AIM-listed Rockhopper Exploration, the oil and gas company with key interests in the North Falkland Basin ('NFB'), notes the recent update published by Navitas Petroleum ('Operator') on Sea Lion development progress which includes an updated NFB independent resource report conducted by Netherland Sewell & Associates ('NSA') (the 'October 2024 NSAI Independent Report') on behalf of Navitas.
The EIS for the Northern Development Area, Phase 1 & 2 development was submitted to the Falkland Islands Government ('FIG') for statutory public consultation in July 2024 and in November FIG confirmed that, having received a number of comments, no further public consultation was required. An MOU has been signed for the provision of a redeployed FPSO with a current UK safety case. FEED for the FPSO commenced in November 2024.
The hydrocarbons will initially be produced through the redeployed FPSO with a peak production rate of up to 55,000 bbls/d.
Against a background of continued industry cost inflation, gross capex required to first oil has increased to US$1.4bn (including contingency). Despite this increase, project economics remain highly robust.
Following these developments, Navitas indicates that FID is now scheduled for mid 2025 and first oil for Q4 2027.
October 2024 NSAI Independent Report
The new NSAI report, which Rockhopper has not reviewed, categorises the resources into 3 areas, Northern, Central and Southern Development Areas.
- The Northern Development Area – previously described by Rockhopper as Sea Lion phase one
- using a single FPSO with 2 separate drilling campaigns which Navitas refer to as the Northen Area Phase1 and Phase 2
- recovering 319 MMbbls of oil in total (compared to 312 MMbbls in previous reports)
- The Central Development Area – contains what Rockhopper has previously described as Sea Lion phase two (Zebedee, Casper and other associated fans)
- The Southern Development Area aiming to develop fans around the Isobel / Elaine discovery
In addition to the previously certified Northern Development Area, Phase 1 & 2 FDP, a further development plan has been certified by NSAI to develop the Central Area. Central Development Area, Phase 1 will comprise 12 wells, increasing gross 2C Development Pending oil resources from 312 MMbbls to 532 MMbbls out of overall 917 MMbbls certified discovered oil resources in the NFB. Navitas has commenced work on the Central Development Area, Phase 1 FDP.
According to the October 2024 NSAI Independent Report, the certified gross 2C recoverable oil resources in the overall NFB have increased from 791 MMbbls to 917 MMbbls. In addition, 2.1 TCF of 2C recoverable gas resources have been certified by NSAI. This represents an increase in oil resources of 16% in the overall NFB portfolio compared to the previous certified 2C resource, as published in January 2024.
Key Information
2C Contingent Resources (Development Pending) phased development concept for the Sea Lion field:
- 35 wells
- Phased Development
- 1st Phase – (Northern Area) 11 wells with approximately 6 drilled and completed prior to first oil
- 2nd Phase – 12 wells (Northern Area)
- 3rd Phase – 12 wells (Central Area)
- Phase 1 + Phase 2 total barrels developed, 319 MMbbls
- Total barrels developed (all 3 phases) 532 MMbbls
- Phase 1 + Phase 2 peak production rate 55,000 bbls/day, increasing up to 120,000 bbls/day once all 3 phases have been developed
- Pre first oil capex (Phase 1 only) US$1.4bn
- Total capex (Phase 1, 2 and 3) US$4.0bn
- Production breakeven approximately US$24 per barrel (Phase1, 2 and 3)
Navitas published the October 2024 NSAI Independent Report which is available on Navitas’ website, and contains the following resource estimates (rounded, for oil only):
|
1C (MMbbls) |
2C (MMbbls) |
3C (MMbbls) |
|
|
Development Pending |
371 |
532 |
673 |
|
Development On Hold |
177 |
376 |
566 |
|
Development Not Viable |
6 |
10 |
15 |
|
Total |
554 |
917 |
1,254 |
The Development Pending category of 2C 532 MMbbls outlined above comprises the following certified development plans:
- Northern Development Area, Phase 1
- Northern Development Area, Phase 2
- Central Development Area, Phase 1
The Development On Hold category of 376 MMbbls 2C are the additional gross resources contained on the NFB held by Navitas and Rockhopper, including Sea Lion and Isobel/Elaine, that could be developed under future phases but for which there is currently no published development plan.
The Development Not Viable category of 10 MMbbls are the additional gross resources from Gas Condensate contained on the NFB held by Navitas and Rockhopper, that could be developed under future phases but for which there is currently no published development plan or market.
Rockhopper holds a 35% working interest in Sea Lion and associated NFB licences and benefits from various loans from Navitas in relation to the development, which are detailed in previous announcements.
Source: Rockhopper
