Rockhopper Exploration Stock

Well, firstly, let me welcome you all to the 2026 Rockhopper AGM. As has been the case for some years now, there's not sufficient Internet access here to allow us to broadcast this meeting live. And so a recording of this presentation will go on the website later today. I'd actually like to start with a personal thank you to those of you who stuck with us through some really very difficult times and who backed us through it all and, of course, to those who supported us in the equity raises, which allowed us to take FID.

Now, obviously, since our last AGM, we've taken the hugely important step of financing and sanctioning Sea Lion, which, as you all know, is something we've been working on for a very long time. And as we've picked up a fair few new holders in the past 12 months or so and hope to continue to do so, I'm actually going to kick off with a quick reminder about who we are, what we have and something of our history and then talk a little bit more about what we've achieved with Navitas, where we are on the project, what our future plans might include and a short update on Ombrina in Italy before summing up. But before I do that, let's just recap what we've done this year.

So we really have had a year, I would say, of exceptional delivery. Obviously, the big news, we've sanctioned Sea Lion. In order to sanction Sea Lion, we undertook some equity raises, which were very successful, and thank you to everybody who supported us in those endeavors. Project is sanctioned. All of the key contracts are let. There's a new independent Netherlands, Sewell or NSAI reserves and resources report available on the website, which I'll talk about later. Possibly very excitingly, Navitas has signed a nonbinding MOU for a second FPSO, which might be able to be used to accelerate subsequent phases. And the project is still on track for the first oil late Q1 2028.

So as I said in the introduction, just for those of you who are new to Rockhopper, here we are at a glance. For anybody who doesn't already know, we're an AIM listed E&P company whose core asset is in the North Falkland Basin. We've got a 35% working interest in the dark red licenses here on the map on the right-hand side and a 100% interest in the pink or peach colored licenses. But our real focus is the red licenses, which are in the North Falkland Basin, and they are held 35% Rockhopper, 65% Navitas, and they've been operated by Navitas since around September '22. And the key asset in those licenses is a large oil field called Sea Lion, which we discovered 100% as operator back in 2010.

Now, as I say, we've got an independent report, which sets out that we've got 321 million barrels of 2P plus 2C reserves and resources. That's net to our 35%. And in that NSAI report, there's an NPV10 calculation of those 321 million barrels of over $2.2 billion on a post-tax, post-FID royalty prefinancing basis, a realized oil price of about $71 a barrel. And, of course, as I'm going to keep mentioning because it's something we're incredibly proud of, we've sanctioned the first phase of the development of Sea Lion and first oil scheduled for Q1 2028, and we at Rockhopper are fully funded for that first phase.

We pulled out a handful of key numbers here, some of which I've spoken about, but it's probably worth just repeating a handful of them. $2.2 billion of NPV10 at just over $70 a barrel, and that's for the already discovered resources and reserves. 321 million barrels of 2P plus 2C net to us, and there's a lot of upside to that number, by the way. Fully financed for our share of Phase 1 development costs, and I'll come on to the financing later. And first oil now, in very round numbers, only 20 months or so away with around 20,000 barrels of oil a day forecast net to Rockhopper.

A couple of slides on our history and track record. I'm just going to pull out a few key dates here. It was set up in 2004, admitted to AIM in 2005. We discovered Sea Lion in 2010. We appraised and tested Sea Lion 2010 and 2011 and all of that 100% as operator, which is something that we're very proud of, and I would say is pretty unusual. And, of course, we sanctioned the project late in '25, and thank you to the involvement of Gideon, Amit, Ian and all of the team at Navitas for the exceptional work they've done both at the level of the project and, of course, on the financing.

A little bit of detail on this slide about Falklands' track record, when I can say for absolute certain that track record is second to none. In the top line here, you can see we've operated 10 wells. And in the bottom line, those are the 3 wells with the subsurface lead for exploration. And of those wells, 10 were successful, and that's a success rate of not far shy of 80%. So we've got unparalleled experience and success in the Falkland Islands. And I think it's worth bearing all that in mind when we come to talk about the confidence we have in Sea Lion field itself and also the really meaningful running room there is remaining. For those of you who don't know, I've personally been involved with this company since the start, and I've lost count of the number of times I've visited the islands, which is something I highly recommend, by the way. We retain a core small team of hugely experienced technical experts who know this basin and this asset very well indeed.

I'm not a geologist, and so I'm going to do this slide in about 2 paragraphs. But what you can see on the right-hand side, in the dark blue, is the extent of the area that we call the North Falkland Basin. And on the bottom left, there's a cross-section in the area of the basin where the Sea Lion oil field sits. Our licenses are overlaid on this map on the right-hand side. And we would say that, in our view, they encompass the most prospective parts of the basin. I will say, to preempt some questions, we're not a working interest holder in license PL001, which is also on this slide, and I'm not intending to get drawn into any -- making any comment on that acreage today.

So putting all of that together, what do we have? Well, we've got a really big oil field. And you can see that on the right-hand side of this slide in the green color. That oil field is well appraised. It's been independently assessed to have over 300 million barrels of reserves and 400 million barrels of contingent resources. There's an additional discovery in the red color towards the bottom right-hand side of the map on the right in Isobel and Elaine, and that requires appraisal at some stage. And then in the [ yellowish-orange ] color, we have very significant exploration upside, which the NSAI report I've been referring to indicates has a best case of around 500 million barrels of upside. And some of that is actually really quite low risk. And remember, we have a track record of success of over 75% in this basin. So a lot of additional barrels still to go for.

I just pulled out of that NSAI report some of the key numbers. What you have here is the net 35% numbers and oil only. The full report is available on the website, of course, and I'm not going to just read out all the numbers here today. But what you can see is a confirmation of the really material value of this asset at an oil price of just over $70 a barrel. And if you add up the 2P and 2C NPV10 numbers, you get to this post-FID tax and royalty prefinancing number in excess of $2 billion for our 35%. And if you push that oil price deck up 15% and you move to the 3P plus 3C, then that NPV10 number goes to over $3.6 billion, and that's with no allowance for exploration success. Now, even with our track record, I'm not suggesting that all of this upside is going to come in because, obviously, there is risk remaining. But it's a very good way to highlight the huge scale of the opportunity that we and, of course, Navitas have in our hands. Before we go on to the Sea Lion financing itself, just a reminder here of the key commercial terms with Navitas.

In short, prior to FID, Navitas paid all of our project costs for Phase 1 with a tiny number of exceptions, and we will repay that loan from Sea Lion cash flows at an interest rate of 8%. And now, of course, we're post-FID, we benefit from a separate Navitas loan, which covers 2/3 of our Rockhopper equity requirement, again for Phase 1. And, again, we will repay that loan to Navitas from Sea Lion cash flows, but this time at an interest rate of 0%. So bearing that post-FID loan in mind, just take a very high-level look at the financing of Sea Lion Phase 1. We've got a total cost of project completion, including financing costs, of just over $2.1 billion when you include the relatively small additional FPSO costs that we've made public. Of that, we have to find 35% in line with our working interest, and in very round numbers, it's about $750 million.

And on this slide, you can see an approximate breakdown of that between senior debt, Rockhopper equity, which we've prefunded, of course, the Navitas loan, and there's actually a smaller degree of post-first-oil cash flows, which we don't break out on this slide. And I think it's worth saying here that the great advantage to Rockhopper of the Navitas loan is uncapped. And what this means is, should we see, for example, a $200 million cost overrun on the project, not that we're anticipating it, we at Rockhopper would be on the hook for just over $23 million of that $200 million. And I think that gives us a pretty decent level of insulation, if you will, against unforeseen cost increases, although, as I say, we're not anticipating any. And to repeat what I said earlier, we are fully funded for Phase 1.

So where are we on the project itself? Well, the short answer is that we're on track. As you know, because we've already made it public, we moved the work on the FPSO from the Middle East to Asia as a result of the events in Iran. And Navitas did an outstanding job at very short notice at really a pretty minimal cost in the context of the project and very limited, if any, schedule slippage. We should be drilling the first wells in early 2027, which is not that far away at all. And, as I've already mentioned, targeting first oil in Q1 2028. Handful of photos here of progress down in the islands at the energy dock, the laydown yard and the warehouses, all on schedule. You can actually get a really good idea of the scale of Stanley Harbour on the main photograph there and the layout of the town as it stretches away from us as well as the work that's going on, of course, with the yard, the warehouses and the new energy dock causeway.

Now, as I've mentioned, Sea Lion is a big field, and it's going to be developed in phases. And on Slide 15 here, we have a schematic previously used by Navitas. Mention again here that there is a nonbinding MOU signed for a second FPSO. And I'm not going to mention the name of that vessel today, but I can say it's larger in every regard than the one that's being used for Phase 1. Now, it might all come to nothing. But if it turns out to pass the currently ongoing due diligence, it might mean we're able to actually accelerate subsequent phases. And so this slide might become redundant or get updated. But at the moment, that's the plan that Navitas has put into the public domain. Now, plainly, if we are able to accelerate production from later phases, that would potentially be a very significant value-enhancing event. So that is possibly could turn out to be a very exciting development for all of us.

I'm not going to go through this slide in any detail because I don't run Navitas, but what I will say is that they've been an outstanding partner, and they really are doing a first-class job on Sea Lion. Not only are they incredibly financially sophisticated, and, in fact, they have now financed 2 projects that I would say many in the oil industry thought would be probably stuck forever in Shenandoah and Sea Lion. But they've also built a super capable operating team. And that team completely reengineered the project in a very short time because they only became operator late in 2022, massively reducing costs and improving economics, all of which provided the foundation for the successful financing. And I have to thank Gideon and Amit, Ian and the rest of the team there, as without them, we would not have been able to sanction this project.

This slide is a reminder that we signed an SPA to dispose of our Italian assets. The long stop date for that transaction is actually today. We don't currently have a consent from the Italian regulator at the moment. I have to say, it looks unlikely that we'll get that consent without further engagement with the ministry. And so we need to keep working on this one. On the resubmitted Ombrina Mare claim, we're not expecting to have the hearing before late in 2028. And I would remind investors, before we move to the next slide that the last arbitration took the thick end of 9 years. Confirmation here of the latest position in terms of large shareholders and the year-end cash balance, and another chance for me to repeat that we are fully funded at Rockhopper for Phase 1 of Sea Lion.

So let me try to sum all of that up. We set up in 2004 with the dream of finding oil in the North Falkland Basin. We succeeded in that in 2010 and went on to complete a hugely successful appraisal campaign. Today, we've kept a meaningful 35% working interest in a very large oil field that has significant follow-on, all of which has huge potential value associated with it. We fully financed and sanctioned the first phase of the development and are now less than 2 years from the first-ever oil production coming from the field we discovered and appraised ourselves. But we and Navitas are not intending to stop at Phase 1 and are already investigating how to actually accelerate subsequent phases to further enhance and deliver that value.