Rockhopper Exploration sells Italian portfolio to Northern Petroleum

Rockhopper Exploration has streamlined its Italian portfolio by agreeing to sell a portfolio of non-core onshore assets to AIM-listed Northern Petroleum, which includes one gas-producing field and five other concessions.

Rockhopper, which has interests in the North Falkland Basin and the Greater Mediterranean region, has put all the assets for sale in a subsidiary vehicle called Rockhopper Civita.

Northern pay $1.6m cash on completion, which is expected by year end 2017, and will assume all future abandonment and decommissioning liabilities associated with the sold licences, which excluding Aglavizza and the two fields with redevelopment potential, are estimated to be approximately €3m over the next ten years.

The sold licences include 100% interests in the Aglavizza and Scanzano concessions and the Civita permit, plus an 85% share of the San Basile concession, 60% of the Monte Verdese concession and 50% of the Torrente Celone concession.

In the last calendar year, the Civita gas field produced roughly 130 barrels of oil equivalent per day, while total revenue and gross profit associated with the licences was €1.1m and €0.7m respectively.

The Civita field, which is tied into the national gas network, is estimated to contain approximately 1 bcf of recoverable gas according to internal estimates and made an operating profit last year of €0.9m.

Rockhopper said it will retain the benefit of a €1.2m Italian VAT refund and that the previously announced international arbitration against the Republic of Italy in relation to the Ombrina Mare project is unaffected by this transaction

Chief executive Sam Moody said: "Our entry to the Mediterranean has created a strong platform for the growth of the business, bringing cashflow and exploration opportunities such as Monto Grosso. This transaction represents the conclusion of our initiative to streamline our Italian interests, focus on material assets and right-size our cost base.

"Through the Civita gas field, which Rockhopper developed as operator and brought on stream in 2015, we have added material value which allows us to off-set our exposure to future decommissioning liabilities."

Following the deal, Rockhopper's Italian interests will be centred on the producing Guendalina gas field and the Serra San Bernado exploration permit.

Northern said it was looking into the potential for the redevelopment of the Scanzano concession's Cupoloni field and the further subsurface potential of the Vigna Nocelli field in the Torrente Celone concession.

CEO Keith Bush said the acquisition was the company's "first step into the valuable gas production market in Italy and complements our oil production in Canada" and allows it to utilise its Italian tax position efficiently.

"We consider Italy to have further acquisition opportunities for growth and will continue to evaluate additional assets to supplement those acquired today, as we look to build an Italian production and development business."