Malcy’s Blog: Flash blog: Rockhopper, Prospex.

A flash blog today, as usual further comment as and when necessary.

Rockhopper Exploration

Rockhopper has announced it has received firm commitments to raise up to approximately US$140 million (approximately £105 million), before expenses, by way of a conditional placing of up to 198,207,354 new Ordinary Shares and 49,551,833 Underwriting Warrants at an issue price of 53 pence[1] (the “Issue Price”) comprising:

·    a firm placing of 162,813,189 Firm Placing Shares and 40,703,294 Firm Underwriting Warrants to raise approximately US$115 million at the Issue Price, conditional upon inter alia the occurrence of a final investment decision in relation to Phase 1 of the development plan for the Company’s Sea Lion field, to be effected using the authorities to issue and allot new shares granted to the Directors by Shareholders at the Company’s annual general meeting held on 27 June 2025 (the “Firm Placing”); and

·    a conditional placing of 35,394,165 Conditional Placing Shares and 8,848,539 Conditional Underwriting Warrants to raise approximately US$25 million at the Issue Price, conditional upon inter alia the passing of the Resolutions at a general meeting of the Company (the “General Meeting”) and the occurrence of a final investment decision in relation to Phase 1 of the development plan for the Company’s Sea Lion field (the “Conditional Placing” and, together with the Firm Placing, the “Placing”).

Pursuant to the firm and conditional tranches of the Placing, each Placee will receive one Underwriting Warrant for every 4 Placing Shares subscribed for at the Issue Price upon completion of the Placing. Each Underwriting Warrant will give the holder the right to subscribe for one new Ordinary Share at a price of 80 pence[2] per Ordinary Share (the “Strike Price”) at any time from the issue of the Underwriting Warrants up to (and including) 5.00 p.m. on the fourth anniversary of Admission (the “Warrant Exercise Period”). Members of the public are not entitled to participate in the Placing. The Placees include a combination of new Israeli based institutional investors as well as larger existing shareholders.

The Issue Price represents a discount of approximately 13.3 per cent. to the volume-weighted average price of 61.14 pence per Existing Ordinary Share for the 30-day period ended 30 July 2025.

The Company considers it important that existing Shareholders who are not participating in the Placing are given an opportunity to acquire new Ordinary Shares at 53 pence. The Company therefore confirms its intention to provide existing Shareholders with the opportunity to subscribe for new Ordinary Shares at 53 pence pursuant to an Open Offer to be announced on or around the date of Admission, which is currently expected to occur by the end of 2025. Pursuant to the Open Offer, the Company will seek to raise gross proceeds of up to €8 million (approximately US$9.2 million).

The making of the Open Offer is conditional upon the approval by Shareholders at the General Meeting. The Open Offer will include an excess application facility to enable Shareholders to apply for additional new Ordinary Shares in excess of their basic entitlements under the Open Offer. A circular setting out full details of the resolutions proposed in connection with the Conditional Placing and the Open Offer (the “Circular”) is expected to be published on the Company’s website and posted to Shareholders who have elected to receive hard copies of shareholder documentation as soon as practicable and in any event by no later than 31 August 2025.

Each Placee participating in the Placing has undertaken to the Company not to take up their respective Open Offer entitlements as a condition of their participation in the Placing.

The net proceeds of the Placing and Open Offer are expected to fund Rockhopper’s proportion of the capex required for the Phase 1 development plan for the Sea Lion oil field in the North Falklands Basin (“Sea Lion”). The Phase 1 scope is over the northern development area of Sea Lion and is designed to recover 170 mmbbls of gross 2C resource through the drilling of seven oil producer wells, one gas injector and three water injector wells (“Phase 1 of the Sea Lion Development or “Phase 1”). Navitas Development and Production Ltd (“Navitas”), an indirect subsidiary of Navitas Petroleum LP, the operator of Sea Lion, estimates the total post-FID funding requirement as US$1.658 billion to the point of first oil production (“First Oil”) and US$2.058 billion to project completion on Phase 1 of the Sea Lion Development. US$1 billion of the cost to project completion is expected to be funded through a senior secured debt financing package. The base equity requirement under the project financing to project completion, once all fees, interest charges, contingencies and post-First Oil revenues have been taken account of, is US$790 million. Under the previously disclosed loan agreements between Navitas and Rockhopper, the Rockhopper share of this is US$92 million. In addition, Rockhopper will need to provide for an additional US$10 million of cost overrun equity support, bringing the total Rockhopper project equity requirement to US$102 million. The remaining proceeds will go towards the contingent early project failure decommissioning funding requirement, which Rockhopper currently estimates its net cost to be approximately US$25 million, and other ongoing working capital requirements. 

The Company expects that the proceeds of the Firm Placing will be sufficient for Rockhopper to take FID in respect of Phase 1 of the Sea Lion Development. Given the importance of the overall Sea Lion development to Rockhopper, the Board has concluded that it is prudent and in the best interests of all Shareholders to raise additional funds as described below in order to provide further financial flexibility and to ensure, in so far as is possible, that further equity raises should not be required between FID and project completion of Phase 1, subject to inter alia the risk factors and uncertainties described below.

The Board believes it could be possible to sanction the second phase of the Sea Lion Project relatively quickly after First Oil on Phase 1 depending on field performance, oil prices at the time, and various other project assumptions being positively met. Based on data contained in the senior debt lending case, it is currently envisaged that the second phase, and all subsequent phases, will be self-financing using excess cashflows once Phase 1 is on production.

The Company acknowledges that it is seeking to issue New Securities pursuant to the Firm Placing amounting to approximately 32% of its existing issued Ordinary Share capital on a non-pre-emptive basis pursuant to the arrangements described in this Announcement. The Company has sought to consult with its major institutional Shareholders ahead of the release of this Announcement. These Shareholders are supportive of the proposed structure, which has been chosen to maximise certainty of funding to ensure the Company is able to secure the critical equity funding it requires to take FID in respect of Phase 1 of Sea Lion, which the Board believes has the potential to deliver significant value to all Shareholders. The Board’s unanimous view is that the Placing is in the best interest of Shareholders, and will promote the Company’s long-term success.

Sam Moody, CEO of Rockhopper Exploration plc said:

“Having discovered Sea Lion some 15 years ago, we are obviously delighted to be able to announce this equity fundraise, which we are confident puts Rockhopper in the strongest possible position to take FID by the end of this year and to reach project completion of the first phase of Sea Lion with no additional equity dilution. We look forward to continuing to work with and support Navitas in its role as Operator in bringing Sea Lion onto production and finally crystalising the value in the asset for all of our stakeholders.”

This is massively good news from Rockhopper who have taken advantage of very strong share price performance (1M +45%, 6M +105%, 12M +366%) to delve into the market and raise $140m at a time when operator Navitas are making noises about FID. Of course RKH cannot comment on this but getting funded now places the company in a strong backing position for when Navitas presses the button which I reckon could be imminent.

Rockhopper is now in the enviable position of being in the box seat on a huge project, surely now massively de-risked and if these numbers in today’s extensive announcement are in any way accurate will be able to ride the Sea Lion wave with no more need for equity raises.

The strong share price has meant that the company has not been left scrabbling around for significant investors and they even note that ‘the Placees include a combination of new Israeli based institutional investors as well as larger existing shareholders’ and that the raise was massively oversubscribed. It may be worth noting that when companies choose a farm-in partner, to select someone that might carry big investors with it count for plenty. I remain a huge fan of Rockhopper and readers know that there hasn’t been a bigger backer of Sea lion since Premier days and before…

Placing Highlights

·    Allocations of the New Securities have been determined by the Company in consultation with the Bookrunner, Canaccord Genuity Limited (“Canaccord”).

·    The Firm Placing is conditional upon, inter alia:

o  the aggregate proceeds being raised pursuant to the Firm Placing amounting to at least US$100 million (the “Minimum Fundraise Amount”);

o  the payment by each of the Placees to Canaccord of their pro rata Firm Placing subscription monies, and such pro rata amounts being, in aggregate, not less than the Minimum Fundraise Amount;

o  each of Navitas and the Company having made public announcements of a positive FID in

relation to Phase 1 by no later than 31 March 2026, such decision to be made by their respective boards of directors upon their satisfaction (acting in good faith) that, amongst other things, (a) Phase 1 has received all required regulatory consents and approvals and (b) the senior lender(s) in respect of the debt financing for Phase 1 have confirmed that the conditions to completing the debt financing have been satisfied save in respect of any condition relating to the release of the net proceeds of the Placing;

o  the Placing Agreement becoming unconditional and not having been terminated by Canaccord in accordance with its terms; and

o  Admission becoming effective by not later than 8.00 a.m. on the fifth Business Day following FID (or such later date as may be agreed by the Company and Canaccord).

·    The Conditional Placing is conditional upon, inter alia, the Firm Placing conditions (other than Admission of the Firm Placing Shares) having been satisfied and the passing of the Resolutions at the General Meeting.

·    The Firm Placing is not conditional upon the Conditional Placing or the Open Offer, but the Conditional Placing (and Open Offer) is conditional upon the Firm Placing.

·    The Conditional Placing is not conditional upon the Open Offer, but the Open Offer will be conditional upon the Firm Placing and Conditional Placing.

·    As the Firm Placing and Conditional Placing are both conditional upon, inter alia, the occurrence of FID, Placees have been required to place their Placing subscription monies in an Escrow Account managed by Law Debenture (the “Escrow Agent”) pending satisfaction of the conditions to completion of the Placing.

·    The issue of the New Securities (including the Placing Shares, the Underwriting Warrants and the Interest Shares) is to be effected by way of a non-pre-emptive cash box placing. Following the satisfaction or waiver (where applicable) of the conditions relating to the Placing, which the Company currently expects will occur by the end of 2025, the Company will allot and issue the New Securities on a non-pre-emptive basis to Placees in consideration for Canaccord transferring its holdings of redeemable preference shares and ordinary shares in a Jersey special purpose vehicle (“JerseyCo”) to the Company. Accordingly, instead of receiving cash as consideration for the allotment and issue of the New Securities at completion of the Placing, the Company will own all of the issued ordinary shares and redeemable preference shares of JerseyCo, whose only asset will be its cash reserves, which will represent an amount approximately equal to the net proceeds of the Placing (net of any agreed commission and expenses) following the release of such amounts from the Escrow Account.

·    Interest shall accrue on funds held in the Escrow Account at the applicable Escrow Agent rate in favour of Placees. Upon Admission, any interest that shall have accrued on the funds held in the Escrow Account shall be applied on Placees’ behalf to take up New Ordinary Shares at the Issue Price (the “Interest Shares”), with such Interest Shares to be issued to Placees (together with the Placing Shares and Underwriting Warrants) on a pro rata basis in proportion to their respective contribution to the Placing Proceeds. In addition to the Interest Shares, each Placee shall be entitled to receive one further Underwriting Warrant for every 4 Interest Shares it receives.

·    If FID does not occur by 31 March 2026, or the Placing Agreement is otherwise terminated in accordance with its terms and Admission does not occur, funds held in the Escrow Account (including any accrued interest) will be returned to Placees.

·    If the Resolutions at the General Meeting are not passed, the Conditional Placing will not proceed and the Conditional Placing funds held in the Escrow Account (including any accrued interest) will be returned to Placees.

·    Each Placee has executed a Placing Letter setting out the terms and conditions on which they participate in the Placing. Further details on the Placing Letters, including certain limited circumstances in which Placees shall be entitled to terminate their participation in the Placing pursuant to such Placing Letters, are set out below.

·    At the Company’s 2025 Annual General Meeting held on 27 June 2025, the Directors were granted authorities to allot shares or rights to subscribe for or to convert any security into shares under section 551 of the Act. This authority is sufficient to enable the Company to allot and issue the total number of Firm Placing Shares, Interest Shares and Underwriting Warrants to be issued pursuant to the Firm Placing.

·    Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings in respect of the New Ordinary Shares will commence at 8.00 a.m. on the fifth Business Day following FID.

·    The Underwriting Warrants will not be admitted to trading on AIM or on any other stock exchange. The Underwriting Warrants will be capable of being settled in CREST. It is currently intended that settlement of Underwriting Warrants via CREST will be on the same timetable as settlement of the New Ordinary Shares. Warrant certificates in respect of the Underwriting Warrants issued pursuant to the Placing will be issued to certificated holders only and are currently expected to be dispatched within 14 days of Admission.

Current Trading and Prospects

The Company’s results for the twelve months ended 31 December 2024 were released on 29 May 2025. A copy of these results can be found at www.rockhopperexploration.co.uk.

As noted in the Company’s results for the twelve months ended 31 December 2024, as at 31 December 2024, the Group had (audited) cash resources of approximately US$20.9 million. Save as set out below, there have been no material changes to the performance of the Group since the publication of these results.

Recent Event 

On 3 June 2025, the Company published the June 2025 NSAI Report, as further described below in the section headed Background to and reasons for the Placing.

On 3 June 2025, the Company separately announced that the Republic of Italy had been successful in annulling the award regarding its Ombrina Mare Arbitration and consequently the Company was not expecting any further payment under its monetisation agreement. On 7 July 2025, the Company updated that the lead insurer had confirmed that the loss has been triggered and, as a result, it was confident it would receive the full €31 million amount to which it is entitled under an insurance policy it had in place to cover the eventuality of the award being annulled.

Background to and reasons for the Placing

The Company’s core asset is a 35% non-operating interest in the Sea Lion oil field located offshore to the north of the Falkland Islands. The Company has previously publicly disclosed that discussions with potential capital providers have been positive and that FID on a first phase project development is anticipated in H2 2025.

Navitas holds the remaining 65% interest and is the operator of the Sea Lion field. Navitas currently estimates that the capital expenditure required to reach First Oil on the Phase 1 of the Sea Lion Development is US$1.658 billion and US$2.058 billion to project completion (the “Sea Lion Phase 1 Development Funding”). Navitas, as operator, is responsible for arranging the project financing (senior debt) which is expected to contribute the majority proportion of the Sea Lion Phase 1 Development Funding. The remainder of financing has to come directly from contributions by Navitas and Rockhopper in line with their ownership of Sea Lion and the loan agreements between Navitas and Rockhopper. 

Whilst Rockhopper benefits from various financing loan arrangements from Navitas for its proportion of the Sea Lion Development Funding, as described further below, Rockhopper has previously disclosed that it will need to contribute to the Sea Lion Phase 1 Development Funding directly and will therefore need to raise additional finance itself. Rockhopper provided some scenarios of such funding requirement in its 2024 Annual Report and Accounts published on 5 June 2025.

The taking of FID and sanctioning of Phase 1 is therefore conditional on all of the Sea Lion Phase 1 Development Funding coming together coterminously as well as other necessary consents and approvals being received. Rockhopper is therefore seeking to secure its capital requirements for Phase 1 as soon as possible, such that when the remainder of the Sea Lion Phase 1 Development Funding and necessary approvals are in place, FID and sanctioning of Phase 1 can occur without delay.

The Company is therefore conducting the Placing to raise proceeds for its required contribution of the Sea Lion Phase 1 Development Funding on the basis that FID ultimately occurs and Phase 1 is sanctioned successfully.

Accordingly, the Company needs to ensure the Placing is conditional on FID occurring (and the wider Sea Lion Phase 1 Development Funding and any associated approvals being in place). The Operator is targeting FID by year-end 2025.

Accordingly, the Placing Proceeds will be held in a third-party Escrow Account until FID. Upon FID, the Placing Proceeds (including any interest to be applied on Placees’ behalf to take up Interest Shares) shall be released from the Escrow Account to the Company in accordance with the procedures outlined in the Placing Letters, the Placing Agreement and the Escrow Agreement. If FID does not occur by the Long Stop Date, the Placing Proceeds (and any accrued interest) will be returned to Placees.

The potential value to Shareholders of the Sea Lion Project proceeding is highlighted in the recent independent resource evaluation conducted by Netherland, Sewell & Associates, Inc. (“NSAI”) on behalf of Rockhopper (the “June 2025 NSAI Report”). The June 2025 NSAI Report confirmed total gross full field 2C Resource of 917 mmbbls of which 321 mmbbls are attributable to Rockhopper’s net working interest. Of the 917 mmbbls, 727 mmbbls (255 mmbbls net to the Company) are categorised as Development Pending. NSAI further provided that the 2C Resources of 255 mmbbls has an NPV10 net to Rockhopper (after FIG royalties and taxes) of US$1.85 billion using US$70 brent oil price. As set out below, it is envisaged that Sea Lion will be developed over several phases. Phase 1, the funding for which is the purpose of the Placing, is scoped to recover gross 2C resource of 170 mmbbls (59.5 mmbbls net to Rockhopper). Subsequent phases are expected to be self-financing using the excess cash flows of Phase 1. Phase 2 is anticipated to recover a further gross 2C resource of 149 mmbbls (52.15 mmbbls net to Rockhopper) from the northern area of Sea Lion with first oil currently planned for 2030. 

Background to Rockhopper and the Sea Lion Project

The Company is an AIM-quoted oil and gas exploration and production company based in the UK with key interests in the Falkland Islands. It was established in 2004 and admitted to trading on AIM in August 2005. Rockhopper’s current market capitalisation is approximately £462 million.

Since 2004, the Company has built a portfolio of licences in the North Falkland Basin, containing Sea Lion and satellite discoveries. The Company discovered Sea Lion in May 2010 and went on to appraise and flow-test the field during the remainder of 2010 and 2011, as operator with a 100 per cent. working interest. Sea Lion is accordingly well appraised and has been the subject of many years of sub-surface, facilities engineering and pre-development work.

In 2012, the Company farmed down 60 per cent. and operatorship of its licence interests in the North Falkland Basin, including Sea Lion, to Premier Oil plc (“Premier Oil”). From 2012 to 2021, Premier Oil undertook various pre-development activities including front end engineering and design and other studies with the aim of developing the field. Premier Oil submitted an ‘Environmental Impact Assessment’ and draft ‘Field Development Plan’ to FIG. The ‘Environmental Impact Assessment’ was accepted by FIG in 2020. Furthermore, significant efforts were historically expended to secure financing for the Project.

In March 2021, Premier Oil was acquired by Chrysaor Holdings Limited to create Harbour Energy. As part of the acquisition, Harbour Energy conducted a strategic review of Premier Oil’s asset portfolio and concluded in September 2021 that Sea Lion, amongst other development assets it was acquiring, was not a strategic fit for the enlarged business. As a result, Harbour Energy decided to exit its interests in the Falkland Islands.

In April 2022, Rockhopper announced that legally binding agreements had been reached for Navitas to acquire the subsidiary of Premier Oil that held all of its Falkland Islands licences and an immediate further realignment of interests such that Navitas held 65% and operatorship, with Rockhopper retaining 35% across the North Falklands licence areas. As part of the transaction, Navitas agreed to provide the following loan funding to Rockhopper:

·    the majority of Rockhopper’s share of Sea Lion Phase 1 related costs from transaction completion up to FID are funded through a loan from Navitas with interest charged at 8% per annum (the “Pre-FID Loan”).  Certain costs, such as licence costs, are excluded; and

·    subject to a positive FID, Navitas will provide an interest free loan to Rockhopper to fund two-thirds of Rockhopper’s share of Sea Lion Phase 1 development costs (for any costs not met by third party debt financing) (the “Post-FID Loan”).  Certain costs, such as licence costs, are excluded.

Funds drawn under the Pre-FID Loan and the Post-FID Loan will be repaid from 85% of Rockhopper’s working interest share of free cash flow.

Since becoming operator, Navitas has been through a rigorous and continuous process of redefining the Sea Lion Project and reducing the capital expenditures required to reach First Oil. This has culminated in the current phased development programme as described below:

·    2C Contingent Resources (“Development Pending”) phased development concept for the Sea Lion field:

o  64 wells to develop the full 730 mmbbls

o  Phased development

Northern Area

·    1st Phase – 11 wells, 6 pre-drilled 170 mmbbls

·    2nd Phase – 12 wells, 149 mmbbls

·    3rd Phase – 16 wells, 95 mmbbls

Central Area

·    1st Phase – 12 wells, 212 mmbbls

·    2nd Phase – 13 wells, 102 mmbbls

·    Northern Area Phase 1 + Phase 2 total barrels developed, 319 mmbbls

·    Total barrels developed (all phases) 730 mmbbls

·    Northern Area Phase 1 + Phase 2 peak production rate 55,000 bbls/day, increasing up to 150,000 bbls/day once all phases have been developed

·    Production breakeven approximately US$24 per barrel (Phase 1, 2 and 3)

Phase 1

The Phase 1 scope is over the northern development area of Sea Lion and is designed to recover 170 mmbbls through the drilling of seven oil producer wells, one gas injector and three water injector wells (11 in total). Peak production from Phase 1 is expected to be approximately 50,000 bopd. Five producers and one water injector is expected to be drilled prior to First Oil. The wells will be tied into a leased FPSO.

The financing plans, including senior bank debt, for the Phase 1 of the Sea Lion Development are progressing well and Navitas is targeting FID by the end of 2025 with First Oil planned for the first quarter of 2028.

See Future Funding Requirements and Use of Proceeds section below further information on the financing assumptions.

Future Funding Requirements and Use of Proceeds

1)    Funding Requirements

Sea Lion Development Costs 

The total project financing package for Phase 1 of the Sea Lion Development that is in the process of being arranged, and on which FID is expected to be based, is currently estimated at US$1.658 billion to First Oil and US$2.058 billion to project completion. This amount includes all capex, opex, project fees, contingencies, insurance and financing fees (including interest) up to the point of First Oil and project completion respectively on the Phase 1 of the Sea Lion Development.

US$1 billion of the US$2.058 billion, which is currently being negotiated, is due to be met by a senior secured debt facility which will be split between Navitas and Rockhopper proportionally to their working interest in Sea Lion and is expected to have a 7-year term. The remainder will need to be met directly by each of Navitas and Rockhopper in the form of project equity. However Rockhopper benefits from certain loan arrangements from Navitas (as detailed above), such that Rockhopper estimates that its project equity contribution will be US$92 million at FID. Including Rockhopper’s proportion of an additional 5% project contingency, this increases to US$102 million. See below for further detail on the key Phase 1 project financing assumptions.

As set out in the Company’s 2024 Annual Report and Accounts, in addition to the project financing requirements, FIG has indicated a requirement for provisions of certain contingent project decommissioning liabilities to be secured and funded as the project is developed in the event of early project failure pre-production. This is likely to place an additional phased financial requirement on Rockhopper, starting at the time the first pre-drilled well is spudded, and is estimated, at this stage, to peak at approximately US$40 million at First Oil on Phase 1. The Company has started investigating various sources of funding for this and currently believes that a form of surety bond can be put in place which will result in Rockhopper having a net financing requirement of approximately US$25 million. The Company continues to investigate other options and there may be scope to reduce this cost.

Accordingly, Rockhopper’s current estimated capital requirement for Phase 1 of the Sea Lion Development, including its best estimate of net early project failure decommission liabilities, is US$127 million.

Other Corporate Costs 

Outside of direct Sea Lion Project costs, the Company expects to have other corporates costs in the region of US$30 million to US$40 million over the next three years at which point Rockhopper expects First Oil to have occurred (currently anticipated in Q1 2028). These corporate costs include, but are not limited to, three years general and administrative expenses, exit costs from Italian assets, corporates taxes (on insurance proceeds and Falkland Islands related) and other professional fees.

2)    Sources of Funds

Current Balance Sheet

The Company has a cash and cash equivalents balance at 30 June 2025 of US$21.6 million. As announced on 7 July 2025, the Company is expecting to receive, over the coming months, €31 million (c.US$35.7 million) to which it is entitled under the terms of the insurance policy regarding the annulment of the Ombrina Mare Arbitration award. 

Current Funding Proposals

The Company has today announced it is raising up to US$140 million through a two tranche conditional Placing. The proceeds from the Placing will be transferred into escrow pending FID and Financial Close on the Sea Lion Phase 1 Development Funding. Following FID and Financial Close, the Company is seeking to conduct an Open Offer to existing shareholder that could raise up to a further €8 million (c.US$9.2 million) if fully subscribed. The Open Offer is not being underwritten.

Furthermore, excluding any Underwriting Warrants that may be issued in relation to Interest Shares, the Company will issue 49,551,833 million Underwriting Warrants, conditional on the Placing closing, at a strike price of 80 pence per Underwriting Warrant. If all these Underwriting Warrants were exercised within their exercise period, the Company would raise up to a further approximate US$53 million before expenses.

Conclusions and Sensitivities

On the Company’s base case analysis, which includes assumptions that the Firm Placing and Conditional Placing close, the Ombrina Mare Arbitration insurance proceeds are forthcoming, a significant proportion of the Open Offer is taken-up, but prudently excludes any proceeds from exercise of the Underwriting Warrants, the Company believes it will have sufficient financial resources to the point of First Oil without requiring further financing. 

Should a combination of events occur which may include, but is not limited, the Ombrina Mare Arbitration insurance proceeds not being forthcoming (which the Company believes to be highly unlikely), the Open Offer not completing, the Conditional Placing not completing or there being Sea Lion Project complications, including but not limited to cost escalations (over and above the current contingency), project delays or the decommissioning funding requirement assumptions increase, then the Company may require additional capital prior to First Oil. However, the Company believes that if Phase 1 of the Sea Lion Development has progressed significantly, and First Oil is still on schedule, then further funding will be available to the Company.

3)    Key Sea Lion Project Financing Assumptions

The current target is for Phase 1 of the Sea Lion Development to be financed through a combination of a US$1 billion senior secured debt facility, US$790 million of project equity and post-First Oil revenues. The senior facility is expected to be split according to the joint venture working interest meaning that, by the time of Phase 1 completion, Rockhopper Hydrocarbons Limited, which holds licence PL032, will assume senior secured debt of US$350 million. The debt facility is expected to have a tenor of seven years with amortisation starting approximately one year after First Oil. The banking case, which includes various contingencies, assumes that post-First Oil cash flows are sufficient to cover the period from First Oil to Phase 1 project completion with no further equity injection. In addition, there is a requirement for the joint venture to provide a 5% cost overrun equity support. The entire amount of the US$790 million project equity is required to be spent ahead of the senior secured facility being available for drawdown.

Risk Factors

Please see pages 12 to 15 of the 2024 Annual Report and Accounts issued on 5 June 2025 for a list of principal risks and uncertainties facing the Company which include, inter alia, sufficiency of funding to develop the Sea Lion Project, disputes in respect of the sovereignty of Falkland Islands, joint venture alignment, changes to the fiscal regime and regulatory requirements, volatility in commodity prices and health, safety, environment and security risks. Any investment in the New Securities is subject to a number of risks and uncertainties. The risk factors described in the 2024 Annual Report and Accounts and those set out below do not purport to be a complete list or explanation of all the risks involved in investing in the New Securities, or that may adversely affect the Company or its business.

Please see below certain risk factors relating specifically to the Placing:

·    Admission of the New Ordinary Shares may not take place and Placee subscription monies may be returned to Placees

The Placing is conditional upon, among other things, FID occurring, the gross proceeds of the Firm Placing amounting to not less than US$100 million and the Placing Agreement becoming unconditional and not having been terminated in accordance with its terms. Additionally, Placees each have certain termination rights which include, among other things, the suspension of trading of the Ordinary Shares on AIM for a period exceeding 10 Business Days, the cancellation of the admission of the Ordinary Shares to trading on AIM, the termination of the Sea Lion licences, the termination of certain key agreements relating to the Sea Lion Project and an insolvency event occurring in relation to the Company and its Group or Navitas. If Admission of the New Ordinary Shares does not take place, the Company will not issue any New Securities pursuant to the Placing and all subscription monies (together with accrued interest in the Escrow Account) will be returned to Placees by Canaccord.

·    FID on Phase 1 of the Sea Lion Development may not occur or may be materially delayed

Having consulted with Navitas and the project financing consortium, the Company currently anticipates that FID will take place by the end of 2025. A number of factors could result in Financial Close being postponed or cancelled and if FID does not take place before the Long Stop Date, Admission of the New Ordinary Shares will not take place and all subscription monies (and any accrued interest in the Escrow Account) will be returned to Placees by Canaccord.

As at the date of this Announcement, potential reasons for FID to be delayed or cancelled include, but are not limited to: (i) the senior secured debt facility not being successfully syndicated or completed, (ii) the project equity to be procured by Navitas, including the amount required to carry Rockhopper, may not be completed, (iii) necessary regulatory consents may not be forthcoming, and (iv) other political instability may disrupt financing initiatives.

Further, in the 2024 Annual Report and Accounts, the Company provided detailed disclosure in relation to its disputed tax liability arising from the historic farm-outs in the Falkland Islands, including the recognition of a non-current tax liability of US$22.3 million. As set out in the 2024 Annual Report and Accounts, the Company recognises that the current position makes the project financing for Sea Lion significantly more difficult and has the potential to result in FID not being able to be taken or being delayed. The Company has continued to be in discussions with FIG to resolve differences and hopes to be in a position to provide an update in the coming weeks.

If FID is not able to be taken or is materially delayed, this could have a material adverse effect on the Group’s business, results of operations and financial condition.

·    Post Financial Close, First Oil may not occur or may be materially delayed

As set out above, the Company’s base case assumptions are that following FID and completion of the Placing, the Company will have sufficient financial resource to reach First Oil. However, there could be a number of factors that mean First Oil does not happen or is materially delayed including, but not limited to, (i) the oil price environment materially deteriorating, such that the Project is no longer viable, (ii) cost escalation (above current contingencies) meaning the project financing package is not sufficient to reach First Oil, and/or (iii) the conditions to the senior debt facility not being met and not being capable of being drawn. In those circumstances, the Company may require further financial resources to get to First Oil. There can be no guarantee that such further financial resources would be available to the Company at all, or on commercially viable terms.

·    Even if Phase 1 of Sea Lion Development occurs there is no guarantee subsequent development phases of Sea Lion will be forthcoming 

As set out above, Navitas and the Company are targeting FID and Financial Close on Phase 1 of the Sea Lion Development by the end of 2025, with First Oil on Phase 1 expected in the first quarter of 2028. It is currently envisaged that further phases and development of the remaining resources of the Sea Lion field will be self-funding using excess cashflows from Phase 1. There can however be no guarantee further phases occur in accordance with anticipated timetables. Furthermore, there can be no guarantee that further phases can be self-financing from cashflows generated from Phase 1.   

·    If the Resolutions at General Meeting are not passed, the Conditional Placing will not proceed and the Conditional Placing funds held in the Escrow Account (including any accrued interest) will be returned to Placees 

Rockhopper’s Other Falkland Licence Interests

In addition to the licences in the North Falkland Basin, the Company holds a 100 per cent. interest and is the operator of licences PL011, PL012 and PL014 in the South and East of the Falkland Islands.

The Company considers these licences to be potentially prospective for gas resources. In particular, licence PL011 is adjacent to a large gas-condensate discovery made by Borders & Southern Limited in April 2012.

Prospex Energy

Prospex has provided the following update on operations at its three main assets, the Viura gas field in northern Spain, the El Romeral power plant in southern Spain and including an update from the Selva Malvezzi production concession in northern Italy following the publication by Po Valley Energy Limited (“PVE”) (ASX: PVE) of its Q2‑2025 activity report.

Viura

The Operator of the Viura field, HEYCO Energia Iberia S.L. (“HEI” or the “Operator”), has advised Prospex that it has successfully repaired the leak in the production tubing of the Viura-1B well, identified in April 2025 (refer to 29 April 2025 announcement).  However, during the newly run completion of the wellbore, HEI identified an unexpected blockage of residual drilling mud.  A coil-tubing unit is needed to clear the obstruction, which is currently preventing the sliding sleeve from being actuated in order to allow gas production to resume.

Although this is a relatively simple process, sourcing an appropriate coil-tubing unit was not possible in Spain, so procurement necessitated mobilisation of a unit from Poland, resulting in a delay of bringing the Viura-1B well back into production.  Resumption of production is expected to follow shortly after the coil tubing unit is successfully deployed which is expected to arrive on site mid-August.

While the Operator awaits the arrival of the coil tubing unit, operations to remove the blockage with wire line methods have been ongoing, but this process is far slower than using the optimum coil tubing equipment.

Total natural gas produced from the Viura-1B well from start-up in December 2024 to the end of Q1-2025 was 30.2 MMscm = 1.1 Bcf (which is ≈ 4.4 MMscm = 154 MMscf net to Prospex).

The Viura acquisition significantly increased Prospex’s proven (2P) reserves by 6.5 Bcf (0.18 Bcm) net to Prospex.  Gross 2P remaining reserves at the Viura field is 90 Bcf (2.5 Bcm) and is expected to increase upon further evaluation of the newly drilled horizons.

Prospex owns 7.24% of the Viura field through its ownership of 7.5% of HEI.  Prospex will accrue 14.47% of the production income from the Viura gas field until payback of its capital investment plus the accrued 10% p.a. interest thereon.

Selva Malvezzi

The operator of the Selva Malvezzi production concession in Italy, Po Valley Operations Pty Limited (“PVO”), a wholly owned subsidiary of Po Valley Energy Limited (“PVE”) (ASX: PVE), announced its Q2‑2025 activity on 31 July 2025.  In the report PVO confirmed that it is on target to start field activities at the Selva Malvezzi Production Concession in October 2025 and steady production from PM-1 through the quarter.  PVE has a 63% working interest in the Selva Malvezzi production concession, while Prospex has the remaining 37% working interest.

Gas production and revenues from PM-1 gas facility in the Selva Malvezzi Production Concession

In addition, PVO confirmed the advancement of permitting revisions is underway to address further studies and recommendations from the technical commission of Ministry (MASE) Budrio Municipality, Civil Protection and Emilia Romagna region for the Broader Selva Development Program focussing on  Casale Guida 1d (Selva North), Ronchi 1d (Selva South), Bagnarola 1d(Riccardina), Selva Malvezzi 1d (East Selva) wells;.

Highlights

·    Steady gas production from the Podere Maiar-1 well at Selva (“PM 1”) for the quarter averaging 79,783 scm/d continuing to meet predicted levels of production.

·    Environmental Impact Assessment (“EIA”) revisions are underway to address further studies and recommendations from the technical commission of Ministry (MASE) Budrio Municipality, Civil Protection and Emilia Romagna region for the broader Selva Development Program.

·    Field activities are scheduled from October 2025 for the 3D geophysical survey for the broader Selva Development Program and permitting processes and landowner agreements continue to advance.

·    Gross quarterly production of 7.260 MMscm of gas (Q1‑2025: 6.724 MMscm), with 2.686 MMscm net to Prospex (Q1‑2025: 2.488 MMscm).

·    Gross revenue for the quarter of €2.864 million (Q1‑2025: €3.338 million), with €1.059 million net to Prospex (Q1‑2025: €1.235 million)

·    PM-1 continues to sell the gas from Selva Malvezzi to BP Gas Marketing.

Casale Guida 1d, Ronchi 1d, Bagnarola 1d, Selva Malvezzi 1d wells

The Selva Malvezzi Production Concession is the key area of focus for PVO with the next stages of development at Casale Guida 1d (Selva North), Ronchi 1d (South Selva), Selva Malvezzi (East Selva) and Bagnarola 1d (Riccardina) prospects.

The drilling programs for the four new drilling projects were submitted to the UNMIG department of the Italian Ministry of Environment and Energy Security (MASE) for drilling authorisation in September 2024.  The Environmental Impact Study (EIA) covering the drilling, development and production phases of the four wells was filed in December 2024.

During May 2025, the EIA technical commission of the Ministry (“MASE”) requested further studies specifically covering assessment of flood risk in the area given flooding events that occurred in the region in 2023 and 2024.  In addition, the Budrio Municipality requested a relocation of the Casale Guida (North Selva) and Ronchi (South Selva) well site due to community concerns regarding visual and noise impacts on the surrounding area.  The Selva Malvezzi-1 (East Selva) well site location will also be evaluated further to mitigate flooding risk concerns raised by the Civil Protection of Emilia Romagna Region.  PVO is preparing an updated EIA for resubmission which aligns with the Ministry’s observations and recommendations outlined.  The re-location of the surface locations of the two well pads does not impact the 3D seismic programme.

PVO received INTESA from the Region and the final authorisation by the MASE for the 3D geophysical survey acquisition on the Selva Malvezzi Production Concession in early April 2025.  Field activities, including the seismic acquisition, are scheduled for early October 2025 in accordance with guidance from landowners and relevant Farmer’s Associations, ensuring no impact on their late summer harvest.  Permitting process and landowner agreements continued to advance in the quarter.

El Romeral

The El Romeral power plant near Carmona in southern Spain has not been producing since 1 July 2025.  As previously reported, a two-week shutdown of production was expected whilst the plant’s main transformer was replaced.  Tarba Energía S.L. (“Tarba”) the operator of the plant has been renting a transformer from a third-party supplier and that company requested that the transformer be swapped out for a more suitably sized unit at a lower rental cost.  There have been delays to the arrival of the new transformer unit due to circumstances beyond the control of either company.  Tarba is receiving compensation for lost production from the transformer provider at a rate of €3,000 per day plus other operational costs related to alternative power provision.  This compensation has now increased to just under €4,000 per day following the delay on the delivery of the replacement transformer.  Tarba does not have a firm delivery date, the expectation is that replacement will occur during August.  Whilst this is not an ideal situation, Tarba is receiving compensation for lost production.

Tarba is the company through which Prospex holds its 100% interest in the El Romeral production concessions and the associated El Romeral gas-to-power plant situated near Carmona in southern Spain.

Other investments

Prospex remains committed to its stringent investment criteria; namely its strategy of investing in onshore natural gas projects across Europe and to this end, is continuously evaluating new opportunities that have the potential to deliver long-term value for shareholders.  In Poland, the Company has applied for licences to own 100% working interest in prospective blocks in areas which have proven gas production, high potential prospectivity in the targeted geological horizons and high potential for new reserves to be unlocked which can be brought onstream within two to three years.  The licence applications in Poland are with the Ministry of Climate and Environment for evaluation.  The next step will be the public gazetting of Prospex’s applications and details of the proposed work programmes on the licences.

Mark Routh, Prospex’s CEO, commented:

“We are pleased with the consistent production performance achieved at Selva from the PM-1 well during the quarter, which marks an important milestone for the project.  In addition, we’re encouraged by the progress made and recent amendments implemented to advance the next stage of development at Selva, aligning with our broader growth strategy.  I appreciate the interruptions at some of our other projects are frustrating.  Circumstances beyond our control have unfortunately collided to impact operations at our investments, but with our operators we have a clear and proactive plans in place to swiftly and effectively manage this and reset us on our production and development path.

“The value of our portfolio remains strong; we still hold strategic interests in producing natural gas assets and have significant volumes of Proven, Contingent and Prospective natural gas resources ready to be unlocked.  I am confident that the ongoing actions of our operators will ensure the recommencement of production at Viura and at El Romeral in the near term and the continuing expansion of Selva.  We are committed to maintaining transparent communications with our shareholders and will continue to share further updates on progress from our respective operators as soon as we are in a position to do so.”

Not much to add today, Prospex remains a high quality play in areas where demand will stay strong for the longer term but has the usual infuriating delays ‘beyond their control’. Combine that with limited visibility on operational issues, shareholders cannot be blamed for continuing frustration.