Rockhopper Exploration (LON:RKH) has provided an update on the company’s Greater Mediterranean assets, reporting improved production from Abu Sennan, strong realisations and confirmation of a four-well drilling programme in 2018. The company’s Egyptian receivables position is significantly reduced ($4.5m outstanding) and historical liabilities to Beach Energy have been satisfied, meaning that Rockhopper will now benefit from 100% of payments from EGPC relating to its net interest. Cash flows from the company’s Egyptian asset base are expected to cover operational costs, G&A and contribute to maintenance capex going forward. Our last published valuation ranges from a core NAV of 44p/share (Phase 1 risked at 20% CoS) to 81p/share (Phase 1 at 50% CoS).
Abu Sennan: producing slightly ahead of management expectations following workovers in H217 at 880kboed net. Following JV approval, the company is to drill one exploration well (Prospect ‘S’), two development wells and a water injection programme at Al Jahraa in 2018. The focus remains on replacing reserves and maintaining production with the potential to materially increase recovery factor over time. (Abu Sennan accounts for 2p/share of our NAV). Net capex for the assets is estimated at $3m in 2018.
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