TIDMRKH
RNS Number : 9603Y
Rockhopper Exploration plc
15 September 2020
15 September 2020
Rockhopper Exploration plc
("Rockhopper", the "Group" or the "Company")
Half-year results for the six months to 30 June 2020
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 results for the six
months ended 30 June 2020.
Year to date highlights
Operational
-- Detailed transaction terms agreed with Navitas Petroleum LP
("Navitas") to farm-in for a 30 per cent interest in the Sea Lion
project
-- Under the farm-in terms, Rockhopper's costs for the Phase 1
development (not met by external debt) are to be funded by Premier
and Navitas from 1 January 2020 to Phase 1 Project Completion
(estimated to occur 9-12 months after first oil)*
-- In response to recent external events, cost reduction process
initiated to scale-back headcount and activity at Sea Lion pending
an improvement in the external macro environment
-- A core team continues to progress a number of project,
commercial and regulatory workstreams including development of Sea
Lion's net zero emissions plan
Corporate and financial
-- Disposal of Rockhopper Egypt Pty Limited completed in February 2020
-- Proceeds of US$4.0 million realised from the sale of the
Group's entire shareholding in United Oil & Gas plc in August
2020
-- Initiatives implemented to further materially reduce
corporate G&A costs - US$2.7 million (H1 2020): a further 30%
cost reduction target has been set
-- US$222.2 million one-off non-cash impairment, based on a
decision, in line with the operator, to write off the historic
exploration costs associated with the resources which will not be
developed as part of the Sea Lion Phase 1 project
-- Cash resources of US$13.4 million as at 1 September 2020 -
Board expects the Company to be fully funded through to at least
the end of 2022, assuming Sea Lion sanction occurs during that
time
Outlook
-- Completion of the Navitas farm-in - targeted late Q4 2020
-- Outcome awaited in relation to Ombrina Mare arbitration -
seeking significant monetary damages
Keith Lough, Chairman of Rockhopper, commented:
" Notwithstanding the current market volatility, Sea Lion
remains a world-class oil resource with the scale and potential to
create huge value in the right oil price environment for Rockhopper
and the Falklands as a whole.
The proposed farm-out to Navitas validates the highly attractive
nature of the asset, enhances the prospects of securing the
requisite senior debt to allow sanction (once market conditions
improve) and at the same time ensures that Rockhopper is fully
funded for all Sea Lion development costs through to project
completion.
In these uncertain macroeconomic times, the Board has focused on
those areas within our control. Recent initiatives by the Group
include the disposal of our Egyptian business and the proposed Sea
Lion farm-out to Navitas. These initiatives taken together have
raised significant cash proceeds thereby strengthening the Group's
balance sheet, materially reducing our exposure to future costs at
Sea Lion and at the same time introducing a third party into the
Sea Lion project to enhance the prospects of securing funding for
the project. As a result, the Group expects to be fully funded
through to at least the end of 2022, assuming Sea Lion sanction
during that time."
* Excluding licence fees, taxes and project wind down costs
In addition, the Company announces that it is changing its
registered office address to Warner House, 123 Castle Street,
Salisbury, SP1 3UA, effective immediately.
Enquiries:
Rockhopper Exploration plc
Sam Moody - Chief Executive
Stewart MacDonald - Chief Financial Officer
Tel. +44 (0) 20 7390 0234 (via Vigo Communications)
Canaccord Genuity Limited (NOMAD and Joint Broker)
Henry Fitzgerald-O'Connor/James Asensio
Tel. +44 (0) 20 7523 8000
Peel Hunt LLP (Joint Broker)
Richard Crichton
Tel. +44 (0) 20 7418 8900
Vigo Communications
Patrick d'Ancona/Ben Simons
Tel. +44 (0) 20 7390 0234
Note regarding Rockhopper oil and gas disclosure
This announcement has been approved by Rockhopper's geological
staff which includes Lucy Williams (Geoscience Manager) who is a
Chartered Geologist, a Fellow and member of the Council of the
Geological Society of London, with over 25 years of experience in
petroleum exploration and management and who is the qualified
person as defined in the Guidance Note for Mining, Oil and Gas
Companies issued by the London Stock Exchange in respect of AIM
companies.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S REPORT
The first half of the year saw unprecedented oil price weakness
and volatility, driven by the combination of fears over the spread
of COVID-19 and the impact this will have on the global balance of
oil supply and demand. Oil prices have since recovered to around
US$40/bbl, supported by the relaxation of restrictions related to
COVID-19 as well as record supply cuts by OPEC and other producers.
The outlook however remains uncertain with any near-term
improvement in oil prices dependant on a number of factors
including the containment of the pandemic.
In these uncertain macroeconomic times, the Board has focused on
those areas within our control. Recent initiatives by the Group
include the disposal of our Egyptian business and the proposed Sea
Lion farm-out to Navitas. These initiatives taken together have
raised significant cash proceeds thereby strengthening the Group's
balance sheet, materially reducing our exposure to future costs at
Sea Lion and at the same time, introducing a third party into the
Sea Lion project to enhance the prospects of securing funding for
the project. As a result, the Group expects to be fully funded
through to at least the end of 2022, assuming Sea Lion sanction
during that time.
Sea Lion Phase 1 development - project validated and de-risked
through introduction of Navitas as joint venture partner
The overall strategy to develop the North Falkland Basin remains
a phased development solution, starting with Sea Lion Phase 1,
which will commercialise, through a conventional FPSO development
scheme, 250 mmbbls (gross) of oil resources in the northern part of
PL032 (in which Rockhopper has a 30% working interest post farm-out
to Navitas). A subsequent Phase 2 development will commercialise
the remaining approximately 280 mmbbls (gross) resources in both
PL032 and the satellite accumulations in the north of PL004 (in
which Rockhopper has a 30% working interest post farm-out to
Navitas). In addition, there is a further 200 mmbbls (gross) of low
risk, near field exploration potential which could be included in
either the Phase 1 or Phase 2 developments. Phase 3 will entail the
development of the Isobel/Elaine fan complex in the south of PL004,
subject to further appraisal drilling.
The Company was delighted to announce the signing of a Heads of
Terms with Navitas Petroleum LP ("Navitas") in January 2020 as the
Board believes the introduction of Navitas into the Sea Lion joint
venture validates the attractive nature of the asset, enhances the
prospects of securing the requisite senior debt to allow sanction
(once oil prices and capital markets recover) and, at the same
time, through the revised commercial arrangements ensures that
Rockhopper is fully funded for all Sea Lion development costs
(excluding licence fees, taxes and project wind down costs) from 1
January 2020 to project completion (estimated 9 - 12 months after
first oil).
Good progress has been made during the first half of 2020 to
convert the Heads of Terms into fully documented agreements.
Despite the continuing oil price weakness, all parties remain
committed to the finalisation of the Navitas farm-out agreement.
Discussions with the Falkland Islands Government ("FIG") regarding
Navitas's entry into the project are progressing with completion of
the transaction, which remains subject to FIG approval, targeted
for late Q4 2020.
In response to recent external events, a cost reduction process
was initiated to scale-back headcount and activity at Sea Lion
pending an improvement in the external macro environment . As a
result, a core team continues to progress a number of project,
commercial and regulatory workstreams including the important
development of Sea Lion's net zero emissions plan. Technical
definition of the project is largely complete and all work fully
documented to enable a swift reactivation of the project once the
macroeconomic outlook improves and Premier's credit position better
supports the funding of the project.
Corporate matters
Rockhopper commenced international arbitration proceedings
against the Republic of Italy in relation to the Ombrina Mare field
in March 2017. The hearing took place in early February 2019 in
Paris. In June 2019, the Tribunal rejected Italy's request for the
suspension of the arbitration and Italy's related intra-EU
jurisdictional objections.
Post-hearing briefings were submitted in October and November
2019. Feedback from the Tribunal has indicated that work continues
on the award although the process has been delayed due to
disruptions caused by COVID-19. No guidance on the timing of the
award was provided by the Tribunal.
Rockhopper continues to believe it has strong prospects of
recovering very significant monetary damages - on the basis of lost
profits - as a result of the Republic of Italy's breaches of the
Energy Charter Treaty. All costs associated with the arbitration
are funded on a non-recourse ("no win - no fee") basis from a
specialist arbitration funder.
The Group continues to actively manage its corporate costs and
has reduced G&A by circa 50% over the last five years. In these
particularly difficult times, a further review of corporate
overheads has been undertaken with additional cost savings of circa
30% of G&A targeted. These measures include, but are not
limited to: permanent reduction to executive director base
remuneration; employee headcount reductions including certain roles
transitioning to part-time; reductions to adviser and contractor
costs; and a decrease in head office costs through the relocation
to premises outside of London.
The disposal of our Egyptian business, including the subsequent
sale of our shareholding in United Oil & Gas, generated a
healthy return on investment with sale proceeds of US$15.5 million
and free cash flow during our period of ownership of circa US$4.0
million, against an original investment of US$11.9 million in
2016.
Environmental, Social and Governance ("ESG")
ESG continues to be a key focus for Rockhopper and we are
committed to acting as a socially responsible contributor to the
global energy mix.
For the Sea Lion development, Rockhopper (in line with the
operator) is committed to net zero in respect of scope 1 and 2
emissions from the project. Such a commitment is expected to be
achieved through a combination of reduced emissions from the use of
best-in-class technologies and investment in carbon-offsetting
projects both in the Falklands and the UK.
In June 2019, FIG approved the establishment of an environment
fund to receive and administer future off-setting payments from the
Sea Lion joint venture and distribute those funds for activities
aimed at ensuring a positive environmental legacy.
Outlook
Notwithstanding the current market volatility, Sea Lion remains
a world-class oil resource with the scale and potential to create
huge value in the right oil price environment for Rockhopper and
the Falklands as a whole.
The proposed farm-out to Navitas validates the highly attractive
nature of the asset, enhances the prospects of securing the
requisite senior debt to allow sanction (once market conditions
improve) and at the same time, through the revised commercial
arrangements, ensures that Rockhopper is fully funded for all Sea
Lion development costs (excluding licence fees, taxes and project
wind down costs) from 1 January 2020 to project completion
(estimated 9 - 12 months after first oil).
With a supportive interim ruling on jurisdiction, we remain
positive on the prospects of recovering significant monetary
damages through our international arbitration against the Republic
of Italy in respect of Ombrina Mare.
The Company is focussed on making every effort to unlock the Sea
Lion development in order to create shareholder value. Should other
opportunities, which are value accretive, and which will strengthen
the Company and enhance the likelihood of the Sea Lion development
reaching a positive sanction decision, be identified then these
will be considered by the Board on an individual basis.
Keith Lough Samuel Moody
Non-Executive Chairman Chief Executive
Officer
FINANCIAL REVIEW
OVERVIEW
From a financial perspective, the most significant events in the
period include:
-- Terms agreed with Navitas to farm-in for a 30 per cent
interest in the Sea Lion project (signed January 2020)
-- Disposal of Rockhopper Egypt Pty Limited to United Oil &
Gas plc ("United") - completed in February - and subsequent sale of
the Group's entire shareholding in United - completed in August
2020
-- In response to the COVID-19 pandemic, and the dramatic fall
in oil and gas prices, significant cost reduction programmes
implemented both at the Sea Lion project level and corporately at
Rockhopper
Following the divestment of the Group's entire shareholding in
United, the Group has cash resources of US$13.4 million as at 1
September 2020.
The revised funding arrangements ensure that Rockhopper is
funded for all pre-sanction costs related to Sea Lion (other than
licence fees, taxes and project wind down costs). As such, the
Group believes the above events materially strengthen the Group's
financial position in the short and medium term and significantly
enhance the prospects for a successful project financing for the
Sea Lion project once markets recover.
Results summary
US$m (unless otherwise specified) H1 2020 H1 2019
Working interest production
(kboepd) 0.5 1.2
Realised oil price (US$/bbl) 56.5 63.1
Revenue 2.5 4.8
Cash operating costs 1.3 2.2
Recurring administrative
costs ("G&A")* 2.4 2.4
Loss after tax (226.8) (16.5)
Cash out flow from operating
activities (1.0) (2.8)
Capital expenditure 0.5 15.2
Cash, term deposits and
liquid investments 18.2 26.9
* H1 2020 administrative costs of US$2.7 million include US$0.3
million of one-off costs associated with the corporate cost
reduction exercise commenced in May 2020
Results for the period
For the period ended 30 June 2020, the Group reported revenues
of US$2.5 million and loss after tax of US$226.8 million. The loss
after tax primarily arose as a result of non-recurring non-cash
impairments associated with previously incurred exploration costs
in the North Falkland Basin. The decision was made, in line with
the operator, to write off historic exploration costs associated
with the resources which will not be developed as part of the Sea
Lion Phase 1 project.
REVENUE
The Group's revenues of US$2.5 million (H1 2019: US$4.8 million)
during the period relate entirely to the sale of oil and natural
gas in the Greater Mediterranean (Egypt and Italy) region. The
reduction in revenues from the comparable period reflects the
completion of the disposal of the Group's Egypt portfolio in
February 2020 as well as a decline in production and gas prices in
Italy.
Working interest production averaged approximately 470 boepd
during H1 2020, a reduction over the comparable period (H1 2019:
1,190 boepd), again related to the disposal of the Group's Egyptian
portfolio during the period.
During the period, the Group's gas production in Italy was sold
under short-term contract with an average realised price of EUR0.09
per scm (H1 2019: EUR0.19 per scm), equivalent to US$2.8 per mscf.
Gas was sold at a price linked to the Italian "PSV" (Virtual
Exchange Point) gas marker price.
In Egypt, all of the Group's oil and gas production was sold to
Egypt General Petroleum Company ("EGPC"). The average realised
price for oil was US$56.5 per barrel (H1 2019: US$63.1 per barrel),
a small discount to the average Brent price over the same period.
Gas was sold at a fixed price of US$2.65 per mmbtu.
OPERATING COSTS
Cash operating costs, excluding depreciation and impairment
charges, amounted to US$1.3 million (H1 2019: US$2.2 million).
Again the reduction in operating costs reflect the disposal of the
Group's Egypt portfolio during the period.
The Group continues to manage corporate costs, having achieved
an approximate 50% reduction in general and administrative
("G&A") cost, excluding non-recurring expenses related to
restructuring and acquisitions, over the last five years. In light
of the sharp reduction in oil prices experienced in Q1 2020,
initiatives to further reduce corporate costs commenced in May 2020
with a target to reduce costs by a further 30%. As a result of
initial one-off costs associated with these cost reductions (US$0.3
million), G&A costs increased to US$2.7 million in H1 2020.
Excluding such one-off costs, recurring G&A remained flat
compared with the corresponding period last year (H1 2019: US$2.4
million).
Following the decision in February 2016 by the Italian Ministry
of Economic Development not to award the Group a Production
Concession covering the Ombrina Mare field, in March 2017 the Group
commenced international arbitration proceedings against the
Republic of Italy. All costs associated with the arbitration are
funded on a non-recourse ("no win - no fee") basis from a
specialist arbitration funder.
CASH MOVEMENTS AND CAPITAL EXPITURE
At 30 June 2020, the Group had cash and term deposits of US$14.5
million (31 December 2019: US$17.2 million).
Cash and term deposit movements during the period:
US$m
----------------------------------------- ------
Opening cash balance (31 December 2019) 17.2
Revenues 2.5
Cost of sales (1.3)
Falkland Islands (9.4)
Greater Mediterranean (0.7)
Egypt disposal proceeds 11.5
Admin and miscellaneous (5.3)
Closing cash balance (30 June 2020) 14.5
----------------------------------------- ------
Following signature of a Heads of Terms in January 2020,
Rockhopper's share of pre-sanction costs from 1 January 2020 (other
than licence fees, taxes and project wind down costs) are funded by
Premier and/or Navitas. During the first half of 2020, the Group
paid US$8.7 million of Sea Lion costs related to the period prior
to 1 January 2020. Further such costs, amounting to approximately
US$4.6 million were paid during July/August 2020. Going forward,
limited further costs are expected.
Spend in the Greater Mediterranean largely relates to the
Egyptian portfolio prior to its disposal.
Admin and miscellaneous includes G&A, foreign exchange and
movements in working capital during the period.
Following the sale of the Group's entire shareholding in United,
the Group has cash resources of US$13.4 million as at 1 September
2020.
Impairment of oil and gas assets
Rockhopper has tested the carrying value of its assets for
impairment. Carrying values are compared to the value in use of the
assets based on discounted cash flow models. Future cash flows were
estimated using a long-term Brent oil price assumption of
US$62.5/bbl (in "real" terms) (2019: US$70/bbl real). A post-tax
nominal discount rate of 10% and 12.5% was used for the Group's
Greater Mediterranean and Falkland Islands assets respectively.
Despite the reduction in the long-term oil price assumption, no
impairment arose on the Sea Lion Phase 1 project. A range of
sensitivities have been considered as part of the impairment
testing process. In the event of a US$2.5/bbl reduction in the
Group's long-term oil price assumption, no impairment on Sea Lion
Phase 1 arises. Equally, no impairment would arise even if the
Group assumed project sanction was delayed by a further two
years.
A decision was made, in line with the operator, 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 but
instead reflects the limited capital which will be invested outside
of the Phase 1 project in the near-term. A reversal of the
impairment is expected once the Phase 1 project has been sanctioned
and investment resumes on the Phase 2 project.
Mergers, acquisitions and disposals
On 23 July 2019, Rockhopper announced the disposal of Rockhopper
Egypt Pty Limited which holds a 22% working interest in the Abu
Sennan concession to United.
The consideration payable to Rockhopper under the transaction
comprised:
-- cash of US $11.5 million; and
-- the issue of 114,503,817 Consideration Shares representing
approximately 18.5% of United's enlarged ordinary share
capital.
The transaction was subject to satisfaction of customary
conditions precedent including United shareholder approval,
completion of the readmission of United to trading on AIM and
receipt of Egyptian government
approvals. The transaction completed on 28 February 2020.
In August 2020, the Group disposed of its entire shareholding in
United, realising a further US$4.0 million of cash proceeds.
Taxation
On 8 April 2015, the Group agreed binding documentation ("Tax
Settlement Deed") with the Falkland Islands Government in relation
to the tax arising from the Group's farm-out to Premier.
The Tax Settlement Deed confirms the quantum and deferment of
the outstanding tax liability and is made under Extra Statutory
Concession 16.
As a result of the Tax Settlement Deed, the outstanding tax
liability was confirmed at GBP64.4 million and is payable on the
earlier of: (i) the first royalty payment date on Sea Lion; (ii)
the date on 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.
During the first half of 2017, as a result of the Group
receiving the full Exploration Carry from Premier during the
2015/16 drilling campaign, the Falkland Islands Commissioner of
Taxation agreed to reduce the tax liability in line with the terms
of the Tax Settlement Deed. As such, the tax liability has been
revised downwards to GBP59.6 million. The outstanding tax liability
is classified as non-current and is discounted to a period-end
value of US$36.6 million.
Full details of the provisions and undertakings of the Tax
Settlement Deed are disclosed in note 8 of these condensed
consolidated interim financial statements and these include
"creditor protection" provisions including undertakings not to
declare dividends or make distributions while the tax liability
remains outstanding (in whole or in part).
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, with surplus cash held on term deposits with a
number of major financial institutions.
Following the completion of the disposal of Rockhopper Egypt Pty
Limited, the Group has cash resources of US$13.4 million (as at 1
September 2020) and generates limited revenue and cash flow from
the sale of oil or gas but continues to fund the Group's materially
reduced G&A costs.
Historically, the Group's largest annual expenditure has related
to pre-sanction costs associated with the Sea Lion development.
However, following signature of a legally binding Heads of Terms in
January 2020, Rockhopper's share of all Sea Lion pre-sanction costs
from 1 January 2020 (other than licence fees, taxes and project
wind down costs) are funded by Premier and/or Navitas.
Management's base case forecast (in line with that of the
operator) assumes a final investment decision on the Sea Lion
development during Q4 2021, subject to securing requisite
financing, with the Group's costs funded by Premier and/or Navitas
during this period.
Management has also considered a downside scenario in which the
project does not achieve sanction which could be due to a number of
factors including funding not being achieved, or Premier deciding
to withdraw from the Sea Lion Development which could also
ultimately result in relinquishment of the acreage. In this
scenario the Sea Lion project would need to be wound down including
the decommissioning of assets in the Falklands and the Group is
liable for its share of these project wind down costs with no
funding support from Premier and/or Navitas.
Under the base case forecast, the Group will have sufficient
financial headroom to meet forecast cash requirements for the 12
months from the date of approval of these condensed consolidated
interim financial statements. However, in the downside scenario, in
the absence of any mitigating actions, the Group may have
insufficient funds to meet its forecast cash requirements.
Potential mitigating actions, some of which are outside the Group's
control, could include collection of arbitration award proceeds,
deferral of expenditure or raising additional equity.
Accordingly, after making enquiries and considering the risks
described above, the Directors have assessed that the cash balance
held provides the Group with adequate headroom over forecasted
expenditure for the following 12 months - as a result, the
Directors have adopted the going concern basis of accounting in
preparing these condensed consolidated interim financial
statements. Nonetheless, for the avoidance of doubt, in the
downside scenario run and in the absence of potential mitigating
actions, a material uncertainty exists that may cast significant
doubt on the Group's ability to continue as a going concern. The
condensed consolidated interim financial statements do not include
any adjustments that may be necessary if the Group were not a going
concern.
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 2019 Annual Report. The Group identified its principal
risks at the end of 2019 as being:
-- sustained low oil price;
-- joint venture partner alignment and funding issues, both of
which could ultimately create a delay to the Sea Lion Final
Investment Decision; and
-- failure of the joint venture partners to secure the requisite
funding to allow a Sea Lion Final Investment Decision.
During 2019, the environmental impact of oil and gas extraction
(e.g. Climate Change) was added to the risk register, reflecting
the increased focus on ESG issues which could have an adverse
impact on investor and lender sentiment towards the Group and the
Sea Lion project.
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Directors confirm that, to the best of their knowledge, the
condensed consolidated interim financial statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting" as
adopted by the European Union and the AIM Rules for Companies, and
that the interim results include a fair review of the information
required.
The Directors must not approve the non-statutory Group financial
statements unless they are satisfied that the non-statutory Group
financial statements give a true and fair view of the state of
affairs of the Group and of the profit or loss of the Group for
that period. In preparing the non-statutory financial statements,
the Directors are responsible for:
-- selecting suitable accounting policies and then applying them consistently;
-- stating whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements;
-- making judgements and accounting estimates that are reasonable and prudent; and
-- preparing the non-statutory financial statements on the going
concern basis unless it is inappropriate to presume that the Group
will continue in business.
The Directors are also responsible for safeguarding the assets
of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the group.
Stewart MacDonald
Chief Financial Officer
CONDENSED CONSOLIDATED income statement
for the six months ended 30 June 2020
Six months Six months Year
Ended Ended ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
------------------------------------- ------ ----------- ----------- ------------
Revenue 2 2,467 4,782 10,328
------------------------------------- ------ ----------- ----------- ------------
Other cost of sales (1,283) (2,224) (4,647)
Depreciation and impairment of
oil and gas assets (2,598) (2,595) (5,738)
Total cost of sales (3,881) (4,819) (10,385)
------------------------------------- ------ ----------- ----------- ------------
Gross loss (1,414) (37) (57)
Exploration and evaluation expenses (223,635) (1,085) (1,974)
Impairment of goodwill - (10,057) (10,057)
Administrative expenses (2,651) (2,414) (5,942)
Charge for share based payments (843) (617) (1,307)
Foreign exchange movement 2,632 156 (1,627)
------------------------------------- ------ ----------- ----------- ------------
Results from operating activities
and other income (225,911) (14,054) (20,964)
Finance income 36 415 624
Finance expense (956) (2,813) (291)
------------------------------------- ------ ----------- ----------- ------------
Loss before tax (226,831) (16,452) (20,631)
Tax 3 8 - -
------------------------------------- ------ ----------- ----------- ------------
Loss for the period attributable
to the equity shareholders of the
parent company (226,823) (16,452) (20,631)
------------------------------------- ------ ----------- ----------- ------------
Loss per share: cents
Basic 4 (49.81) (3.62) (4.54)
Diluted 4 (49.81) (3.62) (4.54)
------------------------------------- ------ ----------- ----------- ------------
CONDENSED CONSOLIDATED statement of comprehensive income
for the six months ended 30 June 2020
Six months Six months Year
Ended Ended Ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
------------------------------------- ------- ----------- ----------- ------------
Loss for the period (226,823) (16,452) (20,631)
Exchange differences on translation
of foreign operations (28) (145) 70
---------------------------------------------- ----------- ----------- ------------
TOTAL COMPREHENSIVE Loss FOR THE
period (226,851) (16,597) (20,561)
---------------------------------------------- ----------- ----------- ------------
CONDENSED CONSOLIDATED balance sheet
as at 30 June 2020
As at As at As at
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
----------------------------------------- ------ ---------- ---------- ------------
Notes $'000 $'000 $'000
NON CURRENT Assets
Exploration and evaluation assets 5 243,651 454,366 465,820
Property, plant and equipment 6 530 2,622 1,814
Right-of-use assets 1,086 1,069 1,255
Finance lease receivable 580 906 628
CURRENT Assets
Inventories 1,463 1,743 1,463
Other receivables 3,622 7,654 3,501
Finance lease receivable 76 199 146
Investments 7 3,608 - -
Restricted cash 441 565 467
Term deposits - 20,000 -
Cash and cash equivalents 14,545 6,851 17,223
Assets held for sale - 17,295 17,925
----------------------------------------- ------ ---------- ---------- ------------
Total assets 269,602 513,270 510,242
----------------------------------------- ------ ---------- ---------- ------------
CURRENT Liabilities
Other payables 7,873 17,647 17,943
Lease liability 291 391 426
Liabilities directly associated
with assets held for sale - 743 2,000
NON-CURRENT Liabilities
Lease liability 1,597 1,805 1,735
Tax payable 8 36,644 40,304 39,167
Provisions 13,672 13,787 13,636
Deferred tax liability 39,213 39,222 39,221
----------------------------------------- ------ ---------- ---------- ------------
Total liabilities 99,290 113,899 114,128
----------------------------------------- ------ ---------- ---------- ------------
Equity
Share capital 9 7,218 7,209 7,212
Share premium 9 3,622 3,509 3,547
Share based remuneration 9 4,975 4,208 4,871
Owns shares held in trust 9 (3,342) (3,370) (3,371)
Merger reserve 9 74,332 74,332 74,332
Foreign currency translation reserve 9 (9,706) (9,893) (9,678)
Special reserve 9 433,766 456,680 433,766
Retained losses (340,553) (133,304) (114,565)
----------------------------------------- ------ ---------- ---------- ------------
Attributable to the equity shareholders
of the company 170,312 399,371 396,114
----------------------------------------- ------ ---------- ---------- ------------
Total liabilities and equity 269,602 513,270 510,242
----------------------------------------- ------ ---------- ---------- ------------
These condensed consolidated interim financial statements were
approved by the directors and authorised for issue on 14 September
2020 and are signed on their behalf by:
Stewart MacDonald
Chief Financial Officer
CONDENSED CONSOLIDATED statement of changes in equity
for the six months ended 30 June 2020
Own Foreign
shares Currency
Share
Share Share based held Merger Translation Special Retained Total
---------------
in
capital premium remuneration trust Reserve Reserve reserve losses Equity
For the six
months ended
30 June 2020 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- ------------- -------- -------- ------------ -------- ---------- ----------
Balance at
31 December
2019 7,212 3,547 4,871 (3,371) 74,332 (9,678) 433,766 (114,565) 396,114
Total
comprehensive
expense for
the period - - - - - (28) - (226,823) (226,851)
Other
transfers - - (835) - - - 835 -
Share based
payments - - 843 - - - - - 843
Share issues
in relation
to SIP 6 75 96 29 - - - - 206
Balance at
30 June 2020 7,218 3,622 4,975 (3,342) 74,332 (9,706) 433,766 (340,553) 170,312
--------------- -------- -------- ------------- -------- -------- ------------ -------- ---------- ----------
Foreign
Shares Currency
Share
Share Share based held Merger Translation Special Retained Total
----------------
in
capital premium remuneration trust Reserve Reserve reserve losses Equity
For the six
months ended
30 June 2019 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
---------------- -------- -------- ------------- -------- -------- ------------ -------- ---------- ---------
Balance at
31 December
2018 7,205 3,422 5,103 (3,369) 74,332 (9,748) 456,680 (118,282) 415,343
Total
comprehensive
expense for
the period - - - - - (145) - (16,452) (16,597)
Transfers - - (1,430) - - - 1,430 -
Share based
payments - - 617 - - - - - 617
Share issues
in relation
to SIP 4 87 (82) (1) - - - - 8
Balance at
30 June 2019 7,209 3,509 4,208 (3,370) 74,332 (9,893) 456,680 (133,304) 399,371
---------------- -------- -------- ------------- -------- -------- ------------ -------- ---------- ---------
Foreign
Shares Currency
Share
Share Share based held Merger Translation Special Retained Total
---------------
in
capital premium remuneration trust Reserve Reserve reserve losses Equity
For the year
ended
31 December
2019 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- ------------- -------- -------- ------------ --------- ----------- -----------
Balance at
31 December
2018 7,205 3,422 5,103 (3,369) 74,332 (9,748) 456,680 (118,282) 415,343
Total
comprehensive
income for
the year - - - - - 70 - (20,631) (20,561)
Share based
payments - - 1,307 - - - - - 1,307
Share issues
in relation
to SIP 7 125 (105) (2) - - - - 25
Other
transfers - - (1,434) - - - (22,914) 24,348 -
---------------
Balance at
31 December
2019 7,212 3,547 4,871 (3,371) 74,332 (9,678) 433,766 (114,565) 396,114
--------------- -------- -------- ------------- -------- -------- ------------ --------- ----------- -----------
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2020
Six months Six months Year
Ended Ended Ended
30 June 30 June 31 December
2020 2019 2019
Unaudited Unaudited Audited
Notes $'000 $'000 $'000
---------------------------------------- ------ ----------- ----------- ------------
Cash flows from operating activities
Net loss before tax (226,831) (16,452) (20,631)
Adjustments to reconcile net
losses to cash:
Depreciation 1,013 1,913 4,544
Share based payment charge 843 617 1,307
Impairment of oil and gas assets 6 1,789 700 1,600
Impairment of exploration and
evaluation assets 5 223,003 150 350
Impairment of goodwill - 10,057 10,057
Finance expense 956 2,813 291
Finance income (36) (415) (624)
Foreign exchange (2,450) (307) 1,221
---------------------------------------- ------ ----------- ----------- ------------
Operating cash flows before movements
in working capital (1,713) (924) (1,885)
Changes in:
Inventories 67 23 214
Other receivables 1,319 (585) 3,259
Payables (677) (1,322) (1,623)
Movement on other provisions 3 - (189)
---------------------------------------- ------ ----------- ----------- ------------
Cash utilised by operating activities (1,001) (2,808) (224)
---------------------------------------- ------ ----------- ----------- ------------
Cash Flows from investing activities
Capitalised expenditure on exploration
and evaluation assets (9,388) (8,632) (20,152)
Purchase of property, plant and
equipment (653) (1,794) (3,743)
Disposal of exploration and evaluation
assets and property, plant and
equipment 8,421 - -
Cash transferred to assets held
for sale - (633) -
Interest 44 333 1,020
Investing cash flows before movements
in capital balances (1,576) (10,726) (22,875)
Changes in:
Restricted cash - 3 101
Term deposits - 10,000 30,000
Cash flow from investing activities (1,576) (723) 7,226
---------------------------------------- ------ ----------- ----------- ------------
Cash flows from financing activities
Share incentive plan 12 13 25
Lease liability payments (119) - (259)
Finance paid (3) (6) (13)
---------------------------------------- ------ ----------- ----------- ------------
Cash flow from financing activities (110) 7 (247)
---------------------------------------- ------ ----------- ----------- ------------
Currency translation differences
relating to cash and cash equivalents 9 (51) 42
Net cash (outflow)/inflow (2,687) (3,524) 6,755
Cash and cash equivalents brought
forward 17,223 10,426 10,426
---------------------------------------- ------ ----------- ----------- ------------
Cash and cash equivalents carried
forward 14,545 6,851 17,223
---------------------------------------- ------ ----------- ----------- ------------
Notes to the condensed CONSOLIDATED group financial
statements
for the six months ended 30 June 2019
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. From the date of the RNS announcing these results
the Company's registered office address will be Warner House, 123
Castle Street, Salisbury, SP1 3UA.
1.2 Statement of compliance and basis of preparation
These condensed consolidated interim financial statements of the
Group, as at and for the six months ended 30 June 2020, include the
results of the Company and all subsidiaries over which the Company
exercises control.
The condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
("IAS") 34 Interim Financial Reporting as adopted by the European
Union ("EU"). The accounting policies applied in the preparation of
the condensed consolidated interim financial statements are
consistent with the policies applied by the Group in the
consolidated financial statements as at and for the year ended 31
December 2019 which were prepared in accordance with International
Financial Reporting Standards (IFRSs) as adopted by the European
Union. They do not include all information required for full annual
financial statements, and should be read in conjunction with the
consolidated financial statements of the Company and all its
subsidiaries as at the year ended 31 December 2019.
The comparative figures for the year ended 31 December 2019 are
not the Group's statutory accounts for that financial period. Those
accounts have been reported on by the Group's auditor and delivered
to the registrar of companies. The report of the auditor was: (i)
unqualified and (ii) did not contain a statement under section 498
(2) or (3) of the Companies Act 2006.
The preparation of condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial
statements, the significant judgements made by management in
applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
consolidated financial statements as at and for the year ended 31
December 2019.
The condensed consolidated interim financial statements were
approved by the Board on 14 September 2020.
All values are rounded to the nearest thousand dollars ($'000)
or thousand pounds (GBP'000), except when otherwise indicated.
1.3 Going concern
The Group monitors its cash position, cash forecasts and
liquidity on a regular basis and takes a conservative approach to
cash management, with surplus cash held on term deposits with a
number of major financial institutions.
Following the completion of the disposal of Rockhopper Egypt Pty
Limited, the Group has cash resources of US$13.4 million (as at 1
September 2020) and generates limited revenue and cash flow from
the sale of oil or gas but continues to fund the Group's materially
reduced G&A costs.
Historically, the Group's largest annual expenditure has related
to pre-sanction costs associated with the Sea Lion development.
However, following signature of a legally binding Heads of Terms in
January 2020, Rockhopper's share of all Sea Lion pre-sanction costs
from 1 January 2020 (other than licence fees, taxes and project
wind down costs) are funded by Premier and/or Navitas.
Management's base case forecast (in line with that of the
Operator) assumes a final investment decision on the Sea Lion
development during Q4 2021, subject to securing requisite
financing, with the Group's costs funded by Premier and/or Navitas
during this period.
Management has also considered a downside scenario in which the
project does not achieve sanction which could be due to a number of
factors including funding not being achieved, or Premier deciding
to withdraw from the Sea Lion Development which could also
ultimately result in relinquishment of the acreage. In this
scenario the Sea Lion project would need to be wound down including
the decommissioning of assets in the Falklands and the Group is
liable for its share of these project wind down costs with no
funding support from Premier and/or Navitas.
Under the base case forecast, the Group will have sufficient
financial headroom to meet forecast cash requirements for the 12
months from the date of approval of these condensed consolidated
interim financial statements. However, in the downside scenario, in
the absence of any mitigating actions, the Group may have
insufficient funds to meet its forecast cash requirements.
Potential mitigating actions, some of which are outside the Group's
control, could include collection of arbitration award proceeds,
deferral of expenditure or raising additional equity.
Accordingly, after making enquiries and considering the risks
described above, the Directors have assessed that the cash balance
held provides the Group with adequate headroom over forecasted
expenditure for the following 12 months - as a result, the
Directors have adopted the going concern basis of accounting in
preparing these condensed consolidated interim financial
statements. Nonetheless, for the avoidance of doubt, in the
downside scenario run and in the absence of potential mitigating
actions, a material uncertainty exists that may cast significant
doubt on the Group's ability to continue as a going concern. The
condensed consolidated interim financial statements do not include
any adjustments that may be necessary if the Group were not a going
concern.
1.4 Period end exchange rates
The period end rates of exchange actually used were:
30 June 30 June 2019 31 December
2020 2019
----------- -------- ------------- ------------
GBP : US$ 1.31 1.27 1.32
EUR : US$ 1.12 1.14 1.12
----------- -------- ------------- ------------
2 Revenue and segmental information
Six months ended 30 June 2020
Falkland Greater
Islands Mediterranean Corporate Total
$'000 $'000 $'000 $'000
-------------------------------- ---------- -------------- ---------- ----------
Revenue - 2,467 - 2,467
Cost of sales - (3,881) - (3,881)
-------------------------------- ---------- -------------- ---------- ----------
Gross profit/(loss) - (1,414) - (1,414)
Exploration and evaluation
expenses (222,228) (812) (595) (223,635)
Administrative expenses - (514) (2,137) (2,651)
Charge for share based
payments - - (843) (843)
Foreign exchange movement 2,523 78 31 2,632
-------------------------------- ---------- -------------- ---------- ----------
Results from operating
activities and other income (219,705) (2,662) (3,544) (225,911)
Finance income - - 36 36
Finance expense - (30) (926) (956)
-------------------------------- ---------- -------------- ---------- ----------
Loss before tax (219,705) (2,692) (4,434) (226,831)
Tax - 8 - 8
-------------------------------- ---------- -------------- ---------- ----------
Loss for period (219,705) (2,684) (4,434) (226,823)
-------------------------------- ---------- -------------- ---------- ----------
Reporting segments assets 242,856 6,509 20,237 269,602
Reporting segments liabilities (76,370) (14,401) (8,519) (99,290)
Material additions to segment assets are disclosed separately in
notes 5 and 6.
Six months ended 30 June 2019
Falkland Greater
Islands Mediterranean Corporate Total
$'000 $'000 $'000 $'000
-------------------------------- --------- -------------- ---------- ----------
Revenue - 4,782 - 4,782
Cost of sales - (4,819) - (4,819)
-------------------------------- --------- -------------- ---------- ----------
Gross loss - (37) - (37)
Exploration and evaluation
expenses - (303) (782) (1,085)
Impairment of goodwill - (10,057) - (10,057)
Administrative expenses - (671) (1,743) (2,414)
Charge for share based
payments - - (617) (617)
Foreign exchange movement 338 5 (187) 156
-------------------------------- --------- -------------- ---------- ----------
Results from operating
activities and other income 338 (11,063) (3,329) (14,054)
Finance income - 4 411 415
Finance expense (2,783) (7) (23) (2,813)
-------------------------------- --------- -------------- ---------- ----------
Loss before tax (2,445) (11,066) (2,941) (16,452)
Tax - - - -
-------------------------------- --------- -------------- ---------- ----------
Loss for period (2,445) (11,066) (2,941) (16,452)
-------------------------------- --------- -------------- ---------- ----------
Reporting segments assets 453,195 30,007 30,068 513,270
Reporting segments liabilities (79,440) (16,281) (18,178) (113,899)
All of the Group's worldwide sales revenues of oil and gas
$2,467 thousand (2019: 4,782 thousand) arose from contracts to
customers. Total revenue relates to revenue from two customers
(2019: two customers) each exceeding 10 per cent of the Group's
consolidated revenue.
3 Taxation
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
$'000 $'000 $'000
------------------------------- ----------- ----------- ------------
Current tax:
Overseas tax - - -
Adjustment in respect of prior
periods 8 - -
------------------------------- ----------- ----------- ------------
Total current tax 8 - -
------------------------------- ----------- ----------- ------------
Deferred tax:
Overseas tax - - -
------------------------------- ----------- ----------- ------------
Total deferred tax - - -
------------------------------- ----------- ----------- ------------
Tax on ordinary activities 8 - -
------------------------------- ----------- ----------- ------------
4 Basic and diluted loss per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Number Number Number
--------------------------------- ----------------- ------------ ------------
Shares in issue brought forward 457,979,755 457,495,899 457,495,899
Shares issued
- Issued under the SIP 502,365 308,503 483,856
------------------------------------- ----------------- ------------ ------------
Shares in issue carried forward 458,482,120 457,804,402 457,979,755
------------------------------------- ----------------- ------------ ------------
Weighted average number of
Ordinary Shares 455,405,626 454,574,168 454,659,998
------------------------------------- ----------------- ------------ ------------
$'000 $'000 $'000
--------------------------------- ------- ------------ ------------ --------------
Net loss after tax for purposes
of basic and diluted earnings
per share (226,823) (16,452) (20,631)
------------------------------------- --- ------------ ------------ --------------
Earnings per share - cents
Basic (49.81) (3.62) (4.54)
Diluted (49.81) (3.62) (4.54)
------------------------------------- --- ------------ ------------ --------------
The weighted average number of Ordinary Shares takes into
account those shares which are treated as own shares held in trust
(see note 9). As the Group is reporting a loss in each period 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 and share appreciation rights in issue.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
Number Number Number
--------------------------- ----------- ----------- ------------
Long term incentive plan 18,032,536 14,243,094 21,516,536
Share appreciation rights 786,967 786,967 786,967
Share options 32,194,588 - -
---------------------------- ----------- ----------- ------------
5 Intangible exploration and evaluation assets
During the period there have not been any material additions.
The majority of the movement is due to the US$222.2 million one-off
non-cash impairment, based on a decision, in line with the
operator, to write off the historic exploration costs associated
with the resources which will not be developed as part of the Sea
Lion Phase 1 project. Total impairments were US$223.0 million. The
balance carried forward is predominantly in relation to the Sea
Lion project.
6 Property, plant and equipment
During the period there have not been any material additions.
The movement in the period relate to the depreciation and
impairment of producing assets in the Greater Mediterranean Region.
Impairments of US$1.8 million mainly relate to writing down the
Egyptian portfolio to value of consideration received.
7 Investments
Investments relate to the shareholding in United Oil & Gas
Limited received as part consideration for the disposal of the Abu
Sennan production assets. The entire shareholding was disposed of
in August 2020 for US$4.0 million.
8 Tax payable
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2020 2019 2019
$'000 $'000 $'000
------------------------- ----------- ----------- ------------
Current tax payable - - -
Non current tax payable 36,644 40,304 39,167
-------------------------- ----------- ----------- ------------
36,644 40,304 39,167
------------------------- ----------- ----------- ------------
On the 8 April 2015, the Group agreed binding documentation
("Tax Settlement Deed") with the Falkland Island Government ("FIG")
in relation to the tax arising from the Group's farm out to Premier
Oil plc ("Premier").
The Tax Settlement Deed confirms the quantum and deferment of
the outstanding tax liability and is made under Extra Statutory
Concession 16. The Outstanding Tax Liability is intended to be
binding and final except, subject to the satisfaction of the
Falkland Islands' Commissioner of Taxation, Rockhopper shall be
entitled to make an adjustment to the Outstanding Tax Liability if
any part of the Development Carry from Premier becomes
"irrecoverable".
The Outstanding Tax Liability is payable on the earlier of:
-- First royalty payment date, which is expected to occur within
six months of the date of first oil;
-- The date on which Rockhopper disposes of all or a substantial
part of the Company's remaining interest in the Licences, or
otherwise realises value from the Licences;
-- A change of control of Rockhopper Exploration plc.
As security the Group has provided fixed and floating security
over all assets (with limited carve outs where this would conflict
with applicable law or existing terms). While such security is in
place, restrictions, subject to conventional carve outs, exist on
granting further security. The Group also agreed to maintain a
minimum 20% interest in licence PL032 and not to make dividends or
distributions.
The outstanding tax liability is GBP59.6 million and is expected
to be payable on the first royalty payment date on Sea Lion.
Currently the first royalty payment date is anticipated to occur
within six months of first oil production which itself is estimated
to occur three and a half years after project sanction. As such the
tax liability has been discounted at 15% to a US$ equivalent amount
of US$36.6 million.
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.
9 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 The share based remuneration reserve captures the
remuneration 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 Shares held in trust represent the issue value of
in trust shares held on behalf of participants in the SIP by
Capita IRG Trustees Limited, the trustee of the SIP
as well as shares held by the Employee Benefit Trust
which have been purchased to settle future exercises
of options.
Merger reserve The difference between the nominal value and fair
value of shares issued on acquisition of subsidiaries.
Foreign currency Exchange differences arising on consolidating the
translation assets and liabilities of the Group's subsidiaries
reserve 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 subject to settling
all contingent and actual liabilities as at 4 July
2013 it can distributed or used to acquire the share
capital of the Company. 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.
Independent review report to Rockhopper Exploration plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Rockhopper Exploration plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the half-year results of Rockhopper Exploration plc
for the 6 month period ended 30 June 2020. Based on our review,
nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and
the AIM Rules for Companies.
Emphasis of matter
Without modifying our conclusion on the interim financial
statements, we draw attention to Note 1.3 in the financial
statements, which indicates that under the base case forecast, the
Group will have sufficient financial headroom to meet forecast cash
requirements for the 12 months from the date of approval of these
consolidated financial statements. However, in the downside
scenario, in the absence of any mitigating actions, the Group may
have insufficient funds to meet its forecast cash requirements.
Potential mitigating actions, some of which are outside the Group's
control, could include collection of arbitration award proceeds,
deferral of expenditure or raising additional equity. As stated in
Note 1.3 these events or conditions, indicate that a material
uncertainty exists that may cast significant doubt on the Company's
ability to continue as a going concern. Our opinion is not modified
in respect of this matter.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated balance sheet as at 30 June 2020;
-- the condensed consolidated income statement and condensed
consolidated statement of comprehensive income for the period then
ended;
-- the condensed consolidated cash flow statement for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-year
results have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the AIM Rules for Companies.
As disclosed in note 1.2 to the interim financial statements,
the financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half-year results , including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the
half-year results in accordance with the AIM Rules for Companies
which require that the financial information must be presented and
prepared in a form consistent with that which will be adopted in
the company's annual financial statements.
Our responsibility is to express a conclusion on the interim
financial statements in the half-year results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the AIM
Rules for Companies and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-year
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
15 September 2020
Glossary :
2C best estimate of contingent resources
2P proven plus probable reserves
3C a high estimate category of contingent resources
AGM Annual General Meeting
Best a best estimate category of Prospective Resources
also used as a generic term to describe a
best, or mid estimate
Board the Board of Directors of Rockhopper Exploration
plc
boe barrels of oil equivalent
boepd barrels of oil equivalent per day
Capex capital expenditure
Company Rockhopper Exploration plc
E&P exploration and production
EGPC Egyptian General Petroleum Company
EIS Environmental Impact Statement
ERCE ERC Equipoise Limited
Farm-down to assign an interest in a licence to another
party
FEED Front End Engineering and Design
FDP Field Development Plan
FID Final Investment Decision
FIG Falkland Islands Government
FOGL Falkland Oil and Gas Limited
FPSO Floating Production, Storage and Offtake
vessel
G&A General and administrative costs
Group the Company and its subsidiaries
High a high estimate category of Prospective Resources
also used as a generic term to describe a
high or optimistic estimate
IFRS International Financial Reporting Standard
kboepd thousand barrels of oil equivalent per day
Low a low estimate category of Prospective Resources
also used as a generic term to describe a
low or conservative estimate
LOI Letter of Intent
mmbbls million barrels (of oil)
mmboe million barrels of oil equivalent
MMstb million stock barrels (of oil)
mscf thousand standard cubic feet
net pay the portion of reservoir containing hydrocarbons
that through the placing of cut offs for
certain properties such as porosity, water
saturation and volume of shale determine
the productive element of the reservoir
P&A plug and abandon
Premier Premier Oil plc
PSV virtual exchange point
scm standard cubic metre
STOIIP stock-tank oil initially in place
SURF Subsea, Umbilicals, Risers and Flowlines
tvdss true vertical depth subsea
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END
IR FLFETAAISLII
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