Rockhopper Exploration (LON:RKH) oil discovery in the Falklands Islands is of “good” quality said on Friday a release from the company. The announcement had a positive impact on shares of all Falklands’ oil explorers.
New data from the Sea Lion prospect confirmed “53 meters of net pay in multiple zones, with the thickest sand at about 25 meters of net pay and average porosity of 19 percent,” said the company. “These are further encouraging results; the logs clearly indicate that we have encountered a high quality reservoir interval with very good porosity and permeability. This increases the likelihood that we will return to this well later during the campaign to carry out a flow test,” said Managing Director Samuel Moody according to an official release from the company.
Data released Friday by Rockhopper Exploration (LON:RKH) means “the reservoir is good and shares are bound to rise on the back of this,” said Richard Rose an oil analyst at Oriel Securities Ltd. On Thursday, following the “discovery of oil” announcement, the company’s shares ballooned 153%.
The oil exploration rig Ocean Guardian, contracted by Desire Petroleum (LON:DES) for the current round, spudded the 14/10-B well on 16 April on license PL032, which Rockhopper operates with 100% interest. The well was drilled to 2744m, and its oil shows make it the first oil find in the North Falkland Basin.
Rockhopper said it will now proceed with additional log analysis and collect fluid samples and intends to run a liner to allow the well to be suspended for future testing. The company also confirmed it intends to drill its 100%-held Ernest prospect in the fourth slot of the overall Falklands Drilling program.
The “good quality” oil discovery follows Desire Petroleum’s experience that at the end of March announced it had also discovered signs of hydrocarbons but “commercially non viable”. The Liz prospect was sealed and abandoned. However, Desire is expected to drill a total of four wells in the North Falkland Basin before the end of the current round. Two other companies have licences, Borders & Southern Petroleum (LON:BOR) and BHP Billiton (NYSE:BHP) in association with Falkland Oil and Gas (LON:FOGL), and are also planning to drill with the Ocean Guardian rig.
Argentina, which disputes the Falklands/Malvinas Islands, rejected Thursday in a strongly worded statement the “illegal” UK exploration for hydrocarbons in the Islands' waters and anticipated it would address the issue at the coming Madrid Latin America, the Caribbean and the European Union Summit (LAC-EU) on May 17/18. Argentina “will take the necessary actions to avoid Great Britain from taking illegal possession of Argentina's non-renewable resources,” underlined the release.
Meantime in London, Rockhopper, following the Thursday 150% increase in share price to 93.50p, then settled back on profit taking. Other explorers in the region rose substantially but profit taking on those stocks seem to have taken hold Friday. Desire Petroleum, an old favourite amongst the Falkland’s explorers, rose 63% yesterday to 61.5p but was down 3.5p to 58p; Falkland Oil and Gas up 14% Thursday was down 11p (-7%) to 145.50p and Borders and Southern Petroleum up 20%, was down Friday 1.75p to 52.25p.