Rockhopper Exploration has acquired a 35% stake in FPSO OSX-1 for the development of the Sea Lion field in Falkland waters by securing $44 million. This investment comes amid ongoing political pressure from Argentina and the exit of contractors that continues to overshadow the project.
Details of the Sea Lion Project
The OSX-1 vessel will become the second FPSO for the Sea Lion field. The first FPSO, Aoka Mizu, has been selected for the Northern Development Area, where the target for oil production is set for the first quarter of 2028. OSX-1 is intended for the Central Development Area, which will help create a second production hub as part of the project's expansion.
Agreements and Estimated Costs
To secure its 35% investment, Rockhopper has entered into an agreement to purchase shares in a newly established special purpose company whose only asset is OSX-1. The estimated cost of acquiring this FPSO is around $125 million, and Rockhopper's share of annual maintenance costs is expected to be approximately $1.4 million.
The operator of Sea Lion, Navitas Petroleum, executed an option to purchase OSX-1 in August to expedite the development of the central area. Navitas initially funded the purchase cost, after which Rockhopper acted for its 35% stake.
Political Impacts and Environmental Challenges
This additional FPSO is expected to have a production capacity of about 125,000 barrels per day, which equates to approximately 43,750 barrels per day for Rockhopper. The central development area currently includes 20 wells in the first phase and 18 additional wells in later stages. A development plan is targeted for submission to the Falkland government in 2027, with the final investment decision expected in the first half of 2028 and initial production anticipated by the end of 2030.
In August, Rockhopper raised about $180 million through the sale of shares, with around $100 million allocated for the financing needs of the central development area until mid-2028, including investment in OSX-1. This financial commitment comes as Argentina has increased its efforts to challenge the Sea Lion project being developed in the waters around the Falklands.
Halliburton has confirmed that it will not undertake any work related to Sea Lion following discussions with Argentine officials. Previously, Baker Hughes had also stated that it would not be involved in this project. An Argentine federal judge has separately issued a temporary order to suspend drilling related to Sea Lion and marine and port construction work.
Navitas and Rockhopper emphasize that Sea Lion operates under licenses issued by Falkland authorities, and the actions of the Argentinians are not expected to have a significant impact on development, aside from the need to change two contractors for the project.
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