Rockhopper roller coaster as investors cool on deal
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Your support makes all the difference.Shares in Rockhopper Exploration surged by more than a fifth yesterday before tumbling to end the day 9 per cent lower as investors in the Falkland Islands-focused oil company initially celebrated a $1bn (£649m) deal with Premier Oil before changing their minds about its merits.
As Britain put itself on a collision course with Argentina by backing Premier Oil's move into the waters around the Falklands, investors in cash-strapped Rockhopper welcomed the sale of 60 per cent of its licence to explore the area to the FTSE 100 group.
Rockhopper's shares initially soared by 22 per cent to 335p as shareholders welcomed the fact that the so-called farm-out of part of its Sea Lion field prospect will enable it to bring the licence into full production.
Rockhopper would not be able to finance this on its own, despite proving the field's commercial potential at the end of last year.
However, as the day wore on, Rockhopper investors reconsidered the deal and began to regret giving away such a large part of the licence's potential profits, according to analysts. Furthermore, some investors were disappointed Premier Oil hadn't signed a deal with a major operator, such as BP or Shell. As a result, Rockhopper's shares fell to 223p at one point – a decline of 19 per cent on Wednesday night's closing price - before ending the day 25.5p lower at 248.5p.
The Foreign Office threw its support behind Premier Oil and reiterated its opposition to Argentina's claim on the islands 30 years after the countries went to war.
"We welcome this announcement from Premier Oil. Hydrocarbons exploration is a legitimate business and we have been unequivocal in our support for the people of the Falkland Islands as they seek to expand their economy," a spokesman said.
Rockhopper's Sea Lion field is the site of the only commercial oil discovery made off the islands so far, but explorers hope there will be more to come.
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