ROCKHOPPER EXPLORATION PLC Rockhopper Exploration plc Hilltop Park Mediterranean office: [email protected] Building a well-funded, Devizes Road Via Cornelia, 498 www.rockhopperexploration.co.uk Salisbury 00166 Roma @RockhopperExplo SP3 4UF Italia full-cycle, exploration Telephone +44 (0)1722 414 419 Telephone +39 06 62290270 Company Reg. No. 05250250 led E&P company Report and Accounts for the year ended 31 December 2015 Report and Accounts for the year ended 31 December 2015 Shareholder information Glossary Key contacts AGM Annual General Meeting Registered address Solicitors bbl barrel and head office: Ashurst LLP bcf billion cubic feet Hilltop Park Broadwalk House Board the Board of Directors of Rockhopper Exploration plc Devizes Road 5 Appold Street boe barrel(s) of oil equivalent Salisbury London boepd barrel(s) of oil equivalent per day Wiltshire EC2A 2DA SP3 4UF BOP blow out preventer Principal Bankers bopd barrel(s) of oil per day Mediterranean office: Royal Bank of Scotland plc Capex capital expenditure Via Cornelia, 498 36 St Andrew Square Company Rockhopper Exploration PLC 00166 Roma Edinburgh E&P exploration and production Italia EH2 2YB EIS Environmental Impact Statement ESA Exploration Study Agreement Nomad and joint broker Auditor ExCo Executive Committee Canaccord Genuity Limited KPMG LLP Farm-in to acquire an interest in a licence from another party 88 Wood Street 15 Canada Square Farm-out to assign an interest in a licence to another party London London FDP field development plan EC2V 7QR E14 5GL FEED front end engineering and design FID Final Investment Decision Joint broker Registrar FIG Falkland Islands Government Liberum Capital Limited Computershare Investor FOGL Falkland Oil & Gas Limited Ropemaker Place, Level 12 Services plc 25 Ropemaker Street Vintners Place FPSO floating production, storage and offtake vessel London 68 Upper Thames Street G&A General & Administration expenses EC2Y 9LY London Group The Company and its sunsidiaries EC4V 3BJ GSA Gas Sales Agreement Joint broker HoA Heads of Agreement Merrill Lynch International HSE health, safety and environment 2 King Edward Street IAS International Accounting Standard London IFRS International Financial Reporting Standard EC1A 1HQ JV Joint Venture kboepd thousand barrels of oil equivalent per day kbopd thousand barrels of oil per day KPI key performance indicator Concerns and procedures LoI Letter of Intent General emails LTI Lost Time Incident info rockhopperexploration.co.uk LTIP Long Term Incentive Plan @ MOG Mediterranean Oil & Gas plc Audit committee emails mmbbls million barrels [email protected] mmboe million barrels of oil equivalent mmscfd million standard cubic feet per day Website mscf thousand standard cubic feet www.rockhopperexploration.co.uk mt metric tonne NAV net asset value Shareholder concerns: Premier Premier Oil plc Should shareholders have concerns which have not been PSA Production Sharing Agreement adequately addressed by the chairman or chief executive, PSC Production Sharing Contract please contact the chairman of the audit committee at: scm standard cubic metre [email protected] SIP Share Incentive Plan Whistle-blowing procedures: spud to commence drilling a well Should employees, consultants, contractors or other STOIIP stock-tank oil initially in place interested parties have concerns which have not been TSR total shareholder return adequately addressed by the chairman or chief executive, 2C best estimate of contingent resources please contact the chairman of the audit committee at: 2P proven plus probable [email protected] $/US$ United States dollar WI working interest Designed and produced by JacksonBone Limited. Printed in England by Synergy Group. Rockhopper Exploration plc Report & Accounts for the year ended 31 December 2015 89 Strategic Report Rockhopper Exploration plc (AIM: RKH) is an oil and gas exploration and production company with key interests in the North Falkland Basin and the Greater Mediterranean region. STRATEGIC REPORT GOVERNANCE 2 2015 highlights 26 Chairman’s Governance Report 3 Rockhopper – the story so far 28 Board of Directors 4 Rockhopper at a glance 30 Corporate Governance Statement 6 Objective, strategy and business model 33 Remuneration Report 8 Chairman and Chief Executive Officer’s Review 46 Statutory information 10 Key Performance Indicators (KPIs) 48 Independent auditor’s report to the 11 Market overview members of Rockhopper Exploration plc 12 Chief Operating Officer’s Review 18 Chief Financial Officer’s Review ACCOUNTS 21 Internal controls and risk management Group company financial statements 22 Principal risks and uncertainties 49 Group income statement 24 Health, Safety, Environmental and Social Management 49 Group statement of comprehensive income 50 Group balance sheet 51 Group statement of changes in equity 52 Group cash flow statement 53 Notes to the group financial statements Parent company financial statements 76 Company balance sheet 77 Company statement of changes in equity 78 Company cash flow statement 79 Notes to the company financial statements 88 Key licence interests as at 1 April 2016 89 Shareholder information Rockhopper Exploration plc Report & Accounts for the year ended 31 December 2015 1 Strategic Report 2015 highlights > Significant progress in advancing the Sea Lion development ≥ Pre-FEED work for Phase 1 completed ≥ FEED contracts awarded to a set of world class contractors ≥ Modified project scope and cost improvements have enhanced project economics and lowered break-even oil price ≥ Draft Field Development Plan submitted to the Falkland Islands Government > Material exploration successes at Zebedee and Isobel Deep > All-share merger with Falkland Oil & Gas Limited (completed post the year end) ≥ Consolidates Rockhopper’s leading North Falkland Basin acreage position > Significant production increase achieved in Greater Mediterranean portfolio ≥ Exit 2015 production rate in excess of 700 boepd ≥ Completion of Guendalina side track ≥ First gas achieved at Rockhopper operated Civita field > Confirmation of Falkland Islands tax deferment > Balance sheet strength maintained with cash resources at 31 December 2015 of US$110 million 2 Report & Accounts for the year ended 31 December 2015 Rockhopper Exploration plc Strategic Report Rockhopper – the story so far Q1 2016 2015 Sea Lion enters FEED NFB exploration campaign commences Sea Lion project enters FEED with set of world- In March, the Eirik Raude rig arrives in the class contractors. North Falkland Basin to commence a multi- well drilling campaign. Exploration successes Rockhopper completes merger with Falkland Oil at Zebedee and Isobel Deep with multiple oil & Gas following shareholder approval from both discoveries made. Rockhopper and FOGL shareholders. In November, Rockhopper announced the terms of its all-share merger with Falkland Oil & Gas. Through the merger with FOGL, Rockhopper consolidates its leading acreage and resource position in the North Falkland Basin. 2014 2013 Acquisition of MOG Consolidates interests in NFB acreage In May, Rockhopper announced a recommended Rockhopper consolidates its interests cash and share offer to acquire AIM listed in the Falklands through the farm-in to Mediterranean Oil & Gas plc. The transaction acreage held by Desire Petroleum. As a completed in August. Through the acquisition result, Rockhopper increases its interests in Rockhopper acquired a 2P/2C resource base of licences PL004a, PL004b and PL004c to 24%. 32.5 million barrels of oil equivalent and a portfolio of production, development, appraisal and exploration interests in Italy, Malta and France. In November, and in response to a significant reduction in the global price for oil, Rockhopper and Premier announce a lower cost, phased development concept for Sea Lion. 2012 2011 Farm-Out Sea Lion Appraisal In July, Rockhopper announced it had entered Following the successful flow test in late 2010 into a farm-out agreement with Premier Oil a further eight exploration and appraisal plc (“Premier”), whereby Premier acquired a wells were drilled by Rockhopper across 60% operated interest in Rockhopper’s North the complex, six of those being discoveries. Falkland Basin licences for undiscounted consideration of c.$1bn (comprising cash, In addition, Rockhopper participated development carry and exploration carry). in a further five non-operated wells. In recognition of Rockhopper’s unrivalled understanding of the North Falkland Basin, it was agreed that Rockhopper would retain the sub-surface lead in relation to future exploration activities. 2010 Pre-2010 Sea Lion Discovery Founded in 2004 In February, the Ocean Guardian drilling rig Rockhopper was founded in 2004 to undertake arrived in Falklands waters to carry out a an offshore oil exploration programme in the multi-well programme on behalf of multiple North Falkland Basin. The Company floated on operators. In the spring, Rockhopper (as AIM in August 2005. operator) drilled its first exploration well on the Sea Lion prospect which resulted in an oil A 3D seismic survey was acquired and discovery. The well was successfully flow tested processed during 2007 with interpretation in September. completed in August 2008. Rockhopper Exploration plc Report & Accounts for the year ended 31 December 2015 3 Strategic Report Rockhopper at a glance Falkland Islands NORTH FALKLAND BASIN SEA LION Rockhopper Exploration plc (AIM: RKH) is an oil and gas exploration and production Falkland Islands company with key interests