In early January 2016, the results of the Isobel-2 re-drill were announced, confirming a large total oil column in the Isobel Deep reservoir (more than 480m) and hydrocarbons across four other horizons. Rockhopper has concluded that Isobel is “highly likely to contain a commercially viable quantity of recoverable oil”. This resource base adds to the Sea Lion development, which has benefited from falling service costs. With largely unchanged capital investment, the project should see a sharp increase in Phase 1a recoverable volumes, reducing the break-even price. The merger with FOGL, completed on 18 Jan, has streamlined the ownership of the assets and makes a potential farm-out easier for RKH and PMO. We have adjusted our valuation for substantial changes since our last note, arriving at a core NAV of 104p/share (was 147p) and RENAV of 133p/share (178p).