Falkland Island CGT liability deferment

RNS Number : 6748J

Rockhopper Exploration plc

09 April 2015

 

 9 April 2015

Rockhopper Exploration plc

("Rockhopper" or the "Company")

Confirmation of Falkland Island Capital Gains Tax Liability Deferment

Rockhopper Exploration plc (AIM: RKH), the oil and gas exploration and production company with interests in the North Falkland Basin and the Greater Mediterranean region, is pleased to announce that it has agreed binding documentation with the Falkland Island Government ("FIG") in relation to the tax arising from the Company's 2012 farm-out to Premier Oil plc ("Premier"). 

The Tax Settlement Deed confirms the quantum and deferment of the outstanding tax liability and reflects the principles agreed between Rockhopper and FIG in December 2013 and is made under Falkland Islands Extra Statutory Concession 16.

Highlights

·    Outstanding tax liability confirmed at £64.4 million (approximately $95.7 million) and
 payable on the first royalty payment date on Sea Lion (or earlier subject to certain
 events)

·     First royalty payment date anticipated to occur within six months of first oil production
 which itself is estimated to occur in late 2019 (assuming Sea Lion project sanction in
 mid 2016)

·     Outstanding tax liability amount may be revised downwards if the Falkland Islands'
 Commissioner of Taxation is satisfied that either (i) the Exploration Carry from Premier
 is used to fund exploration activities in the Falkland Island license areas; or (ii) any
 element of the Development Carry from Premier becomes "irrecoverable"

·     Rockhopper provides certain "creditor protection" undertakings to FIG while the tax
 liability remains outstanding including (i) restriction on dividends or distributions; (ii)
 granting of first ranking security over Rockhopper assets; and (iii) while such security
 is in place, restrictions, subject to conventional carve outs, on granting further security

·     Intention that at the point Rockhopper is able to secure senior debt for the Sea Lion
 project, the security provided to FIG will be released and FIG will be provided with a
 standby letter of credit to preserve its creditor position

·     Rockhopper retains balance sheet strength with cash resources at year end 2015
 projected to be approximately $125 million

Sam Moody, CEO of Rockhopper, commented:

"We are delighted to have reached this settlement with FIG under which we now have much greater certainty both on the quantum and timing of the deferred tax liability.

"Under the amended commercial arrangements with Premier we intend to access the full $48 million of Exploration Carry during the 2015 drilling campaign which should allow us to reduce the outstanding tax liability by up to £4.7 million (approximately $7.0 million).

"The security arrangements and undertakings agreed provide credit protection to FIG while preserving Rockhopper's strong balance sheet and ability to obtain senior debt for the Sea Lion development on a cost effective basis.

"As we progress towards the award of the FEED contract during Q2 2015 and now that we have the certainty of the tax settlement in place, our ability to progress discussions with external debt providers (as an alternative to the standby loan from Premier) for our uncarried portion of Sea Lion development costs is significantly enhanced."

Further details of the Tax Settlement Deed are outlined in the Final Results announcement which was also published today.

For further information, please contact: 

Rockhopper Exploration plc

Tel: (via Vigo Communications) - 020 7016 9571

Sam Moody - Chief Executive

Fiona MacAulay - Chief Operating Officer

Stewart MacDonald - Chief Financial Officer

Canaccord Genuity Limited (NOMAD and Joint Broker)

Tel: [phone]

Henry Fitzgerald-O'Connor

Liberum Capital (Joint Broker)

Tel: [phone]

Clayton Bush

Vigo Communications

Tel: [phone]

Peter Reilly

Patrick d'Ancona

 

END

 

 

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