MercoPress. South Atlantic News Agency

FOGL/BHP Billiton sign deal to drill several wells in East Falklands basin

Falkland Oil and Gas, FOGL announced Monday it signed a deal will Desire Petroleum to use the “Ocean Guardian” rig to drill the first ever exploration well in the East Falklands Basin on the Toroa prospect, which is expected to happen during the first half of 2010.

The deal means that FOGL, together with its Australian partner BHP Billiton, is now the third exploration group that will be using the “Ocean Guardian” rig, contacted by Desire Petroleum, in the forthcoming campaign.

Tim Bushell, the chief executive of FOGL, said the drilling of its first ever exploration well would be a “significant milestone” for the company.

Last November FOGL raised £50 million in a 115p per share placing in anticipation of an agreement with Desire over taking part in the drilling programme. Its Toroa prospect is estimated to have mean, gross, un-risked prospective resources (recoverable hydrocarbons) of 1.7 billion barrels and a range between 380 million barrels (P90) and 2.9 billion barrels (P10).

At the time of the placing, Falkland said its JV with BHP JV also intended to contract a deepwater rig for late 2010, which would incorporate a programme of one committed well and other possible discretionary wells.

Desire contracted the “Ocean Guardian” back in September last year for a minimum four-well campaign, which is expected to get underway when the rig arrives on location later this week.

Earlier this month, the company confirmed that it had assigned two option wells to its partner in the region, Rockhopper Exploration. The first well in the campaign will be on the Liz prospect, which is located in Desire's Tranche C acreage and where it has a 92.5% stake, with Rockhopper holding the remaining 7.5%.

After that, “Ocean Guardian” will be allocated to Rockhopper to drill its 100%-held Sea Lion and Ernest prospects. Details about later drilling will be confirmed pending the results of the Liz, Sea Lion and Ernest wells.

Meantime according to UpstreamOnline, the semi-submersible “Ocean Guardian” rig is scheduled to arrive on location at Desire Petroleum’s Liz prospect next Friday, and two days later is expected to spud.