Rockhopper plc acquires non-operated production and exploration assets in Egypt

The company originally announced that it had agreed terms with Beach Energy on the Acquisition in August 2015. However, due to the exercise by one of the partners of pre-emption rights on the Abu Sennan concession, as announced in September 2015, it was not possible to complete the Acquisition on the original terms.

The company believes the amended terms of the Acquisition represent a material improvement in the prospective value of the transaction for Rockhopper shareholders.

Highlights

Rockhopper will acquire the entire issued share capital of Beach Petroleum (Egypt) Pty Limited which on completion will hold:

22% interest in the Abu Sennan concession; and

25% interest in the El Qa'a Plain concession

Cash consideration for the Acquisition of approximately US$11.9 million, payable on completion. No share consideration. Beach Energy retains the economic benefit of the EGPC receivable as at 31 December 2015, being approximately US$8.6 million (see Financial Information below)

In addition, on the date of entering into the amended Acquisition agreement, Rockhopper has agreed the terms of a non-binding letter of intent with Dover Petroleum Corporation (Dover), an affiliate of an existing partner in the Abu Sennan concession, for the sale by Rockhopper of a 5% interest in the Abu Sennan concession (see further details below)

In the event that the Proposed Dover Transaction completes, Rockhopper's interest in the Abu Sennan concession would reduce to 17% and the overall transaction metrics would be as follows:

Net cash consideration reduced from approximately US$11.9 million to approximately US$9.3 million.

Expected working interest production, net to Rockhopper, of approximately 1000 boepd (based on average H2 2015 production levels).

2P plus 2C reserves and resources, net to Rockhopper, of approximately 3.5 mmboe (management estimate).

Implied transaction multiple of US$2.7/boe.

Acquisition anticipated to complete in mid 2016 (subject to satisfaction of certain conditions).

The Acquisition, when combined with existing production in Italy, raises the Company's full-year guidance for 2016 economic production to between 1500 and 1800 boe/d.

Sam Moody, CEO, commented:

"A patient approach to this transaction has paid dividends for Rockhopper and we are delighted to have reached agreement with Beach on the amended terms of the acquisition of Beach Egypt. We believe this deal is a strategically important step, perfectly suited to the current economic environment for the industry, where low cost, cash generative assets are increasingly important.

With the upfront cash consideration payable broadly flat and reducing in the event of the Proposed Dover Transaction, the implied transaction multiple falls to US$2.7/boe.

With low unit cash operating costs at approximately US$8 per barrel in 2015, we expect this portfolio to be net cash flow positive, even in the current oil price environment, and upon completion of the transaction expect operating cash flows from Egypt and our existing Italian assets to broadly cover Group overheads going forward.

The Acquisition also represents the continuation of Rockhopper's strategy to build a full cycle E&P company focused on its two core areas and represents the company's entry into Egypt, a prolific hydrocarbon province."

Adapted from a press release by Louise Mulhall

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