MercoPress. South Atlantic News Agency

Rockhopper plans to raise £ 200 million for further oil drilling in Falklands

Success in Sea Lion prospect but no luck at Rachel prospect

Rockhopper Petroleum Plc, an oil explorer focused on the Falkland Islands, plans to raise about £200 million (318 million USD) through a share placement to pursue additional appraisal of its Sea Lion prospect.

“The recent successful flow test at Sea Lion has validated the potential for commercial oil in the North Falkland Basin,” Salisbury, England-based Rockhopper said in a statement Monday. The funds will be used to drill additional exploration and appraisal wells in the area, the company said.

Rockhopper has been one of the most successful explorers in the Falklands after the May discovery of the Sea Lion prospect. The shares, which have gained seven-fold in six months, tumbled Oct. 13 when the explorer said it would delay a resource evaluation report while it carried out more appraisal work after consultants said resources may be less than estimated.

Merrill Lynch & Co. and Canaccord Financial Inc. are acting as joint book runners for the placing, which is being conducted through an accelerated book-building process, Rockhopper said.

The company’s share sale may be priced in a range of 300 pence to 320 pence apiece, according to terms of the deal obtained by Bloomberg News. Rockhopper rose 43.75, or 15%, to 336.75 pence Monday in London.

Diamond Offshore Drilling Inc., the largest US deep-water oil driller, has offered Rockhopper the Ocean Guardian semi- submersible rig for three wells and possibly five extensions, according to today’s statement.

Last week Rockhopper took notice of the announcement by Desire Petroleum (the Falklands’ pioneering exploration company) regarding the Rachel 14/15-1 well, in which Rockhopper has a 7.5% working interest:

Desire Petroleum plc (AIM:DES) reported that the on the Rachel prospect has reached a total depth of 2,877 metres and initial wire-line logging showed that no hydrocarbons have been found. However a substantial thickness of sandstone was encountered in the upper part of the target zone, comprising 103m of gross sandstone of which 81m is net reservoir with an average porosity of 23%.

“The Rachel well has provided much new valuable data on the distribution of the reservoir targets within the Eastern Flank play and in particular the calibration of the 3D seismic data for sandstone ediction”.

Based on the latest information from this well, potential sandstones have now been identified down-dip from the existing location, closer to the mature oil source rock, significantly reducing the oil charge risk. As a result the well will be sidetracked to this location to evaluate the prospectivity. The sidetrack will commence when the present logging operations are complete. The total depth of the sidetrack is planned to be 3,418 metres measured depth (2,970 metres vertical depth) with an offset of circa 1.2 kilometres from the total depth of the original vertical well. The sidetrack will be designated 14/15-1Z and is expected to take 20 days and the Company will make a further announcement upon completion of this sidetrack.

The Rachel well is the first in a likely four well drilling campaign operated by Desire. Following the 14/15-1Z sidetrack it is intended to move the rig to the next location 25/5-1 on the Dawn/Jacinta prospect in the Desire 100% Tranche I licence.