Noble Energy announced Monday that it has acquired additional acres offshore the Falkland Islands and plans to start drilling, despite opposition from Argentina’s government. The Houston-based oil company now holds a 75% interest in a license in the North Falkland Basin from Argos Resources Limited, an oil and gas exploration company based in the Falkland Islands.
Noble will also be the operator. Italy-based Edison International acquired the remaining 25%. The license covers nearly 285,000 acres and includes the Rhea prospect, which could contain more than 250 million barrels of oil equivalent, the company said. Noble and Edison agreed to pay Argos a 5% royalty on any future production in the block.
Despite slashing its budget by 40% this year and paring back spending in U.S. shale plays and the Gulf of Mexico, Noble retained funding to pay for drilling two exploratory wells off the coast of the Falkland Islands.
“The Rhea prospect diversifies our prospect inventory and upgrades our chance of overall success, without changing our total capital program for the year,” Susan M. Cunningham, executive vice president of exploration and new ventures said in a statement. “This opportunity is in a proven petroleum system and is a strong complement to the vast number of remaining prospects on our acreage.”
Noble announced late last year it would resume drilling in the Falkland Islands in 2015 after evaluating seismic data. Drilling will begin on Humpback, the company’s first operated prospect in the region, in early May, Noble said Monday.
Humpback is located in the South Falkland Basin at a depth of 4,170 feet. Combined with a cluster of other prospects in the sub-basin, Noble estimates that it has a resource potential of 1 billion barrels of oil equivalent. The company has a 35% interest in the basin.
Noble in filings to the US government has acknowledged the risks of operating in the Falkland Islands, saying that the remote location makes difficult and time-consuming to transport personnel, equipment and supplies.
Likewise Argentina has filed criminal charges against Noble, and the other oil companies operating in the Falklands, claiming they are exploring for oil without its permission since Argentina has sovereignty claims over the Islands and surrounding maritime spaces.
“The charges have no merit,” Noble spokeswoman Paula Beasley said in a statement. “We are committed to safely and responsibly exploring for oil and natural gas offshore the Falkland Islands, where our concession contracts are with the Falkland Islands Government.”
Ian Thomson, Chairman of Argos said the company was pleased to be participating in the 2015 drilling campaign in the North Falkland Basin, which is already underway, and look forward to the drilling of the first exploration well to test the Rhea Stack.
Rhea has always been our top-ranked prospect in which we estimate a resource potential of 449 million barrels of recoverable oil. We are especially delighted that, following their own extensive technical work, Noble and Edison have selected this as their first exploration target on the Licence. We believe that success at Rhea will de-risk other prospects in the Licence.