MercoPress. South Atlantic News Agency

Argos confirms Falklands’ waters exploratory oil drilling for second half of 2011

Ian Thomson, Chairman of Argos

In the first six months of 2010 Falkland Islands based Argos Resources has made significant progress in developing its PL001 Licence in the North Falkland Basin, to anticipate it will begin an exploratory hydrocarbons drilling campaign in the second half of 2011.

According to the company’s Interim Financial Results for the period ending 30 June 2010, Argos licence in the North Falkland Basin covers a large area in the centre and western part of the North Falkland Basin, adjacent to Rockhopper's PL032 Licence containing the Sea Lion oil discovery.

After having successfully completed AIM listing last July Argos Resources was able to raise £ 22 million (gross) which means the company “is adequately funded to complete planned 3D seismic program (in the second half of 2011) and identify drilling locations to be ready for a drilling campaign commencing in late 2011/2012”.

The drilling campaign is expected to require further financing “through either equity fundraising or from a farm-in partner”.

Argos points out that based on the reprocessing and reinterpretation of the 2D seismic data acquired in 1996, seven prospects and five leads have been identified in its Licence.

“The combined potential of the seven prospects is estimated to be 747 million barrels of un-risked recoverable oil, in the most likely case, and up to 1.75 billion barrels in the upside case”.

Argos focus has been on identifying deeper prospects in the North Falkland Basin than were tested in the 1998 drilling campaign, believing that the deeper potential of the basin has been overlooked in an area where a mature world-class oil source rock is now known to exist. Therefore, in 2009 the group decided to reprocess the seismic data in its licence in order to try to improve data quality in the deeper parts of the basin in its licence area, and thereby identify attractive drilling prospects for oil”.

As to the financial results report, losses for the Group for the first six months to 30 June 2010 were £ 248.000 compared to £ 78.000 in 2009.

However the company received £20.6 million net of expenses on 2 August 2010, following a successful placing of 70,967,742 of new ordinary shares at a placing price of £0.31.

“Argos has made significant progress during the year including the re-interpretation of existing seismic data, a successful AIM listing and associated fundraising. The funds raised will be used to undertake a 3D seismic programme over the coming southern hemisphere summer which will further define the already high graded prospects and leads, and identify potential drilling locations ahead of a 2011/2012 drilling campaign” said Ian Thomson, Chairman of Argos.

So far five companies are involved in oil exploration activities in Falklands’ waters with licences awarded by the Falklands’ government: Desire Petroleum; Rockhopper Exploration; Falklands Oil & gas in association with Australia’s BHP Billiton; Borders and Southern Petroleum, and Argos Resources. The first three have drilled wells with the “Ocean Guardian” rig.