MercoPress. South Atlantic News Agency

Rockhopper: North Falkland basin oil economic at 25 USD

Rockhopper Exploration has reiterated its intention to start drilling over its licenses in the North Falkland basin as soon as rig availability, financing and relevant consents have been resolved.

Reporting interim results for the period to September 30, 2008, the company said it was continuing to hold discussions over possible farm-outs and noted that there were signs that rig rates and availability were easing. "We have met with a number of companies as part of our ongoing farm-out program and we continue to keep all options open with regard to funding our drilling commitments. We are currently in discussion with a number of rig contractors regarding securing a suitable drilling vessel and from these discussions have noted an easing in both rates and availability of drilling units in recent months", said Executive Chairman, Dr. Pierre Jungels. Rockhopper said its resource estimates had increased from 1.2 billion barrels recoverable on an un-risked basis to 1.8 billion barrels recoverable in licences PL032 and PL033. Its overall potential position has now increased to 4.3 billion barrels recoverable oil plus multi Tcf gas. The group incurred a loss for the six month period of 1.2 million up from 0.7 million last time largely due to increases in administrative expenses and the charge for share based remuneration. In his statement Dr. Jungels said that in spite of falling commodity prices a discovery on Rockhopper acreage could be economic at "an oil price as low as 25 USD per barrel". He added that a period of lower oil prices would be likely to feed through into lower service sector costs, leading to lower rig rates and enhanced availability, "all of which could actually prove to be of benefit to companies in the exploration phase". The refined interpretation of the 3D seismic collected over licenses PL032 and PL033 indicate that the re-analysis of the gas shows in (1998) Shell well 14/5-1A "has confirmed that a significant quantity of gas was encountered". The gas shows in the Shell well demonstrate that "the area has proven gas and the potential to contain multiple Trillion cubic feet (Tcf) of gas reserves". Rockhopper acreage is the only acreage in the North Falkland Basin with wells that have recovered both oil and gas. The Rockhopper Group started trading in February 2004 to invest in and carry out an offshore oil exploration program to the north of the Falkland Islands. The Group, floated on AIM in August 2005, is currently the largest license holder in the North Falklands Basin and has a 100% interest in four offshore production licenses which cover approximately 3,800 sq. km. These licenses have been granted by the Falkland Islands government.