After stating that its first well (Ernest) drilled in the southern part of the North Falkland Basin has been declared dry, Rockhopper Exploration (AIM: RKH) was sold down to 265p before rallying sharply to close Wednesday only 2.5p cheaper at 301.25p.
In its Tuesday release Rockhopper said that the Ernest prospect reached a depth of 2.240 meters but logging operations confirmed that no hydrocarbons had been encountered at the well location and that “the well is a dry hole”.
The well was drilled approximately 120km from the Sea Lion discovery in a previously un-drilled part of the basin, and was testing a different play type from that encountered at Sea Lion. The well encountered good quality sands with high porosity and permeability.
Rockhopper Exploration intends to undertake detailed post-well studies of all data and information gathered from the well once all samples have been returned to the United Kingdom and analysed in a specialist laboratory.
A further announcement will be made once all operations have been completed. Ernest well was spudded 23 July 2010 and was declared a dry hole on 17 August 2010
“The result of Ernest is disappointing, but the well was always designed to investigate an entirely different geological play type from Sea Lion, to which our focus now turns.
Once operations are complete at Ernest, our intention, subject to the usual regulatory consents, is to test the Sea Lion discovery and gain as much”, said Sam Moody, Managing Director of Rockhopper Exploration.
The latest estimate for Sea Lion by independent consultancy RPS Energy raised the bar from 170 million barrels recoverable to 242 million barrels recoverable.
Energy analysts at Evolution Securities said: The first well drilled in the Southern part of the North Falkland Basin has been declared a dry well. RPS suggested that the greatest risk to this well was the source rock found in the Northern part did not extend into the southern part.
If this is the case behind the dry well there should be little impact on the prospectivity of the Northern part of the basin as eight wells have been drilled (there) proving a working hydrocarbon system.
In spite of the adverse result Rockhopper showed no signs of slowing its campaign and in its yearly results published Wednesday said it fully intends to maintain its focus on developing our existing acreage and continuing to work with the Falkland Islands Government in doing so.”
Its bullish approach came despite its losses widening to 7.6 million USD at the end of March from 5.1 million USD a year earlier.
Dr. Pierre Jungels, Rockhopper Exploration’s Executive Chairman, said: “We are fully funded to complete the well on the Ernest prospect, a flow test on the Sea Lion prospect, which we believe will help move the discovery forward towards being declared as commercial, and pay our 15% contribution to two further wells on PL003 & PL004, where Desire is the operator.
The group has been transformed by the discovery on the Sea Lion prospect and is now working through the steps required to ensure that shareholders get the best possible value from it.”