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The UK-based oil and gas exploration and production firm Rockhopper Exploration has signed Heads of Terms (HoT) with Premier Oil Exploration and Production and Navitas Petroleum for a 30% stake in the Sea Lion oil field project.

Located in the Falkland Islands off the Argentinean coast, the Sea Lion oil field is part of the exploration licence PL032 in the North Falkland Basin.

Premier will have a 40% operated interest in licenses across the Sea Lion oil field. Rockhopper and Navitas will each hold a 30% interest in licences PL032, PL004b and PL004c.

According to Rockhopper, the deal will strengthen the Sea Lion joint venture (JV) and increase the likelihood of a successful senior debt project financing for the first phase of the field development.

Rockhopper Exploration CEO Samuel Moody said: “We will be delighted to welcome Navitas to the Sea Lion oil field and regard their joining as an important catalyst as well as industry endorsement of Sea Lion’s scale (independently audited 2C resources of c.520 mmbbls) and potential (NPV10 at first oil c.$4bn).

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“Furthermore, we are obviously very pleased to announce that all of our project costs are being covered from the start of 2020 and in the event of a successful sanction that they will continue to be covered through to Phase 1 Project Completion (estimated nine to 12 months after first oil) while maintaining a very material 30% stake in the Sea Lion project along with additional upside in the PL004a licence containing the Isobel discovery.”

Rockhopper expects to receive up to $48m worth of contingent consideration from Premier and Navitas on future development phases in the North Falkland Basin site.

The companies involved expect the finalisation of a sale and purchase agreement during the first quarter of this year. Completion of the transaction is subject to necessary regulatory approvals and expected during the second quarter.