UK-based oil and gas company Rockhopper Exploration will invest $44 million to acquire a 35% stake in FPSO OSX-1, which is intended for the future expansion of the Sea Lion oil development offshore the Falkland Islands.
The vessel will become the second FPSO planned for the Sea Lion project. Aoka Mizu has already been selected for the approved first phase of the Northern Development Area, where first oil is currently targeted for the first quarter of 2028.
OSX-1 is intended for the separate Central Development Area, creating a second production hub as the project expands.
Rockhopper has entered into an agreement to subscribe for shares in a newly established special-purpose company whose sole asset is FPSO OSX-1. The total acquisition value of the FPSO is estimated at approximately $125 million, with Rockhopper taking a 35% interest.
The company expects its share of annual holding costs for the vessel to be around $1.4 million.
Sea Lion operator Navitas Petroleum previously exercised an option to acquire OSX-1 and initially financed the transaction. Rockhopper is now acquiring its 35% participation in the FPSO.
Following redevelopment, OSX-1 is expected to provide production capacity of approximately 125,000 barrels of oil per day, equivalent to around 43,750 barrels per day net to Rockhopper.
The Central Development Area is currently expected to include 20 wells in the first stage followed by another 18 wells, bringing the planned total to 38.
A development plan is expected to be submitted to the Falkland Islands Government in 2027. A final investment decision is targeted for the first half of 2028, with first production from the Central Development Area expected by the end of 2030.
Rockhopper previously raised approximately $180 million through an equity placing, with around $100 million allocated to funding the Central Development Area through mid-2028, including the investment in OSX-1.
The project continues to move forward amid the longstanding sovereignty dispute between the United Kingdom and Argentina over the Falkland Islands, known in Argentina as the Malvinas.
Argentina has stepped up legal and administrative action against companies participating in offshore oil and gas activity in the area. Halliburton has confirmed that it will not carry out work on the Sea Lion project, while other international contractors have also withdrawn.
Navitas and Rockhopper maintain that Sea Lion is being developed under licences issued by the Falkland Islands authorities and say that Argentina’s actions are not expected to materially affect the project schedule, although replacement contractors will be required.
The investment in OSX-1 demonstrates that the partners are continuing preparations for a major expansion of Sea Lion despite the political, legal and contractor-related challenges surrounding the project.
