The Falkland Islands Government welcomed Thursday's announcement by Premier Oil and partners that the 14/20-1 ‘Isobel Deep’ exploration well has been declared an oil discovery. Isobel Deep in the North Falkland basin, is the second well of a six-well offshore campaign planned to take place in the Islands waters through 2015.
Premier Oil is the operator of the well Isobel Deep of which it owns 36%; Falkland Oil & Gas Ltd. 40% and Rockhopper Exploration 24%. Premier's shares rose as much as 4.9% in London, the biggest intraday gain since May 13. The stock traded up 1.4% at 158 pence, while Rockhopper was up 5.4% at 64 pence, and Falkland Oil fell 2.5% to 29.75 pence after earlier leaping 11%.
Stephen Luxton, Falklands' Director of Mineral Resources said that further work is required to give a complete understanding of the Isobel Deep results, but early signs are very positive, and prove a working hydrocarbons system exists in this part of the basin.
Both the prospect and the wider area will require further appraisal, but this result potentially opens up a new development area some 30 kilometers to the south of the Sea Lion field” added Luxton.
Following completion of near-term operations at the Isobel Deep well, the Eirik Raude drilling rig will commence work for Houston based Noble Energy on the Humpback-1 exploration well to the south-east of the Falkland Islands.
In an official statement Premier announced the oil discovery at the Isobel Deep exploration well 14/20-1 in the North Falkland Basin, approximately 30km south of the Sea Lion field.
The Isobel Deep exploration well has been drilled to a depth of 8,289 feet reaching top reservoir on prognosis. The bottom 75 feet of the well consists of oil bearing F3 sands. These sands were at a higher than expected reservoir pressure and this resulted in an influx into the well. As part of the operations to remove the influx, oil was recovered from the well and appears similar in nature to Sea Lion crude.
Furthermore as a result of the new geological information it has been decided to suspend operations on the well and release the rig to drill in the South Falkland Basin. The rig is expected to return to continue operations in the North Falklands Basin in August, said Andrew Lodge Premier's Exploration Director.
Premier is now considering the optimal appraisal program for the Elaine/Isobel complex in PL004.
FOGL Chief Executive Tim Bushell said in the company's report that further operations on the well will be performed and these could include either a side-track from the existing well or a re-drill of the well near to the current location, depending on what is deemed appropriate once the drilling results have been further evaluated”.
The Isobel Deep well was spudded on 8 April and on 25 April it was announced that drilling was suspended for a couple of weeks following a problem detected on the drilling rig blowout preventer, BOP. On 12 May drilling resumed.
Isobel Deep was the second of a round of six wells and followed on the 'oil and gas discovery' in the first drilling at the Zebedee well on 3 April.
Argentina which disputes sovereignty over the Falkland Islands is expected to make a critical announcement on the event as it did when the oil and gas discovery in Zebedee, and another even more intentionally frightening when the rig had to suspend drilling for a couple of weeks.
The Cristina Fernandez government claims that the wells are being drilled in the Argentine shelf and lodged a criminal lawsuit on all companies and suppliers involved in the Falklands' oil industry before a federal court in Tierra del Fuego arguing they are operating without Argentine licensing.
London which is responsible for the Falklands defense and foreign affairs described Argentine actions as intimidating and bullying, emphasizing that the Falklands have the right to develop their resources.