MercoPress. South Atlantic News Agency

Falklands' welcomes rig-contract which marks beginning of oil drilling season in first quarter of 2015

“FIG looks forward to working closely with the oil industry to deliver a safe and successful campaign”, said Luxton

The Falkland Islands Government welcomed the announcement on Thursday morning that a drilling rig has been contracted by a consortium of licensees for a new six-well program of offshore exploration and appraisal work commencing in early 2015.

 The multi-operator program will test a number of significant new prospects across several Falklands' offshore licence areas in both northern and southern basins, and is understood to contain various options to extend the duration beyond the initial commitment.

Falklands' Director of Mineral Resources, Stephen Luxton commented the Islands' government satisfaction with the confirmation of the exploration program expected to begin in 2015.

“Preparations are already underway within the Falkland Islands to accommodate the logistical requirements for the forthcoming drilling, and FIG looks forward to working closely with the oil industry to deliver a safe and successful campaign” said Stephen Luxton.

On Thursday Premier Oil announced it had contracted a rig for its exploration program in the Falkland Islands waters where it will drill at least four wells starting in the second quarter of 2015. The rig is a harsh environment, dynamically positioned semisubmersible capable of drilling multiple wells offshore.

The company has also entered a rig-sharing agreement with the Falklands branch of Houston based Noble Energy.

The rig will mobilize to the Falklands to start the campaign in late 1Q/early 2Q 2015 and is expected to drill a minimum of six wells, four operated by Premier and two by Noble.

Falkland Oil and Gas Limited announced in a separate statement it would share the rig in the Falklands, participating in a six-well exploration program, which includes three Premier Oil-operated wells and another two operated by Noble.

According to FOGL, a partner to both operators, option slots have been secured that could lead to additional drilling. These comprise eight options that can be exercised prior to the rig being mobilized and up to eight more to be elected during the drilling campaign.

As things stand, the program will probably begin with two Premier-operated wells in the North Falkland basin followed by Noble-operated two wells in the South and East Falkland basins, and two more Premier-operated wells in the northern area. The total firm program is set to last 240 days, excluding mobilization.

FOGL will participate in three wells in the North Falkland basin on the Zebedee, Jayne East, and Isobel Deep prospects. All are in license PL004, southeast of Premier’s Sea Lion field development. Premier will additionally drill the Elaine prospect, claiming that Isobel/Elaine hold similar potential to Sea Lion.

In the South and East Falkland basins FOGL will participate in two Noble-operated wells. Prospect identification, based on recent 3D surveys, will continue into this summer. The partners need time to analyze the 12,000 sq km of new data, FOGL explains.

Under the terms of the contract the sixteen additional drilling options – eight of which can be exercised before the rig is mobilized and eight can be exercised at “key points” during the drill campaign.

That final point may be of particular interest to investors in Argos Resources, which needs to arrange funding in order to drill and it has been holding talks with potential farm-in partners.

Argos has been in “close contact” with other operators to ensure it has the chance to join the campaign once funding has been secured.

Whether or not any of the sixteen options in the rig deal announced on Tuesday are earmarked for Argos’s plans remains to be seen, though the apparent flexibility suggests there may be room for maneuver.