http://www.falklands-oil.com/

http://www.rockhopperexploration.co.uk

http://www.argosresources.com/




Rockhopper was established in 2004 with a strategy to invest in and undertake an offshore oil exploration programme in the North Falkland Basin. It was floated on AIM in August 2005. Rockhopper was the first company to make a commercial oil discovery in the Falklands. Today Rockhopper is the largest acreage holder in the North Falkland Basin, with interests in the Greater Mediterranean region.

lol...what do i know.....still think talk of billions of barrels is rubbish, would have been out of the ground years ago. quite happy to be squished. but i do think pro whats his name, goes on a bit with hypothetical claims of what might be...just like SEO days and look where we are now.

Balerboy just spend a hour and just have a read on what the BGS say about the NFB and then you will see that this is twice as big as the North Sea is and its in infant stage.

http://www.bgs.ac.uk/falklands-oil/prospects/prospect_intro.htm

These are the people who know what they are talking about and have spent 20 years plus crunching data and independent studies.

http://www.walesonline.co.uk/news/uk-news/2009/12/03/swansea-raised-oil-man-colin-phipps-predicted-falklands-bonanza-91466-25310294/

The largest North Sea oilfield, the Forties, contained five billion barrels. But the British Geological Survey has pointed to the highly oil-prone nature of the Falklands source rock, estimating the north area of the islands alone contains some 60 billion barrels of oil.

I don't know about anyone else but I expected a nice rise this morning on the back of all the press over the weekend. Are investors nervous given Gulf disaster and Obama tryinh increases liability for oil companies? Are investors suspicous that the Ernest will be drilled before doing flow test on Sea Lion? Or is everyone hungover from yesterday and still in bed?......

No problem if they drill Ernest before the flow test with it's enhanced COS over Sealion....would prefer the flow test on Sealion first though, should Sam Moody consult me!

2 months to wait by the time Fogl have finished drilling Toroa...perhaps a little less 7 weeks...minimum...

Not correct rf:
"FOGL is pleased to announce that the Toroa F61/5-1 exploration well spudded on Monday 31st May 2010.......... Drilling operations are expected to take approximately 35 days"
Like RKH, they will know pretty much immediately if they have hit oil, but lab tests will take longer.

Plus the time it takes to tow the rig back to Ernest or Sealion....probably Ernest......another 10 days in fine weather.......reckon 7 weeks to cover it all...

You said 'finished drilling' not packed up & moved off site.

Yes, sorry Harrycat, should have made myself clearer....back to the other sites...I reckon 7 weeks will cover it all...

Looks like an sp pullback coming, crude also down......it has done incredibly well over the last 2 months....

2m shares traded already today, so looks lke the day traders still interested. I am not good enough with the candlestick charts to have a go today, particularly as the whole market is down. Hoping for FOGL to drop sub 180p.

Probably no news coming now for a few weeks so profit taking to kick in...sp might pull back to the upper 280's or so....can't go down too far but nothing rises forever...

not at your age rf.... i did make the same comment on friday...

Post from III, worth reading and considering.

Author Gramacho

Date posted today 08:19

Subject The June Volumetrics Estimate is Conservative


Firstly congratulations to RKH and RPS for cranking out the updated volumetrics so quickly and providing us and the market with a detailed picture of the rationale for the revised numbers. Best practice again from RKH. Transparency I love it!!!!

The RPS volumetric estimate of Contingent Resources (in this case reserves in all but name) is to be found on the RKH site at the link below:

http://www.rockhopperexploration.co.uk/exploration/cpreports.php

Here are a few thoughts based on reviewing the report with cold eyes.

UPSIDE TO MAIN FAN THICKNESS

Unfortunately working at this speed they seem to have either made an error or left a significant anomaly unexplained.

The results show two main oil bearing sequences between 2400 metres and 2466 metres (MD) and with 34.5 metres of net pay and between 2488 and 2567 metres (MD) with 16.4 metres of net pay.

The RFT pressure plot (Fig 8 page 11) shows the two separate pressure gradients of the two sequences. You would assume that the upper fit would correspond to the Main Fan and the lower fit would correspond with the Lower Sea Lion Fan. However they do not correspond at all.

This is most easily seen by comparing the gross thickness of the Main Fan, which is 66m, with the vertical distance between the uppermost and lowermost points of the upper fit RFT data points which is about 85m (These are between 2405 2490 m MD, note the RFT plot is incorrectly labelled as TVD SS as they forgot to correct it from Measured Depth.)

There are at least two explanations for this. The first is the one I like because it makes sense and offers us upside OIP and reserves.

1. The lowermost sand of the upper pressure fit is actually part of the Main Fan. This would make sense in that you might expect the Main Fan to be in pressure communication throughout. This would add a small (5%) increase in Main Fan net pay in the well. The Main Fan P50 area is 27km2 and the P10 area is 55.5 km2 (more about this later) whereas the equivalent Lower Fan numbers are 13.4km2 and 30km2. Hence there would be a small increase in OIP/contingent resources since we are adding pay to the larger of the two fans and reducing it from the smaller fan.

More importantly however, this could be strong support for RPSs statement on page 21 in referring to the Main Fan total net pay thickness range of 2m 65m. The total range is to accommodate both the possible downside of a restricted fan system, and also the real possibility of the reservoir thickening down dip in the depot centre of the basin. I like the term real possibility, they are saying it is not wishful thinking on their part. Perhaps the pressure data points at ~ 2490m MD are telling us that we are seeing the up dip pinch out of Main Fan sands that are much thicker down dip. If so this could push the net pay from the P50 value of 34.5m towards the P10 value of 51m in other words increase the Main Fan CR from 215 MMbbl towards 300 MMbbl.

2. A second explanation would be that this is a small sand stringer that is neither the Main Fan nor the Lower Fan and which does not show up on seismic. It is however in pressure communication with the Main Fan. This would not affect the Main Fan OIP/CR but would reduce the Lower Fan CR by about 10% from 44 to 40 MMbbl.

So there is minimal downside and significant upside from that thin sand at 2490m MD. I will point out this anomaly to RKH and report their thoughts.


FIELD EXTENSION BEYOND THE LIMIT OF THE 3-D SEISMIC

Fig 2 of the new report shows the extent of the 3-D seismic. It appears to show the southern extent of the 3-D being coincident with the southern extent of the Sea Lion Field. Does the field suddenly stop at the southern limit of the 3-D survey? Possibly but IMO this is very unlikely.

Reference to the 2009 CPR clearly shows that RPS and RKH believe the field extends beyond the seismic. Reference page 22 of the CPR report, The prospect is mostly within the area of 3-D seismic coverage and Figure 19 shows the prospect limits as defined by seismic amplitude extraction.. Fig 19 shows the prospect outline with a significant area directly to the south of the 3-D.

Indeed in defining the P90 area input to the new OIP/CR estimate RPS have included an area to the south of the 3-D perimeter. Check out Fig 13 and Fig 18 of the new report. Why would they do this? There must be evidence of the fan on the 2-D and it should be very strong evidence if it is included in the P90 estimate.

Why did they limit the southern extent of the survey? Probably to limit cost.

Fig 13 of the new report, the Top Sea Lion Depth Contour Map, shows the Top Main Fan at -2375m SS at the well location. Assuming the well is essentially vertical, this depth is of course consistent with the log depths since the rig rotary table would be about 25 - 28m above sea level. The Main Fan Lowest Known Oil (LKO) on logs is 2466m MD (using the RPS/RKH interpretation) which would correspond to about -2441 m SS. This suggests that if the fan does extend to the south of the existing 3-D, oil has been proven to down to a contour depth that covers a significant area. Take a look at the extent of the area between the -2380 and -2440m SS contours. It disappears off the map! Of course in all probability oil will extend much deeper (it would be too much of a coincidence for an oil water contact to be immediately below the LKO in this well or we alternatively we could invoke the RFT pressure discussion above to deepen Main Fan LKO to 2490m MD, -2465m TVD SS) and the area will also include everything inside the -2440m SS contour.


SOUTH WEST SEA LION

Oil Brat suggested you look at the seismic response to the south of Sea Lion in Fig 13 of the new RPS report which shows that where the seismic extends to the south west of the Main Fan there is another area with significant amplitude. Indeed the response could be indicating a separate field, lets call it South West Sea Lion. Alternatively it could link up with the Main Fan but due to the truncation of the 3-D we cant yet tell if this is the case. Either way it looks like additional reserves for a Sea Lion Field development as South West Sea Lion is well within tie back distance.


PROBABLISTIC ESTIMATE OF OIP AND CONTINGENT RESOURCES (CR)

Any GKPrs on here who have read my posts on the use of probabilistic analysis to determine reserves following a discovery will know that I feel this approach forces conservatism on the Competent Person. Indeed it sometimes causes them to behave somewhat irrationally!

Having reviewed the new RPS report I can confirm that IMO this (conservatism with a minor dose of irrationality) also applies to the RKH probabilistic OIP/CR distribution.


Area:

Curiously RPS makes no mention of the rationale for the P50 area, although it is approximately 50% of the P10 area. That may be because it is difficult to find a rationale to use anything other than the entire high amplitude area. However this is reserved for the P10 area. The P10 area (55 km2) is the entire high amplitude event as mapped pre-drill on the 3D data. The high amplitudes would seem likely to extend further south than the 3D coverage and form a larger area. This possibility is represented by the P1 area of 100 square km.


Net Pay:

Back to the RPS statement A total thickness range of 2m to 65m), and using 34.5m (P50) as seen in the well for the Sea Lion main fan. The total range is to accommodate both the possible downside of a restricted fan system, and also the real possibility of the reservoir thickening down dip in the depot centre of the basin. It seems sensible to allocate the well net pay to the P50 but taking the net pay down to 2m to accommodate a restricted fan system???? Surely a restricted fan system would be handled by the low range of areas. No need to subject 10% of the model runs to a net pay between 5 -50% of the well net pay.


Recovery Factor:

There is always a temptation to consider these pessimistic in comparison with North Sea RFs. However many of the fields with 40-50% RFs were developed from platforms and have 35 40 API oil with highly favourable mobility ratios that lead to very effective waterfloods.

Sea Lion is two rungs down the ladder. The oil is 26 API and the most obvious development plan is use an FPSO and subsea wells. Personal experience with a field that has similar oil gravity, similar rock properties and has been developed with an FPSO and subsea wells in similar water depths indicates that the P50 30% RF is a good starting point estimate. It appears that higher recovery factors are possible from this field but it has only become apparent after a decade of production. In other words if RKH is taken out by a major it may not be willing to factor in a higher RF than 30% into the bid.

It is not a given that the development will use an FPSO however. Should there be other discoveries at Ernest and elsewhere in the RKH/DES acreage a pipeline to the FIs is a possibility. Sea Lion is sufficiently deep that a large proportion of the area could be accessed from platform wells drilled from a TLP at less than half the cost of subsea wells. This would open up the potential for RF in the range 35 40% adding 100 MM bbl to the upside case.



REASONS TO BE BULLISH

So to summarise we have at least four reasons to believe Contingent Resources/Reserves will increase markedly.

The pressure data from the small sand at 2490 m MD suggests the Main Fan has the potential to be significantly thicker down dip and this is consistent with RPS suggesting the Main Fan will thicken at the depocentre.
The new Volumetric Report is indicating an area of similar amplitudes to the south west of the Main Fan that has not been included in the estimates.
The 2009 CPR and the new Volumetric Report strongly hint that the field extends to the south of the arbitrary cut off imposed by the limit of the 3-D seismic.
Some of the probabilistic volumetric model input looks conservative, particularly the areas, downside net pay and also RF if a TLP development can be shown to add value.

Using the P10 area in deterministic estimate of OIP and CR, and making no allowance for the other upsides, yields a combined total CR of close to 500 MMbbl for both fans. Should any of the above reasons to be bullish come to fruition Sea Lion reserves will be well north of this total.


AREAS OF CONCERN

This would not be a balanced post without acknowledging at least one area of concern. But I am struggling to find the downside w.r.t. OIP and reserves.

There is a chance that the fan will contain a water leg. This is not factored into the RPS OIP estimates. But they do say Figure 13 shows the possible fan extent based on the amplitude anomaly. This anomaly appears to be a reliable predictor of lithology and possible hydrocarbon content. The question is what would the amplitude anomaly look like if the pore space was filled entirely with water? It may be that the amplitudes would look relatively similar since the contrast in fluid properties of the medium gravity oil with water is not sufficiently large. RKH may have modelled this and it is worth asking the question. However the fan is surrounded by world class source rock and I believe the expectation is that there has been sufficient oil migration into the fan to displace all moveable water from the sands. A down dip well will remove the uncertainty.

There is also a chance there may be a gas cap. However the well is in an up dip location and there is relatively little attic room to contain gas. Analysis of the samples will address this concern. If the bubble point of the oil is 100 -150 psi lower than the reservoir pressure there is no chance of a gas cap.

Yes development costs will be high but the fiscal regime compensates for this. So long as oil prices remain favourable this is a development certainty.



OUTLOOK

RKH share price has a long way to run IMO. The data so far indicates the well test should be a formality (barring operational SNAFUs). If RKH chose to go for a headline rate/bankers burn the Main Fan permeability-thickness (kh) is more than sufficient to generate a rate that will excite the city.

As a reminder the CPR valued the prospect at 9/share at the former P50 estimate of 170 MMbbl and 30/share at the former P10 estimate of 470 MMbbl assuming an oil price of $80/bbl (2009) with 2%/yr oil price inflation. The development plan upon which the economics are based looks reasonable. The RPS water injector well count looks a bit light to maximise sweep efficiency but this wont make much of a dent in the economics.

I backed my judgement and increased my shareholding by 35% last week.

Regards and GLA
Gramacho

rf , how long have you been looking for a field ?

Still looking.......I saw a lovely cow the other day, she had beautiful eyes and looked at me and.....I decided to.....euhhh...sorry, getting a bit carried away here....

And there was this sheep, with nice eyelashes.. ....she.........any way I'm boring you all with this....

yup

The markets not that impressed with GKP at the mo!



LONDON (SHARECAST) - Gulf Keystone racked up big losses last year as it took a $73.9m hit for pulling out of Algeria and switched focus to its hugely promising Iraq-Kurdistan acreage.

Losses after tax totalled $96.3m from $59.3m. The group raised $165m (114.2m) at 75p a share last month.

Shares in the group soared after the huge Shaikan discoveries in Kurdistan last year. The Shaikan field contains an estimated 7.4bn barrels, which the company says means it holds one of the largest licence positions and has amongst the best pre-drill upside in the region.

During the remainder of 2010, Gulf aims to drill three appraisal wells on Shaikan and the first exploration well on the Sheikh Adi structure. It expects to see first production before year end - although this will be modest, it added.

chav this the RKH thread not GKP.