MercoPress. South Atlantic News Agency

Falklands’ oil find likely to be commercially viable, says Rockhopper Exploration

The company will be drilling at least three more appraisal wells

Rockhopper Exploration announced Monday that its Sea Lion discovery in the North Falkland basin is likely to be commercially viable and anticipated drilling for further appraisal wells (a minimum of three).

In a release the company said that its latest appraisal at the Sea Lion well had found “a high quality reservoir”. Shares of the company soared on the news. Rockhopper’s Sea Lion was the first oil strike in Falklands’ waters (May 2010).

In the technical release Rockhopper said well 14/10-4 was drilled 2.3 km WNW of the 14/10-2 discovery well to a total depth of 2801 metres within the Sea Lion discovery area, and was the first appraisal well on the Sea Lion feature, designed to investigate reservoir presence and oil column at a down-dip location.

“The well has been successful, proving a thick, high quality reservoir package, a substantial oil column and recognition of the first oil-water contact in the licence to date. The geological prognosis came in very close to prediction”, said the release.

“Following this positive result we believe Sea Lion is highly likely to prove commercially viable”, said Rockhopper Exploration CEO Samuel Moody.

He added that “the well has confirmed our ability to identify good reservoir units on the seismic in our acreage with the sands coming in very close to prognosis. “We can now continue to appraise the Sea Lion discovery and to explore additional prospectivity within our acreage with added confidence”.

The company said that the well will now be plugged and abandoned as planned and the “Ocean Guardian” semi-submersible rig will proceed to drill the Ninky prospect in which Rockhopper has a non-operated 7.5% working interest.

Following completion of the Ninky well “Rockhopper intends to drill a minimum of three further appraisal wells on the Sea Lion feature” while the company considers extending that campaign to include additional appraisal and exploration wells.

According to the technical report the top Sea Lion reservoir sands were encountered 66m down-dip from the 14/10-2 discovery well. A total reservoir package of 107m comprising four main sands was encountered with a net to gross of 76%.

Average porosity is 20% and permeability is over 100 millidarcies. 30m of net pay has been encountered in the upper of the four sands, representing the main Sea Lion southern fan.

The gross oil column now proven in the main Sea Lion southern fan is 104m. Three metres of net oil pay is present in the lower sands; these thin oil sands are below the water leg of the upper sands indicating at least one additional oil column.

The lower fan encountered in 14/10-2 was neither strongly developed nor prognosed at this location, but the thin lower oil sands at 14/10-4 confirm prospectivity for lower fan sequences developed elsewhere down-dip.

A mini-DST (wireline drill stem test) was performed using a dual-packer MDT tool over a one metre interval at 2486 metres (drilled depth) within the oil column. This test successfully flowed oil into the well bore, providing additional samples and pressure build-up data.

These data indicate that flow rates and producibility at the location could be significantly better than at 14/10-2. A single MDT sample chamber was opened on the rig and initial well site analysis indicates medium grade oil similar to that in 14/10-2.

An oil-water contact (OWC) is indicated from cores, wireline logs and MDT pressure and sampling data at a depth of 2503 metres drilled (2477 metres true vertical depth sub-sea).

The extensive reservoir information from cores, wire line logs, seismic and wire line MDT test data is being evaluated to establish reservoir extent across the area for both the Upper and Lower fan systems.

Rockhopper believe the results of this successful first appraisal well will significantly increase the contingent P90 volume for this oil discovery. The P50 and P10 contingent volumes will be defined as the appraisal program progresses through the remainder of 2011.