Rockhopper Exploration plc Falkland Island CGT liability deferment (6748J)
April 09 2015 - 2:00AM
UK Regulatory
TIDMRKH
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 GBP64.4 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 GBP4.7 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: 020 7523 8000
Henry Fitzgerald-O'Connor
Liberum Capital (Joint Broker)
Tel: 020 3100 2227
Clayton Bush
Vigo Communications
Tel: 020 7016 9571
Peter Reilly
Patrick d'Ancona
This information is provided by RNS
The company news service from the London Stock Exchange
END
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