Premier Oil PLC agreed to acquire 60% of Rockhopper Exploration PLC’s interest in the North Falkland basin licenses for $1 billion. Upon closing, Premier would become operator of the Sea Lion oil and gas development in the South Atlantic.
The transaction, pending approval from the Falkland Islands government, involves PL023, PL024, PL032, PL033, PL003, and PL004, including the Sea Lion development and an adjacent development area that includes the Casper and Casper South discoveries.
Terms call for Premier initially to pay $231 million, another $48 million to finance Rockhopper's share of future exploration costs, and $722 million to cover Rockhopper’s Sea Lion development costs. In addition, Premier agreed to provide standby financing arrangement at Rockhopper’s option to cover development expenses beyond the $722 million.
Premier and Rockhopper also announced an Area of Mutual Interest agreement outlining plans for the two companies to cooperate on future projects in the North Falkland basin and analogous plays in South Africa, Namibia, and southern Mozambique.
Rockhopper said it retains significant upside in the North Falkland basin through its 40% stake.
The Sea Lion development is in PL032 and PL004b. Rockhopper has said it likely will develop Sea Lion using a floating production, storage, and offloading facility or tension-leg platform with a floating storage unit.
Previously, Rockhopper planned to submit a Sea Lion development plan to the Falkland Islands government by April 2013 (OGJ, Aug. 22, 2011, p. 25).
Premier said the acquisition will add an estimated 200 million bbl of contingent reserves together with resources of 175 million boe net. Once on stream, the Sea Lion development is expected to add 50,000 b/d of oil production net to Premier's 60% stake.
The Sea Lion discovery, tested during September 2010 and June 2011, was the first oil to flow to surface in Falkland Islands waters, Rockhopper said.
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