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LONDON (Alliance News) - Three London-listed companies working together offshore the Falkland Islands on Monday continued to report a successful drilling campaign after striking more oil in the region.
Premier Oil PLC, Rockhopper Exploration PLC and Falkland Oil & Gas PLC all confirmed discoveries from the Isobel deep well located on licence PL004A, making it the third successful well out of four drilled as part of the 2015 to 2016 drilling campaign.
Premier Oil is the operator of the licence and re-drilled the Isobel deep well offshore the Islands to a total depth of 3,014 metres, confirming a previously made oil discovery and making a new oil discovery in four additional sandstones.
The well was originally drilled in 2015, when Premier took the well to a depth of 8,289 feet, where it met the top of the reservoir, and the bottom 75 feet consisted of oil bearing F3 sands which were at a higher-than-expected reservoir pressure.
However, as the reservoir was reached at a lower depth than expected, the companies suspended operations on the well as they evaluated what to do next as it could not reach the target depth. The trio planned to return to the well to confirm the previous discovery and had already hinted that additional reservoir targets would be encountered.
On Monday, Premier Oil said oil was encountered in "a number of sandstone reservoirs" between 2,564 and 2,861 metres, and all the partners said no oil-water contacts were encountered. Further evaluation will now be required to calibrate the well with the existing 3D seismic in order to determine future plans and the extent of the discovered resource, the partners said.
Rockhopper Exploration and Falkland Oil said a total of five oil-bearing fan packages were found in the F3 system, including the previous discovery, with a net oil pay of 27.0 metres recorded within three of the five fan packages in the Isobel Deep, Isobel and Emily reservoirs. Significantly, Premier Oil did not provide the net pay figure provided by its two partners.
In addition, the partners intersected the edges of a number of additional fans within the Isobel / Elaine complex, and said that better quality reservoir can be found in the main bodies of those fans where poorer quality reservoirs were discovered. They also found a total oil column, a vertical thickness of an oil accumulation above an oil/water contact, of 300 to 480 metres that will require further analysis.
Operations at the well have now been suspended and the well has been plugged and abandoned as planned. The rig used to drill the well is now being moved to drill the Chatham well.
"The results of this well confirm the success of the Isobel Deep 14/20-1 well announced in May last year. We have encountered a substantial oil bearing interval, which confirms the potential of this part of the North Falkland basin as a standalone discovery," said Robin Allan, Premier Oil's exploration director.
"This successful re-drill of the Isobel Deep oil sand along with the additional discovery of new oil-bearing sandstones, is extremely encouraging for the prospectivity of the area with a proven petroleum system and a number of prospects established," he added.
The Isobel well is part of the large Isobel/Elaine fan complex, where Premier Oil has previously guided that there is around 400.0 million barrels of oil on a mean, un-risked basis. However, those potential resources would need to be proven up.
The success of the Isobel/Elaine complex would represent the trio's third phase of oil field development offshore the Falkland Islands, building on the first and second phases of development on the 300 million barrel Sea Lion project, which is located 40 kilometres north of the Isobel/Elaine complex.
"Proving oil this far down dip in the Isobel Deep reservoir, in addition to confirming oil bearing sands at a location so close to the edge of the various other fan bodies, is an outstanding result and hugely increases the likelihood that the Isobel / Elaine complex can become a third phase of development in the North Falkland Basin," said Sam Moody, chief executive of Rockhopper.
"Having retained the sub-surface lead for exploration once again, I would like to congratulate our team on their unparalleled success rate of 10 out of 12 wells in licences PL004 and PL032 which brings us closer to proving this to be the billion barrel basin that we believe it could be," Moody added.
Premier Oil holds a 36% stake in the licence whilst Rockhopper holds a 24% stake with Falkland Oil holds the remaining balance. Falkland Oil and Rockhopper are currently trying to finalise a merger, led by Rockhopper, which if completed would give the new enlarged entity a 64% stake in the licence.
That merger is expected to become effective from next Monday, with the pair hoping to create a company that can dominate the oil industry in the British sovereign area. Falkland Oil shareholders will own around 35% of the new entity.
Following the implementation of the merger, Rockhopper's executive management team will remain in place, with Falkland Oil & Gas Chief Executive Tim Bushell and Chairman John Martin to join the board of the combined company as non-executive directors.
Falkland Oil's Bushell said: "The merger with Rockhopper is now the natural next step for the company and should see the realisation of shareholder value via the progression of Sea Lion to first oil, the development of surrounding oil discoveries including Isobel/Elaine and further exploration of a number of material untested prospects."
The news Monday will be especially welcomed by Rockhopper and Falkland Oil after Rockhopper was forced back to the drawing board last week to review its Ombrina Mare project offshore Italy after the country's parliament reintroduced restrictions on activity near the coast. However, its offshore Guendalina gas field remains on track.
Rockhopper shares were trading up 17% to 28.38 pence Monday, whilst Falkland Oil shares were up 12% to 8.16p. Based on those prices, Falkland Oil's market capitalisation is GBP43.5 million whilst Rockhopper is valued at almost double that at around GBP84.2 million.
Premier Oil shares were trading down 1.7% to 29.50 pence per share.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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