Rockhopper Exploration (AIM:RKH) has detailed that Navitas Petroleum, operator of the Sea Lion project, in the Falklands, is acting to replace two contractors after one withdrew from the project, following the Argentine government's continued efforts to sanction parties involved in Sea Lion and other Falkland Islands activity.
The North Falkland Basin-focused oil and gas company said Navitas disclosed that a contractor's withdrawal, reported in the media, followed President Javier Milei's remarks referenced in a partnership report dated 4 September.
Navitas said it is taking action to replace the two breaching contractors and will continue to make adjustments to the project as required, while stating that development continues with the full support of the Falkland Islands Government and the UK government.
The operator said that, at this stage, it does not expect a material adverse effect on the project, though it cautioned that this assessment could change if contractor replacement is delayed or unsuccessful, if further contractors withdraw without suitable alternatives being found, or if Argentine government activity escalates further.
The update lands weeks after Rockhopper completed a $180 million share placing and open offer at 70p per share to fund its 35% pro rata share of the OSX-1 vessel acquisition, which Navitas is earmarking for Sea Lion's Central Development Area to lift field capacity by 125,000 barrels of oil per day.
Navitas is targeting a final investment decision on the Central Development Area in the first half of 2028 and first production from that phase by the end of 2030, while Rockhopper has said first oil from the Northern Development Area Phase 1 remains on track for the first quarter of 2028.