Photo: Sea Lions; Source: WWF

Sea Lion farm-in extended to enable Premier-Chrysaor merger

Rockhopper Exploration and Premier Oil have agreed to extend the exclusivity period for Navitas Petroleum’s farm-in to the Sea Lion project located offshore the Falkland Islands.

Rockhopper said on Monday that the three companies agreed to extend the exclusivity period farm-in to give time for the proposed merger of Premier Oil and Chrysaor to complete and the new management of the combined entity to make a firm decision on the Sea Lion project.

Sea Lion Phase 1; Source: Rockhopper Premier Navitas
Sea Lion Phase 1; Source: Rockhopper

It is worth noting that Navitas Petroleum confirmed that it remained committed to the proposed farm-in.

The exclusivity period for the farm-in will be extended to the earlier of 30 September 2021, the execution of definitive transaction documents, or a decision by Navitas not to proceed with the farm-in.

During this period, Rockhopper’s share of Sea Lion project costs will continue to be borne by Premier under the same terms as previously announced.

Rockhopper added that the discussions were also continuing with the Falkland Islands Government around a possible extension to licences PL004 and PL032 which currently expire in May 2021.

Samuel Moody, CEO of Rockhopper Exploration, said: “We will work closely with all stakeholders over the coming months to maximise the chance of securing the farm out and project sanction of Sea Lion.

We believe that the opportunity to invest in a 500 million barrel fully appraised and engineered project with material additional upside at this point in the cycle presents a compelling opportunity, and one which would lead us towards unlocking the value within the project long-awaited by all stakeholders“.

To remind, Premier Oil – the operator of the project – and its partner Rockhopper in January 2020 signed detailed heads of terms with Navitas Petroleum for a farm in of a 30 per cent interest in the Sea Lion project.

The companies reaffirmed their intention to convert the heads of terms into a fully documented agreements in March, regardless of the current market uncertainty related to Covid-19 and commodity price weakness.

In late April, Rockhopper and Premier agreed to extend the exclusivity period until the earlier of 31 December 2020, execution of the definitive transaction document targeted for late 2Q or 3Q, or until a decision by Navitas not to proceed with the farm-in.