Rockhopper shares plummet after confirming Malvinas oil drilling project

Shares of British oil company Rockhopper Exploration suffered a sharp drop of 23% on Monday after the firm confirmed its participation and schedule in the Sea Lion offshore project, located in the Malvinas Islands basin.

The stock price accumulated a 29% decline over the past month, amid trade sanctions imposed by Argentina, which has dubbed the project as illegal, as it claims sovereignty over the islands and their surrounding maritime area.

The Sea Lion project is being developed in partnership with the Israeli firm Navitas Petroleum. Rockhopper confirmed that the project remains on track to begin commercial production in the first quarter of 2028, despite the political tensions and sanctions.

The British company holds a 35% stake in the development, while Navitas which is listed on the Tel Aviv Stock Exchange controls the remaining 65%. The consulting firm Netherland, Sewell & Associates estimated the assets proven and probable reserves at 314 million barrels.

Rockhopper indicated that the initial development phase will utilize the Aoka Mizu floating production, storage, and offloading (FPSO) unit. For the second phase, for which the Final Investment Decision (FID) is projected for 2028, Navitas plans to use the OSX-1 FPSO platform, acquired last August, with the aim of beginning commercial production around 2030.

Rockhopper Exploration stated that the combined operation of both units would allow for a production rate of up to 180,000 barrels per day, while noting that a US$200 million capital increase guarantees its operating financing through mid-2028.

The Argentine government recently increased its pressure on the companies operating in the Malvinas Islands, introducing a bill to tighten a sanctions regime established in 2011 aimed at sanctioning companies, shareholders, and suppliers linked to projects that extract natural resources from that area.

Argentina considers the United Kingdoms activities in the Malvinas and the surrounding maritime areas to be illegitimate, based on its historic sovereignty claim, and states that any company looking to operate in the area needs authorization from Argentine authorities.

Editorial disclaimer: Although the UK refers to the territory as the Falkland Islands, Argentina strongly contests this name. The Buenos Aires Herald uses Malvinas to refer to the islands. 

With information from mbito