Rockhopper confident on new oil finds

NORTH Falkland oil and gas exploration company Rockhopper has identified a number of new commercial opportunities during searches off the islands.

In an operational update on work since its September 30 AGM, the company, which works in conjunction with Midlands-based Desire Petroleum, also said recent successful flow tests have considerably enhanced the company’s prospects.

However, it said it will need to raise finance in order to continue operations.

The statement said: “The recent successful flow test at Sea Lion has validated the potential for commercial oil in the North Falkland basin and has significantly enhanced the prospects for the company.   

“The company is pleased to announce that a number of highly attractive new targets have been determined.”

Rockhopper will now continue with appraisal work on the successful Sea Lion flow tests, while 3D seismic tests across the North Falkland Basin area will also go on.

The firm said Diamond Offshore Drilling (UK) Ltd, owner and manager of the Ocean Guardian semi-submersible drilling unit, which is also operating in the Falkland Islands and is currently engaged in the drilling campaign, has recently made a proposal to Rockhopper to continue drilling under a new rig contract.

The project consists of a possible three firm wells and five options extension.  However, in order to finance the move, Rockhopper said “significant funds” would be needed and agreement would have to be found to satisfy both parties.

Rockhopper said it has also entered into two letters of intent with a seismic contractor to acquire additional 3D seismic using two separate vessels.  

The company intends to enter into contracts to procure both vessels shortly and, if it does so, it expects work will begin before the end of January 2011. The work will allow Rockhopper to better analyse the Sea Lion sandstone fans, as well as allowing more detailed and accurate mapping of additional exploration opportunities within the basin.
 
In conclusion, the company said: “The board is very confident about the commerciality of the Sea Lion discovery and the prospectivity of the North Falkland basin.

“In addition the board is comfortable with the existing range of contingent resources as contained in the preliminary volumetric update published in June 2010. Following an intensive drilling campaign it is anticipated that an updated CPR will be issued in the second half of 2011.”

On the funding issue, it said: “Whilst the Sea Lion discovery has enhanced prospects for the company and its shareholders, further significant exploration activity will need to be undertaken given the frontier nature of the basin, to prove up the full potential of that basin. The company is therefore currently evaluating its funding options, which may include an equity issue.”

Desire recently announced its own equity placing, which raised almost £23m to finance further 3D seismic testing.