MercoPress. South Atlantic News Agency

First oil drill in south of Falklands ‘disappointing’, but company keeps to program

FOGL Chief Executive Tim Bushell is now looking for a “suitable” deepwater rig

The first well to be drilled at the south of the Falkland Islands proved to be a disappointment, Falkland Oil and Gas Ltd, FOGL, officially announced to the London Stock Exchange.

However the company said it would continue with its exploration program on its extensive licence areas to the South and East of the Falkland Islands.

FOGL said it plugged and abandoned the Toroa well, after failing to find any hydrocarbons during the drilling to almost 2.500 metres.

Results of the exploration “confirm that the Toroa F61/5-1 exploration well has been drilled to a total depth of 2476 metres and logging operations have now been completed. The well did not encounter any reservoired hydrocarbons and will now be plugged and abandoned”, said the company.

FOGL Chief Executive Tim Bushell indicated that “whilst the results of the Toroa well are disappointing, it has to be remembered that this is the first well in a previously un-drilled frontier basin”.

He added that “we believe that these results have helped to reduce some of the key risks of the plays in the deepwater areas of our licences. In that respect the well is certainly encouraging for further exploration and we look forward to continuing our exploration programme once a suitable deepwater rig has been secured”.

FOGL is the junior partner (49%) of Australian mining giant BHP Billiton (51%) in the exploratory drilling to the south of the Falklands.

According to Australian stock exchange reports BHP Billiton has an annual budget of 800 million US dollars for the exploration of new oil and gas frontiers and Toroa had a cost of 50 million US dollars.
BHP said it would not make a stock exchange announcement on the well's failure but confirmed it was being plugged and abandoned.

This is the third well to be drilled in Falklands’ waters in the current round which took off last February with the arrival to the Islands of the “Ocean Guardian” oil rig contracted by Desire Petroleum.

The Liz prospect of Desire Petroleum in the Falklands north basin only found signs of gas but in early June Rockhopper Exploration’s announced that is had effectively discovered oil in its Sea Lion prospect to the north of the Falklands.

In spite of the mixed results two other British companies are lined up to explore for oil in the Falklands. Last May Borders & Southern Petroleum announced its intention of drilling and only last week the Financial Times said Argos Resources would be joining the pack, later confirmed by Ian Thompson director and founder of the company. Argos began pre-marketing the share offering to investors this week with broker Evolution.