Rockhopper is an AIM-listed E&P with a 35% stake in Sea Lion, one of the world’s largest undeveloped oil fields. The giant field was discovered back in 2010; however, progress stalled due to former operator Premier Oil’s financial issues. The arrival of development specialist Navitas in 2020 has injected fresh impetus. The Tel Aviv-listed independent is in the final stages of its major Shenandoah project offshore US, which once onstream (around mid-year) will allow for attention, and capital, to be directed towards Sea Lion. Going into the project Rockhopper is positioned strongly, with a major portion of capex covered under farm-in agreements with Navitas. Furthermore, the monetisation of an arbitration award in Italy has injected €19m of cash into the business, with another €31m due imminently thanks to a prudent insurance policy protecting against annulment by the Italian state. The market is slowly waking to the clear potential within Rockhopper’s portfolio; however, there remains considerable upside to the prevailing share price. Our DCF-derived risked total NAV at 105p/share offers over 2x returns, with far more running room as Sea Lion is de-risked further. We initiate coverage with a 105p target price offering 132% upside.
