Download - 2012 07 Rockhopper Roadshow Presentation

7/31/2019 2012 07 Rockhopper Roadshow Presentation

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ROCKHOPPEREXPLORATIONPLC

INVESTORUPDATE

JULY/AUGUST2012


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ROCKHOPPEREXPLORATION

OPENINGANEWOILPROVINCE

3

ContingentResources(mmbbls)

NettoRockhopper (2)

1C 2C 3C90.2 142.2 206.4

RockhopperholdslicencesintheNorthFalklandBasin

Tenwelldrillingcampaign20102012

70%successrate

Significantupsideremains

Grossbestunriskedprospective

resources

of

approx.

3.3

bnbbls(1)

____________________(1) Note: aggregated by Rockhopper Exploration Plc. Gross best unrisked resources include 372 mmbbl for prospects and 674 mmbbl for leads per 2012 GCA CPR. Additionally, 152 mmbbl for the Weddell lead is

included per 2009 RPS CPR as well as further leads with 2,138 mmbbl as per 2007 Rockhopper estimates.(2) GCA CPR resources net to Rockhopper post farm-out.


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DETAILEDACREAGEPOSITION

POSTFARMOUT SUBJECTTOREGULATORYANDPARTNERAPPROVALS

4

Licence RKH Interest

PL032 40%

PL033 40%

PL023 40%

PL024 40%

PL003 3%

PL004a 3%

PL004b 24%

PL004c 10%


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ATRANSFORMATIONALDEALFORROCKHOPPER

5

A Global

Competitive

Auction Completed

Rockhopper, Bank of America Merrill Lynch and Rothschild approached global audienceincluding independents, IOCs and NOCs

Disciplined process with international parties from three continents conducting detailed due

diligence

Intense negotiations with a short list of parties prior to announcement

The Right

Deal

Established and secured the best terms offered by the industry

Rockhopper retained material 40% equity stake in Sea Lion and exposure to future upside

Is fully funded for the Sea Lion development with an optional full field standby funding

Carried for US$120mm (gross) of further exploration, equivalent to three wells

The Right Partner

Premier Oil is a proven operator with experience of FPSO developments and waxy oil

Recent experience delivering analogue developments on time and on budget Premier Oil to make significant commitment to the project with c. US$330-350mm pre-FID

(incl. upfront consideration, expected FEED costs and excluding exploration)

Financial strength to bring Sea Lion to first oil; approx. US$2bn after tax cash flows per annum

by 2015/2016 (1)

The Best Platform

Going Forward

Fully funded Sea Lion development to deliver exciting production growth

A partnership to pursue North Falkland Basin exploration

AMI covering highly prospective, geologically analogous, exploration

Significant cash to pursue new ventures and a team with track record of creating value

Joint capital markets day scheduled post closing of the farm-out transaction____________________(1) Premier Oil public disclosure.


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TERMSOFTHEFARMOUT AQUICKREPRISE

6

The Financial

Terms of

the Farm-out

Upfront cash payable on completion:

Net development funding / carry from 1 April 2012:

Net exploration carry:

Optional standby funding arrangement:

US$231mm

US$722mm

US$48mm

US$ full field funding

Conditions

Precedent (Exp. to

be Satisfied by 30

September 2012)

Consent of the Falkland Islands Government

Consent from existing licence partner

Other Features of

the Farm-out:

Costs of Front End Engineering and Design (FEED) expected to be around US$100mm to be covered

within development funding / carry Rockhopper to be sub-surface lead on exploration

Area of Mutual Interest (AMI) signed to cover North Falkland Basin as well as Southern Mozambique,

South Africa & Namibia

Operator handover agreement

This process has already begun and is expected to have concluded by 31 October 2012

Agreement to undertake a FEED study targeting:

Field Development Plan (FDP): H1 2014

First oil: H1 2017


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FARMOUTCLOSESTHEVALUEGAPANDDERISKSTHEPROJECT

7

____________________(1) Note: aggregated by Rockhopper Exploration Plc. Risked and risked and unrisked NPV10 post-tax economic evaluation of Sea Lion and adj. discoveries (net to Rockhopper) as of 31 March 2012 respectively - based on GCA CPR.

Note, economic evaluation in GCA CPR assumes first oil date of 1stJanuary 2016.(2) FactSet as of 11 July 2012, based on 284.2mm shares outstanding and net cash of US$107mm as of 31 March 2012.(3) Note: aggregated by Rockhopper Exploration Plc. Rockhoppers 40% share of risked and unrisked net NPV10 post-tax economic evaluation, as of 31 March 2012, based on GCA CPR. NPV of the development funding / carry per

Premier Oil disclosure, using 10% discount rate as of 31 March 2012. Cash consideration per deal terms. Analysis based on Rockhopper estimates. Note, economic evaluation in GCA CPR assumes first oil date of 1stJanuary 2016.

InadditiontoSeaLionandadjacentdiscoveries,therearenumerousprospectsandleads,withinRockhoppersacreage,withgrossbestunriskedresourcepotentialofapprox.3.3bnbbl.Per dealterms,Rockhopperisfundedforthreeexplorationwells

Post-deal: Highly Value Accretive Farm-out

1,104

-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2,399

2,640

US$mm

100%+ Value

Accretion for

RockhopperShareholders

Sea Lion + Adj.Discoveries

GCA Economic

Evaluation(40%)

Upfront CashConsideration

Upfront CashConsideration

NPV (10%) ofNet DevelopmentFunding / Carry

Sea Lion + Adj.

DiscoveriesGCA Economic

Evaluation(40%)

NPV (10%) ofNet DevelopmentFunding / Carry

RockhopperPre-deal

EnterpriseValue (2)

GCA RiskedEcon. Evaluation

(40%) + Cash and NPVof Devt Funding (3)

GCA UnriskedEcon. Evaluation

(40%) + Cash and NPVof Devt Funding (3)

FurtherExploration

Upside

3.1 18.616.9

GCAprepared

economic

evaluation

to

derive

NetPresentValues(NPVs)forSeaLionand

adjacentdiscoveriesofUS$4.1billion(risked)

andUS$4.7billion(unrisked)onagrossbasis(1)

Thiseconomicevaluationispredicatedonaprojectbeingfullyfunded

TheeconomicevaluationrepresentsriskedandunriskedmultiplesofUS$11.6/bbland

US$13.3/bblrespectively

Thefarmouttransactionishighlyaccretivetotheshareholders:thisprojectisnowfully

funded

and

Rockhopper

benefits

from

upfront

cashanddevelopmentfunding/carry

Postfarmout,theresultingriskedandunriskedUS$/bblmultiplesare

US$16.9/bblandUS$18.6/bblrespectively

US$/bblMultiple


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Multiple 2D, 3D seismic programmes

10 operated wells

2 drill stem tests (DST) and 15 mini DSTs

Static and dynamic reservoir models in place

>20,000 man-hours of completed concept selectionpre-FEED engineering across full project

FPSO selected as development case

Data from appraisal fully integrated

Wax management solutions in place

Peak production

Sea Lion c. 80,000 bbls per day

Upside from Satellites

SEALION:WELLAPPRAISEDANDREADYFORDEVELOPMENT

8

Wellappraisedandunderstoodreservoir

Developmentconceptandtechnicalsolutionsinplace

Extensive Work Completed Schedule To First Oil

Indicative Sea Lion

Development Costs

-

$1,000

$2,000

$3,000

$4,000

$5,000

FEED

Pre-First OilDevelopment

Post-First OilDevelopment

FDP

(H12014) FirstOil(H12017)

FEED

Pre-First OilDevelopment

Post-First OilDevelopment

FDP

(H12014) FirstOil(H12017)

US$mm

FEED

Post-FirstOil

PotentialFPSO

Pre-FirstOil


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SIGNIFICANTUPSIDEREMAINSINNORTHFALKLANDBASIN

9

Rockhoppertotakesubsurfaceleadinexploration

RockhopperhasstrongunderstandingoftheNorthFalklandBasinfollowingitshighlysuccessfuldrillingcampaignwith70%

successrate

Appraisalofexistingdiscoveries(Casper,CasperSouth,Beverley)

andexploration

of

additional

prospects

Multipleattractiveoilprospectswith>20%GCoS

Chatham&GeorgeProspectsdrillreadywithcombinedgrossunriskedprospectiveresourcesof500mmbbls(HighCase),

237mmbbls(Best

Case)

(1)

Technicalworkcontinuestoidentifyandmatureleadsandprospects

____________________(1) Note: resources aggregated by Rockhopper Exploration Plc.(2) Source: GCA CPR, RPS and Rockhopper estimates. Gross best unrisked resources include 372 mmbbl for prospects and 674 mmbbl for leads

per 2012 GCA CPR. Additionally, 152 mmbbl for the Weddell lead is included per 2009 RPS CPR as well as further leads with 2,138 mmbbl asper 2007 Rockhopper estimates.

TotalProspectiveResourcesPostFarmOut(1,2)Prospects

(mmbbls)

Leads

(mmbbls)

Total

(mmbbls)

GrossBestUnriskedProspectiveResources 372 2,964 3,336

NetBestUnriskedProspectiveResources 143 1,186 1,328


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TRANSFORMATIONALEXPLORATIONPOTENTIALTHROUGHAMIANDNEWVENTURE

ACTIVITY

10

SouthernAfrica

AMItargetsgeologicalprovincethatiscontinuationofCretaceousriftedeasternmargin

playoftheopeningSouthernAtlantic

Knowledgetransfer

of

critical

exploration

techniquestoevaluateopportunities

RockhopperwellpositionedtocaptureopportunitiesinemergingfocusregionforBP,

ShellandAPC,amongothers

NewVentures

Proventrackrecordoffindingoil sharepriceincreased224%sinceIPO(1)

Expertiseinoffshoreriftbasinscanbelevered

acrossmultiple

basins

Definedapproachtoscreeningandbuildinganewhighimpactportfolioofopportunities

____________________Source: FactSet. Share price performance between 31 August 2005 and 27 July 2012.


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APPENDIX

11


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INFORMATIONONPREMIEROIL

PremierOilplcwasfoundedin1934,isheadquarteredinLondonandlistedonLSEsince

1936

Interestsineightcountrieswithoperationsbothin

theNorth

Sea

and

Internationally

SignificantexperienceinFPSOdevelopments,includingChimSao,WestNatunaandBalmoral

Marketcapitalisationofapprox.US$3.0bnandenterprisevalueofapprox.US$3.7bnasof11July

2012

Cashandundrawnbankfacilities(incl.lettersofcredit)ofapprox.US$1.4bn,followingsuccessful

bankandbondmarkettransactionsinearly2012

PremierOilisexpectingaftertaxcashflowof

approx.US$2bnperannumby2015/2016

12

Key Facts on Premier Oil

-

20,000

40,000

60,00080,000

100,000

120,000

140,000

160,000

2011A 2012E 2013E 2014E 2015E 2016E 2017E 2018E

Net Production(boepd)

Existing Assets Sea Lion

Sea Lion is Important to Premier Oil

Farm-out Contributes 28% to Premier OilsReserves and Contingent Resources

Falkland

Islands

Existing

Portfolio28% 72%

____________________Source: Premier Oil public disclosure and 2011 annual report.

Huntington,Rochelle

Pelikan CatcherSolan


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GCAASSUMPTIONSANDSUMMARYOUTPUT

13

CompetentPersonsReport(CPR)issuedbyGaffneyCline&Associates(GCA)inApril2012(1)

Net Unrisked Oil ContingentResources for Sea Lion and

Adjacent Discoveries

2C Unrisked Post Tax Net

Present Values as of 31

March 2012

Awarded 2C Risked Post Tax

Net Present Values as of 31

March 2012

Financing Assumptions No financing assumptions made

Risking Factors Assumed Sea Lion: 90%

Adjacent discoveries: 75%

Price and InflationAssumptions

GCA 2Q 2012 Brent price scenario:

2015: $100.46/bbl

2016: $100.85/bbl (equivalent to approx. $93/bbl in 2012 terms)

2017+: escalated at 2% p.a.

Sea Lion crude priced at $3/bbl discount to Brent reflecting differences in quality and location

Real costs inflated at 2% p.a.

Sea Lion Adj. Discoveries Total

1C Resources (mmbbl) 194.7 30.7 225.4




NPV 7.5% US$bn 5.5 1.2 6.7

NPV 10.0% US$bn 3.9 0.8 4.7NPV 12.5% US$bn 2.8 0.5 3.3


NPV 7.5% US$bn 4.9 0.9 5.9

NPV 10.0% US$bn 3.5 0.6 4.1

NPV 12.5% US$bn 2.5 0.4 2.9

____________________(1) Assumes first oil date of 1stJanuary 2016 per GCA CPR.


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DETAILSONOPTIONALSTANDBYFINANCINGARRANGEMENTS

14

Funding Scenarios

Assuming US$2,000mm costs to first oil (leased FPSO), this implies US$800mm for Rockhoppers share

less development funding/carry of US$722mm, resulting in a funding need of US$78mm

Assuming US$3,000mm costs to first oil (purchased FPSO), this implies US$1,200mm for Rockhoppers

share less development funding/carry of US$722mm, resulting in a funding need of US$478mm

Under the first scenario, Rockhopper would expect to finance the balance from cash and under the second

scenario from Reserve Based Lending (RBL)

Capital expenditure post first oil is expected to be financed from field cash flow

Rockhopper Can Elect to

Waive its Right to StandbyFunding at Two Points

Submission of the FDP

Three months prior to the utilisation of the development funding / carry

Waiting until the second point irrevocably reduces some of Rockhopper's voting rights

Should Rockhopper Elect to

Take the Standby Funding

It is available on all future development capex (pre and post first oil)

Once the field is cash flow positive, on a quarterly basis, the standby funding is repaid from an enhanced

share of entitlement cash flows (split 60:40) until Premier has realised a 15% Internal Rate of Return (IRR)

If actual expenditure exceeds the approved development project budget by more than 10%, then excess is

charged at a 12% IRR


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DETAILSONOPTIONALSTANDBYFINANCINGARRANGEMENTS(CONTD)

WORKEDEXAMPLESILLUSTRAINGTHEENTITLEMENTCALCULATIONIFSTANDBY

FUNDINGIS

TAKEN

UP

(1)

15

US$3bn Capex to First Oil

(Assuming a PurchasedFPSO with Balance of Capex

from Production Cash Flow)

US$5bn Total Development

Capex (i.e. Pre- and Post-

First Oil Capex)

____________________(1) All are indicative numbers only.

Capex to First Oil US$mm 3,000.0

Rockhoppers 40% Equity Share US$mm 1,200.0

Less: Development Funding / Carry Net To Rockhopper US$mm (722.0)

Total Costs to be Funded by Rockhopper US$mm 478.0RKH Commitment as % of Capex to First Oil % 15.93%

Rockhopper's Equity Interest % 40.00%Portion of RKH Commitment Covered by Premier Oil (60% of 15.9%) % (9.56%)

Rockhopper Share of Cash Flows (Until IRR Threshold Reached) % 30.44%

Total Development Capex US$mm 5,000.0

Rockhoppers 40% Equity Share US$mm 2,000.0

Less: Development Funding / Carry Net To Rockhopper US$mm (722.0)

Total Costs to be Funded by Rockhopper US$mm 1,278.0

RKH Commitment as % of Total Capex % 25.56%

Rockhopper's Equity Interest % 40.00%Portion of RKH Commitment Covered by Premier Oil % (15.34%)

Rockhopper Share of Cash Flows (Until IRR Threshold Reached) % 24.66%


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EXPECTEDTAXTREATMENTOFTHEFARMOUT

16

Tax Treatment

Branch elections effective from 1 April 2012 mean that this is outside the scope of UK tax Deemed as a disposal within the Falkland Island ring fence and therefore subject to Capital Gains Tax (CGT)

Upfront cash is taxable, exploration carry (undertaken in the Falkland Islands) is not taxable and discounted value

of the development funding / carry is taxable

Assessment of total liability is subject to agreement with HMRC acting on behalf of FIG

Under current legislation, base costs sold (US$231mm) cannot be set against the total gain but base costs

retained (US$231mm) can be

Of the agreed liability, the proportion equivalent to cash over the agreed consideration is payable in 2013 and the

balance at the earlier of first oil or five years

Expected Payment

Profile of the

Development Funding /

Carry (1)

FIG Tax Review

Commenced in July 2012

Written confirmation from FIG that:

This review process will be complete within a timeframe of 6 to 12 months

In the event that legislative change resulting from this review benefits Rockhopper and its future partner then

FIG would be likely to apply this change retrospectively to the Sea Lion field development

In the event that tax legislation is subsequently introduced which disadvantages Rockhopper, in line with

standard practice on tax matters, FIG would not seek to apply such legislation retrospectively

____________________(1) Based on the Premier Oil presentation.

10 40

180

360

132

2012E 2013E 2014E 2015E 2016E

All in US$mm


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ACCOUNTING&CLASSTESTTREATMENTOFTHEFARMOUT

17

Accounting Treatment

Treated in line with prevalent industry practice

Only the cash element is recognised at the time of completion and set against related intangible expenditure

Therefore, no gain or loss will be generated in the group income statement

Class Test Treatment

Consistent with accounting practice above

Therefore, does not exceed 75% threshold tests and so is not considered a fundamental change of business

Consequently, no shareholder vote is required


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OPERATIONS

DRILLINGEFFICIENCY(AGRDATA)

WOWVs.NorthSea NPTVs.NorthSea

18

12.5%

5.3%

10.7%

14.8%

4.0%

10.6%

9.5%

0% 2% 4% 6% 8% 10% 12% 14% 16%

Ensco 100; North Sea

semi-sub (6 wells)

Transocean P rospect;

No rth Sea semi-s ub (11

wells)

Sedco 704; North Sea

semi-sub (10 wells)

Byford Dolphin; North

Sea semi-sub (5 wells)

Ocean Guardian NFB

semi-sub; Ro ckhopper

(10 wells)

No rth Sea average (35

wells)

All wells average (46

wells)

21.1%

13.8%

14.3%

18.9%

9.7%

20.8%

18.5%

0% 5% 10% 15% 20% 25%

Ensco 100; North Sea

semi-sub (6 wells)

Transocean Prospect;

No rth Sea semi-s ub (11

wells)

Sedco 704; North Sea

semi-sub (10 wells)

Byford Dolphin; North

Sea semi-sub (5 wells)

Ocean Guardian NFB

semi-sub; Ro ckhopper

(10 wells)

North Sea average (35

wells)

All wells average (46

wells)

WOW: Waiting On WeatherNPT: Non Productive Time


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0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.00.00 5.00 10 .00 15.00 20.00 25.00 30.00 35.00 40.00

Depth(m)

Time (Days)

Rockhopper 'Sea Lion' All Wells From Spud Time Depth Curve

14/10-2

14/10-3

14/10-4

14/10-5

14/10-6

14/10-7

14/10-8

14/10- 9, 9z

14/15-4,4A,4z

OPERATIONS

METOCEANCONDITIONSAND

DRILLINGPERFORMANCE

19

Metoceanconditionsnotextreme

15monthswaveriderbuoydata

SpudtoTDpossiblein


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OILQUALITY/ASSAY

GOODQUALITYOILANDGLOBALLYTRADABLE

SeaLion

Mediumlightsweetcrude

Circa.20%wax

Lowsulphur

LowTAN

Tradingstudybasedon2xassays

Globallymarketable

GulfCoast 20days

NWEurope 25

days

FarEast 35days

LikelytotradeattightdiscounttoBrent

20


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EXPLORATIONPROSPECTINVENTORY FANPLAYTYPE

21

FanName Block WI

% Gross

Unrisked

Prospective

Resources

MMBBLS GCoS

%

Low Best High

SL30 PL032 40 8.5 13.0 18.6 22

CasperSouth PL032 40 3.8 6.2 9.1 16

CasperSouth PL004c 10 5.3 8.1 11.3 16

Beverley West PL004b 24 7.7 12.8 19.6 34

Beverley PL004c 10 3.3 5.4 8.2 24

B15West PL032 40 6.6 10.0 14.1 53

GeorgeCentral PL032 40 10.2 29.3 83.1 10

GeorgeSouthA PL032 40 14.8 34.3 79.2 12

GeorgeSouthB PL032 40 26.8 51.8 94.2 12

GeorgeNorth PL032 40 7.4 17.7 39.7 8

Berkeley PL032 40 11.3 28.6 65.5 11

S2 PL032 40 14.1 50.5 151.9 22

Chatham PL032 40 16.1 30.9 54.3 25

ChathamEast PL032 40 10.1 47.7 94.5 21

ChathamSouth PL032/04b 40 4.2 25.5 55.3 28

Total 150.2 371.8 798.6

(AggregatedbyRockhopperExplorationPlc)

59 133 296

30 104 204

GeorgeandChathamarehighgradedfordrilling

____________________Source: GCA CPR as of April 2012.


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EXPLORATIONLEADSINVENTORY

22

Lead Block WI% GrossUnriskedProspectiveResourcesMMBBLS GCoS%

Best

Jason(1) PL032 40 254.4 5

Tyssen(1) PL032 40 65.4 5

Sedge(1) PL004c 40 65.7 5

Fox(1) PL004b 40 172.7 5

Stephens(1) PL004c 40 67.5 5

Walker

(1)

PL032 40 27.0 5Meredith(1) PL032 40 9.0 5

Louis(1) PL032 40 12.6 5

Weddell(2) PL023 40 152.0 10

Beauchene(3) PL023 40 145.0 7

Bleaker

(3) PL023 40 193.0 7

Concordia(3) PL023 40 44.0 9

Dolphin(3) PL024 40 287.0 4

Golding(3) PL023 40 49.0 9

Keppel(3) PL023 40 580.0 7

Pebble(3) PL023 40 186.0 5

Saunders(3) PL023 40 434.0 5

Usbourne

(3) PL023 40 220.0 7

Total 2,964.3

(AggregatedbyRockhopperExplorationPlc)____________________(1) Quoted from 2012 GCA CPR. (2) Quoted from 2009 RPS CPR. (3) 2007 management estimates.

GCA2012 CPR

Rockhopper2007

RPS2009 CPR