Rockhopper shares plummet after confirming Malvinas oil drilling project

Shares of British oil firm Rockhopper Exploration plummeted 23% on Monday following confirmation of its involvement and timeline in the Sea Lion offshore project, situated in the Malvinas Islands basin. Over the past month, the stock price plummeted 29%, due to Argentine trade sanctions labeling the project as unlawful, as Argentina asserts sovereignty over the islands and their maritime surroundings.

Rockhopper is collaborating with Israeli firm Navitas Petroleum on the Sea Lion project. The project is on track to commence commercial production in the first quarter of 2028, despite the political strife and sanctions. Rockhopper owns a 35% stake, while Navitas, listed on the Tel Aviv Stock Exchange, controls the remaining 65%.

The asset's proven and probable reserves are estimated at 314 million barrels by consulting firm Netherland, Sewell & Associates. Rockhopper initially plans to use the Aoka Mizu floating production, storage, and offloading (FPSO) unit for the first phase. The second phase, with a Final Investment Decision (FID) projected for 2028, will employ the OSX-1 FPSO platform, acquired in August, aiming for commercial production around 2030.

This combined operation could achieve a production rate of up to 180,000 barrels per day, with a US$200 million capital injection securing operating financing through mid-2028. Argentina has intensified its pressure on companies operating in the Malvinas, introducing a bill to tighten the sanctions regime since 2011, aimed at sanctioning companies, shareholders, and suppliers involved in resource extraction from that area.

Argentina contends the United Kingdom's activities in the Malvinas and surrounding waters are illegitimate, based on its historical sovereignty claim, and asserts that any company operating in the area requires authorization from Argentine authorities.