AUS
NZ
UK
CA
USA
IND
Highlights:
-
Rockhopper Exploration PLC has implemented an insurance policy that guarantees a minimum payout of €31 million in the event of the annulment or partial annulment of the Ombrina Mare Arbitration Award.
-
The company has signed a share purchase agreement with Zodiac Energy Limited to divest its Italian assets, allowing for a strategic refocus on the Sea Lion development project.
-
The recent arrangements will reduce Rockhopper's liabilities associated with its Italian licenses and are expected to lower annual cash burn significantly.
Rockhopper Exploration PLC {LSE:RKH} has taken proactive measures to safeguard its financial position amid ongoing legal proceedings by implementing an insurance policy related to the Ombrina Mare Arbitration Award. This policy ensures that the company will receive a minimum of €31 million should the arbitration result in annulment or partial annulment. Arranged through a specialist FCA-registered brokerage and backed by A-rated insurers, the policy's total cost amounts to €4 million.
In conjunction with the insurance policy, Rockhopper has entered into a share purchase agreement with Zodiac Energy Limited, effectively exiting its Italian assets. This strategic divestment aligns with the company’s intent to concentrate efforts on the Sea Lion development project, which is critical for its future growth.
Chief Executive Samuel Moody emphasized that these developments provide essential strategic and commercial clarity. The combination of the insurance policy and the agreement with Zodiac not only mitigates risk but also enhances the company's balance sheet while preserving potential upside through retained interests in two Italian licenses.
Under the terms of the divestment, Zodiac will make two payments: an upfront payment of €3 million, followed by a contingent payment of €2.5 million contingent upon the successful defense of the annulment attempt and the recovery of at least €10 million from the arbitration. Despite exiting the Italian assets, Rockhopper will retain a royalty interest in the undeveloped licenses, which could yield either 10% of future revenues or 25% of the proceeds from any potential sale of the licenses.
Overall, these recent arrangements will significantly reduce Rockhopper's liabilities associated with its Italian operations by approximately $15 million, while the anticipated decrease in annual cash burn is projected to range between €500,000 and €750,000. This strategic shift positions Rockhopper for a more focused approach as it advances the Sea Lion development.
