Rockhopper Struck Oil in the North Falkland Basin

British oil and gas exploration company Rockhopper struck oil in its Sea Lion prospect locate in the North Falkland basin. The find could help improve UK’s tax for income drilling but could heat up the diplomatic row over the sovereignty of the Falkland Islands.

Rockhopper findings were made at a depth of approximately 2,750 metres and the company is now considering whether to drill an appraisal well. The successful strike was made at the company’s Sea Lion prospect located 137 miles north of the British territory.

The Company has run a suite of wireline logs and logging data collected thus far indicates that the well has encountered a 150 metre gross interval of sand and shares.  The data show that the well has 53 metres of net pay distributed in multiple pay zones, the thickest of which has a net pay of 25 metres.  These pay zones have an average porosity of 19%.

“We are extremely excited by the results,” said Samuel Moody, the Managing Director of Rockhopper. “While we are presently acquiring additional data, current indications are that we have made the first oil discovery in the North Falkland Basin.”

The find sent Rockhopper’s shares soaring by 150%, to 94p following the announcement. Rockhopper shares were not the only ones to shoot up yesterday, Desire Petroleum shares rose 23¾, or 63%, to 61½p.

But investors should be cautious until Rockhopper’s well is determined commercially viable or not. The next step is the more serious of all; a series of complex “wireline” analysis will have to be completed to establish further details. The key will be an estimate of the permeability of the rock, which governs how fast the oil can flow and whether the reservoir will be commercially viable.

“The volume of oil could be quite significant but we don’t know yet if it will flow. That is the big question mark.” said Richard Rose, an Analyst at Oriel Securities.

It is too early to jump into to conclusions at this stage but such findings in the area could change the game if Rockhopper’s well proves to be commercially viable. Not only on the economical side of the coin but also it could spark up another diplomatic row between Britain and Argentina over the sovereignty of the Falkland Islands.

Back in February, Argentinean President, Cristina Kirchner, forced British ship passing through Argentina to obtain permits to do so. Right now the only thing Argentina could do is ban British oil companies from using their ports, but with a little investment the Harbour at Port Stanley in the Falklands could be used instead. Especially now that crude oil prices are on the rise.

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1. [...] This post was mentioned on Twitter by Chris Hurcombe. Chris Hurcombe said: http://www.catalyst-commercial.co.uk/blog/latest-news/new-oil-supply-found/ [...]

   Pingback by Tweets that mention The UK's Largest Energy News Blog – Catalyst Commercial Services Ltd » New Oil Supply Found: -- Topsy.com — May 7, 2010 @ 2:37 pm

2. great post as usual!

   Comment by TomPier — May 7, 2010 @ 6:42 pm

3. New Oil Source Well Found…

   How do they keep finding new pockets of oil? thought we were running out of the stuff?…

   Trackback by links.coolmsgs.com — May 8, 2010 @ 1:42 am

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