspective the
main event during the period was the completion of the
Monetisation. This has resulted in an after tax profit contribution
of US$18.7 million in the period.
On completion of the Monetisation,
the Group received the Tranche 1 payment of €19 million. Whilst
legally Rockhopper has retained the legal and beneficial ownership
of the Award, accounting follows the substance of the transaction
which is akin to a disposal. As such this Tranche 1 payment has
been recorded as other income and expenses of US$20.6
million.
No income has been recorded for the
Tranche 2 and Tranche 3 payments as they are contingent on future
events, in particular, successfully contesting the attempted
annulment of the Award
Revenue and cost of sales
The Group's production ceased during
2022, as such there were no revenues in the period (H1 2023:
US$nil). Even though there has been no revenue in the period there
are costs associated with maintaining the various production
concessions whilst potential options for additional development are
investigated.
Operating activities
The decrease in Administrative
expenses ("G&A") for the period to US$1.5million (H1 2023:
US$2.1 million) almost entirely relates to legal fees associated
with the Ombrina Mare Arbitration. Since the end of 2023 the cost
associated with the Arbitration have been borne by the Specialist
Fund.
Previously the Group made the
decision to use existing resources to fund
all legal costs arising from contesting the request by Italy for
annulment whilst it explores all funding possibilities. In the
prior period, costs were incurred contesting Italy's request for a
stay of enforcement as well as initial fees drafting the Group's
counter memorial on annulment itself. Excluding these, G&A
costs have remained flat.
The foreign exchange loss in the
period is US$0.3 million (H1 2023: gain of US$0.6 million). These
mainly arise on GBP and Euro denominated cash and term deposit
balances in both the current and prior period.
Finance expenses in the period of
US$0.2 million (H1 2023: $US0.7 million) relate to the unwinding of
discounts on provisions. The previous period finance expense
included US$0.5 million from fair valuing
of derivative financial liabilities. This related to warrants
issued as part of the placing in 2022 and were all exercised or
lapsed in the prior year.
Cash movements and capital expenditure
At 30 June 2024, the Group had cash
and term deposits of US$27.8 million (31 December 2023: US$8.0
million).
Cash and term deposit movements
during the period:
|
|
US$m
|
|
Opening cash and term deposit
balance (31 December 2023)
|
8.0
|
|
Cost of sales
|
(0.3)
|
|
Falkland Islands
|
(0.8)
|
|
Administrative expenses
|
(1.6)
|
|
Proceeds of warrants
|
2.1
|
|
Ombrina Mare Award
monetisation
|
20.6
|
|
Miscellaneous
|
(0.2)
|
|
Closing cash and term deposit
balance (30 June 2024)
|
27.8
|
Miscellaneous includes foreign
exchange, interest and movements in working capital during the
period.
Oil
and gas assets
The Sea Lion development remains
central to the Group's plans and the additions in the period of
US$9.2 million almost entirely relate to this project.
The majority of these costs are covered through a
loan from Navitas and are included in other payables.
As part of the transaction to bring Navitas onto
the licences, Navitas agreed to provide loan funding to the Group
to cover the majority of its share of Sea Lion phase one related
costs from Transaction completion, in September 2022, up to FID and
has interest charged at 8% per annum (the "Pre-FID Loan"). Subject
to a positive FID, Navitas will provide a second interest free loan
to fund two-thirds of the Group's share of Sea Lion phase one
development costs (for any costs not met by third party debt
financing).
Certain costs, such as licence
costs, are excluded in both instances. Funds drawn under the loans
will be repaid from 85% of Rockhopper's working interest share of
free cash flow.
Taxation
The charge in the period of US$1.9
million relates to the estimate of tax due on the first Tranche of
proceeds from the monetisation of the Ombrina Mare Arbitration
Award.
Liquidity, counterparty risk and 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 30 June 2024, the Group had cash
resources of US$27.8 million. Historically,
the Group's largest annual expenditure has related to pre-sanction
costs associated with the Sea Lion development. The Group benefits
from loan funding for its share of all Sea Lion pre-sanction costs
(other than licence fees and taxes).
The Group has prepared the financial
statements on the basis that it will continue to operate as a going
concern. The Directors consider that there are no material
uncertainties that may cast significant doubt over this assumption.
They have formed a judgement that there is a reasonable expectation
that the Group has adequate resources to continue in operational
existence for the foreseeable future, and not less than 12 months
from the end of the reporting period.
Principal risk and uncertainties
A detailed review of the potential
risks and uncertainties which could impact the Group are outlined
in the Strategic Report of the Group's annual consolidated
financial statements. The Group identified its key risks at the end
of 2023 as being:
·
oil price volatility;
·
availability and access to capital;
·
joint venture partner alignment; and
·
failure of joint venture partners to secure the
requisite funding to allow a Sea Lion Final Investment
Decision
CONDENSED CONSOLIDATED income statement
for the six months ended 30 June
2024
|
|
|
Six months
|
Six
months
|
|
|
|
Ended
|
Ended
|
|
|
|
30 June
|
30
June
|
|
|
|
2024
|
2023
|
|
|
|
Unaudited
|
Unaudited
|
|
|
Notes
|
$'000
|
$'000
|
|
|
|
|
|
|
Revenue
|
|
-
|
-
|
|
Cost of sales
|
|
(275)
|
(378)
|
|
Gross loss
|
|
(275)
|
(378)
|
|
Exploration and evaluation
expenses
|
|
-
|
(3)
|
|
Administrative expenses
|
|
(1,553)
|
(2,132)
|
|
Charge for share based
payments
|
|
(40)
|
(70)
|
|
Foreign exchange movement
|
|
(279)
|
586
|
|
Results from operating
activities
|
|
(2,147)
|
(1,997)
|
|
Other income and expenses
|
2
|
20,556
|
-
|
|
Finance income
|
|
173
|
128
|
|
Finance expense
|
|
(200)
|
(739)
|
|
Profit/(loss) before tax
|
|
18,382
|
(2,608)
|
|
Tax
|
3
|
(1,882)
|
-
|
|
PROFIT/(Loss) for the period attributable
to the equity shareholders of the parent company
|
|
16,500
|
(2,608)
|
|
|
|
|
|
|
Profit/(loss) per share attributable
to the equity shareholders of the parent company: cents
|
|
|
|
|
Basic
|
4
|
2.57
|
(0.44)
|
|
Diluted
|
4
|
2.53
|
(0.44)
|
CONDENSED CONSOLIDATED statement of comprehensive
income
for the six months ended 30 June
2024
|
|
|
Six months
|
Six
months
|
|
|
|
Ended
|
Ended
|
|
|
|
30 June
|
30
June
|
|
|
|
2024
|
2023
|
|
|
|
Unaudited
|
Unaudited
|
|
|
Notes
|
$'000
|
$'000
|
|
Profit/(loss) for the
period
|
|
16,500
|
(2,608)
|
|
Exchange differences on translation
of foreign operations
|
|
468
|
(615)
|
|
TOTAL COMPREHENSIVE PROFIT/(LOSS) FOR THE
period
|
|
16,968
|
(3,223)
|
CONDENSED CONSOLIDATED balance sheet
as at 30 June 2024
|
|
|
As at
|
As
at
|
|
|
|
30 June
|
31
December
|
|
|
|
2024
|
2023
|
|
|
|
Unaudited
|
Audited
|
|
|
Notes
|
$'000
|
$'000
|
|
NON
CURRENT Assets
|
|
|
|
|
Exploration and evaluation
assets
|
5
|
266,488
|
257,228
|
|
Property, plant and
equipment
|
|
21
|
29
|
|
CURRENT Assets
|
|
|
|
|
Other receivables
|
|
936
|
1,241
|
|
Finance lease receivable
|
|
-
|
235
|
|
Restricted cash
|
|
494
|
529
|
|
Term deposits
|
|
7,006
|
4,501
|
|
Cash and cash equivalents
|
|
20,842
|
3,487
|
|
Total assets
|
|
295,787
|
267,250
|
|
CURRENT Liabilities
|
|
|
|
|
Other payables
|
|
15,115
|
7,716
|
|
Tax payable
|
3
|
1,882
|
-
|
|
Derivative financial
liabilities
|
|
-
|
450
|
|
Lease liability
|
|
-
|
246
|
|
NON-CURRENT Liabilities
|
|
|
|
|
Tax payable
|
3
|
-
|
-
|
|
Provisions
|
|
19,862
|
20,121
|
|
Deferred tax liability
|
|
39,137
|
39,137
|
|
Total liabilities
|
|
75,996
|
67,130
|
|
Equity
|
|
|
|
|
Share capital
|
|
9,455
|
9,196
|
|
Share premium
|
|
12,585
|
10,181
|
|
Share based remuneration
|
|
2,149
|
2,109
|
|
Owns shares held in trust
|
|
(1,320)
|
(1,320)
|
|
Merger reserve
|
|
78,208
|
78,208
|
|
Foreign currency translation
reserve
|
|
(8,033)
|
(8,501)
|
|
Special reserve
|
|
175,281
|
175,281
|
|
Retained losses
|
|
(48,534)
|
(65,034)
|
|
Attributable to the equity shareholders of the
company
|
|
219,791
|
200,120
|
|
Total liabilities and equity
|
|
295,787
|
267,250
|
|
|
|
|
| |
These condensed consolidated interim
financial statements were approved by the directors and authorised
for issue on 25 September 2024 and are signed on their
behalf by:
Samuel Moody
Chief Executive Officer
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE
2024
|
|
|
Six months
|
Six
months
|
|
|
|
Ended
|
Ended
|
|
|
|
30 June
|
30
June
|
|
|
|
2024
|
2023
|
|
|
|
|
|
|
|
|
Unaudited
|
Unaudited
|
|
|
Notes
|
$'000
|
$'000
|
|
Cash flows from operating activities
|
|
|
|
|
Net profit/(loss) before
tax
|
|
18,382
|
(2,608)
|
|
Adjustments to reconcile net losses
to cash:
|
|
|
|
|
Depreciation
|
|
8
|
32
|
|
Share based payment
charge
|
|
40
|
70
|
|
Finance expense
|
|
195
|
735
|
|
Finance income
|
|
-
|
(1)
|
|
Foreign exchange
|
|
(111)
|
(637)
|
|
Operating cash flows before
movements in working capital
|
|
18,514
|
(2,409)
|
|
Changes in:
|
|
|
|
|
Other receivables
|
|
267
|
(103)
|
|
Payables
|
|
(502)
|
(405)
|
|
Provisions
|
|
-
|
(45)
|
|
Cashflow from operating
activities
|
|
18,279
|
(2,962)
|
|
|
|
|
|
|
Cash Flows from investing activities
|
|
|
|
|
Capitalised expenditure on
exploration and evaluation assets
|
|
(766)
|
(680)
|
|
Investing activities before
movements in capital balances
|
|
(766)
|
(680)
|
|
Changes in:
|
|
|
|
|
Term deposits
|
|
(2,532)
|
3,478
|
|
Cash flow from investing
activities
|
|
(3,298)
|
2,798
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Net proceeds of share placing and
subscription
|
|
-
|
-
|
|
Exercise of warrants
|
|
2,109
|
284
|
|
Net lease payments
|
|
(11)
|
(10)
|
|
Cash flow from financing
activities
|
|
2,098
|
274
|
|
|
|
|
|
|
Currency translation differences
relating to cash and cash equivalents
|
|
276
|
28
|
|
Net cash flow
|
|
17,079
|
110
|
|
Cash and cash equivalents brought
forward
|
|
3,487
|
1,059
|
|
Cash and cash equivalents carried forward
|
|
20,842
|
1,197
|
Notes to the condensed CONSOLIDATED group financial
statements
for the six months ended 30 June
2024
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 interests in the
Falkland Islands and the Greater Mediterranean.
The Company's registered office address is
Warner House, 123 Castle Street, Salisbury, SP1 3TB.
The interim condensed consolidated
financial statements for the six months ended 30 June 2024 were
authorised for issue in accordance with a resolution of the
directors on 25 September 2024.
1.2 Statement of compliance and basis of
preparation
The interim condensed consolidated
financial statements have been prepared in accordance with the
measurement principles of UK adopted International Accounting
Standards.
Accounting policies are consistent with those
adopted in the last statutory financial statements of Rockhopper
Exploration plc. The information as of 31 December 2023 has been
extracted from the audited financial statements of Rockhopper
Exploration plc for the year ended 31 December 2023. These interim
condensed consolidated financial statements do not constitute
statutory financial statements under the Companies Act 2006. The
information for the year ended 31 December 2023 shown in this
report does not constitute statutory accounts for that year as
defined in section 434 of the Companies Act 2006. A copy of the
statutory accounts for that year has been delivered to the
Registrar of Companies. The auditor has reported on those accounts.
Their report was unqualified, did include an emphasis of matter but
did not contain a statement under section 498 (2) or (3) of the
Companies Act 2006.
There has been no impact on the
Group of any new standards, amendments or interpretations that have
become effective in the period. The Group has not early adopted any
new standards, amendments or interpretations.
1.3 Going concern
The Group has prepared the financial
statements on the basis that it will continue to operate as a going
concern. Given the receipt of funds from the Specialist Fund in
relation to the Monetisation the Directors consider that there are
no material uncertainties that may cast significant doubt over this
assumption. They have formed a judgement that there is a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future, and not less than
12 months from the end of the reporting period.
1.4 Period end exchange rates
The period end rates of exchange
actually used were:
|
|
30 June
2024
|
30 June
2023
|
31
December 2023
|
|
£ : US$
|
1.26
|
1.27
|
1.27
|
|
€ : US$
|
1.07
|
1.09
|
1.10
|
2 Other income and
expenses
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.
On 20 December 2023, Rockhopper
announced its entry into a funded participation agreement (the
"Agreement") with a regulated specialist fund with over US$4bn of
investments under management that has experience in investing in
legal assets (the "Specialist Fund") to monetise its
Award.
In line with the terms of the
Agreement, the Specialist Fund will make cash payments to
Rockhopper in up to three tranches:
Having satisfied all precedent
conditions on 21 June 2024, Rockhopper received €19 million of the
€45 million Tranche 1 payment. 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. The balance of €26 million has gone to Original
Arbitration Funder in order to fully discharge the Company of all
of its liabilities under the agreement with the Original
Arbitration Funder.
The €19 million has been treated as
other income and expenses, as whilst Rockhopper retains legal and beneficial ownership of the
Award the substance of the transaction is a
disposal of the Award.
No income was recognised in relation
to the Tranche 2 and Tranche 3 payments as they are contingent upon
future events. The terms of these Tranches are described
below.
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.
As previously disclosed, success
fees of approximately €4 million are owed to Rockhopper's legal
representatives if Rockhopper win the claim, meaning liability is
established and Italy is required to pay more than a nominal sum in
damages (either by way of award or settlement in an amount equal to
or more than €25 million).
3
Tax payable
|
|
|
Six months
ended
|
Six months
ended
|
|
|
|
30 June
|
31
December
|
|
|
|
2024
|
2023
|
|
|
|
$'000
|
$'000
|
|
|
|
Unaudited
|
Unaudited
|
|
Current tax payable
|
|
1,882
|
-
|
|
Non current tax payable
|
|
-
|
-
|
|
|
|
1,882
|
-
|
Current tax payable relates to tax
arising in the period on the Tranche 1 proceeds as disclosed in
Note 2.
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 NFB
completed. Under the transaction the balance of Development Carry,
approximately US$670 million, has become irrecoverable.
Due to the irrecoverable Development
Carry in the Group's judgment no further amounts are due on the
Group's 2012 farm-out. Given the highly material nature of this
judgment professional advice has been sought to confirm that it is
probable that the Group is entitled to adjust the outstanding tax
liability for the Development Carry that has become irrecoverable.
As such, in the prior year, the Group derecognised the tax
liability to measure it at the most likely amount it will be
settled for, US$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.
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 NFB; 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.
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.
4 Basic and diluted loss per share
|
|
Six months
|
Six
months
|
|
|
ended
|
ended
|
|
|
30 June
|
30
June
|
|
|
2024
|
2023
|
|
|
Number
|
Number
|
|
|
Unaudited
|
Unaudited
|
|
Shares in issue brought
forward
|
620,229,436
|
586,485,319
|
|
Shares issued
|
|
|
|
- Issued
|
20,349,328
|
2,532,064
|
|
Shares in issue carried
forward
|
640,578,764
|
589,017,383
|
|
|
|
|
|
Weighted average of Ordinary
Shares
|
644,485,599
|
593,539,285
|
|
Shares held in Employee Benefit
Trust
|
(1,304,500)
|
(1,304,500)
|
|
Weighted average number of Ordinary
Shares for the purposes of basic earnings per share
|
643,181,099
|
592,234,785
|
|
Effects of
|
|
|
|
Share options
|
8,058,678
|
n/a
|
|
Weighted average number of Ordinary
Shares for the purposes of diluted earnings per share
|
651,239,777
|
592,234,785
|
|
|
|
|
|
$'000
|
$'000
|
$'000
|
|
Net profit/(loss) after tax for
purposes of basic and diluted earnings per share
|
16,500
|
(2,608)
|
|
Earnings per share -
cents
|
|
|
|
Basic
|
2.57
|
(0.44)
|
|
Diluted
|
2.53
|
(0.44)
|
Shares issued in the period all
relate to the exercise of the warrants.
The weighted average number of
Ordinary Shares takes into account those shares which are treated
as own shares held in trust. As at the period end the Group had
1,304,500 Ordinary shares held in an Employee Benefit Trust which
have been purchased to settle future exercises of options. It also
takes into account those employee options ("LTIPs") which have
vested and have a nil exercise cost as in substance these are
similar to a vested ordinary share, and the entity will receive no
further substantive consideration when the option is exercised. As
at the period end the Group had 5,553,501 such LTIPs.
As the Group is reporting a loss in
the prior period 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.
At the period end, the Group had the
following unexercised options in issue.
|
|
|
Six months
|
|
|
|
ended
|
|
|
|
30 June
|
|
|
|
2024
|
|
|
|
Number
|
|
|
|
Unaudited
|
|
Vested:
|
|
|
|
Long term incentive plan
|
|
5,553,501
|
|
Share options
|
|
16,880,982
|
|
|
|
|
|
Unvested:
|
|
|
|
Share options
|
|
9,616,669
|
5 Intangible exploration and evaluation
assets
During the period there were US$9.2
million (2023: US$2.0 million) of additions. These mainly relate to
the Sea Lion Development as does the balance carried forward. The
majority of these costs are covered through a loan from Navitas and
are included in other payables.
At 30 June 2024, the Group reviewed
its intangible exploration/appraisal assets for indicators of
impairment, with no indicators of impairment being identified. No
impairment tests were therefore performed.
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 supportive and Management
believe that an extension will be received.