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.

RF - in that case, to you too mea culpa etc etc .... i have also traded and held this one very successfully since marky showed me the light

I have not traded this one as its the way to lose profits, and so the traders have.

RF has called this one totally wrong all the way up from 60p onwards, however the "posts" might portray good trading but actually been caught out all the time and covers with a "I purchased at xxx price".

LOL.


This one is significantly undervalued on 242 million recoverable barrels....... thats worth 725p on an in the ground basis.

Upgrades will equal big target price hikes and big moves up.

You are a complete prat Prosels....where 's the 60p sprung from ?.....my trading is not perfect,,,far from it, but I've done well on this one, and I hate having to say that........how's Gulfkeystone getting on ?...oh ! I'm sorry ...you sold out at a loss...shame..(giggles....all round)...come on have a laugh....you blundered....those who boast like you always end up on the rubbish tip !...and I'm not a trader...just a small investor....

Mr P - you're a total ass .... a very basic truth - a profit is only a profit when banked .... it's fine being a smartarse after the event when you can gloat and say, "look how the price has continued on upwards" ..... when were you last honest enough to say, "whoops; gosh i'm a moron! i should have banked some profits while they were there."

oh dear oh dear - is RF letting the cat out of the bag about you and GKP?

Aren't we all making money, just some more than others!

Marunam1 that is a lot of ground to cover but taking your points in turn:

With regards to the test equipment, they state that it was not ideal, what are they missing ?. The test equipment was mobilized when Sealion was discovered, would they not have an idea of what was required, it seems strange to me that they "lacked" all the equipment, unless the OG is not specked enough to do extensive testing.

Remember this is a first ever test in a new hydrocarbon province being overseen by a novice operator, albeit with help from consultants. In these circumstances it is best to go with the simplest test arrangement and not plan on adding the complications associated with a down hole pump for example.

RKH would have been advised on predicted rates from the test assuming all the guns fired correctly and I suspect they believed the rate would be significantly higher than the actual 2000 bbl/d achieved from the Main Fan only.

At higher rates the fluids would have spent less time in the tubing due to the higher velocity. With less time to lose heat to the surroundings on the way to the surface, the point at which the fluid temperature dropped below the wax appearance temperature would have moved up the hole. It is likely therefore the test designer would have felt they were adequately protected with chemical injection at the subsea test tree. In other words they would not have planned for the additional complication of a chemical injection valve below the subsea test tree to mitigate the problem at 2000 bbl/d. Indeed had both fans been perforated and the well produced at 3000 bbl/d it is likely that wax deposition would have been far less problematic or absent.

They cut the test by 10 days or so , is that just that they wanted to prove to II's and themselves it will flow commercially, could they have gone back in and re done the test again?, would that really prove anything as they would have spent another say $10m or so doing it?


They achieved their objective of proving commerciality although perhaps not as convincingly as they would like to have done. They are unlikely to have known the guns failed until they had been retrieved at the end of the test and the RNS seems to confirm this. To retest they would have had run the risk that the perforations were damaged during the well killing operations required to bring the well under control and pull the tubing and test equipment out of the hole at the end of the first test. This would have reduced the rate attainable from the Main Fan and caused confusion as to what rate was being achieved from the Lower Fan.

A lot of oilies had stated that anything over 1000boep was a result from this Exploration well, surely2000bopd is a fantastic result, combined with the limited equipment they are stating.

The CPR report by RPS assumed a plateau rate of 61,000 bbl/d from 12 wells for the P50 development case and 165,000 bbl/d from 27 wells for the P10 development case. That is a nominal rate of 5,000 bbl/d and 6,000 bbl/d per well respectively. Allowing for rate decline due to water cut development and well down time etc., the actual assumption would have been at least 8,000 and 10,000 bbl/d initial production per well. That is a big stretch from a 1,000 bbl/d DST so 1,000 bbl/d would not have been encouraging. However 2,000 bbl/d was good and 3,000 bbl/d was even better and a great platform for extrapolating to 10,000 bbl/d from high angle or horizontal wells in more optimal positions.

"It should be noted that the flowing wellhead pressure was only 120 psia so there was little extra pressure draw down available by opening the choke." Could you try to explain that in layman's terms.

Yes apologies that was written in short hand.
When you turn on a tap in the kitchen water runs out and the more you open the tap the faster the water comes out. The choke is a piece of well test equipment that can be opened up a bit like a tap.

Sometimes on a hot summers day when you open the tap not much water comes out and the rate does not increase much as you open the tap further. This is because the mains pressure is low, everyone is watering their garden. (You get the same effect, low mains pressure, if the mains has burst in your vicinity and the water is pouring out into the road.) Think of the wellbore as the mains.

120 psia was a relatively low mains pressure. In an offshore development you would typically need at least that pressure available to process the crude through the topsides equipment. If the test crew had opened the tap (the choke) there was only a limited pressure reduction they could have achieved at the surface. This would have led to a limited pressure reduction down hole opposite the perforations and a limited increase between the pressure at the perforations and the reservoir pressure which is known as the pressure drawdown. Well rate is a function of pressure drawdown.

Hence the statement was saying there was not much additional production available from that well under DST conditions. They flowed it close to its maximum potential on the day.

"The absence of a statement about the test having a final pressure build up is concerning." - Did they not state that it was building up ?, I understand that it does not specify the pressure, but how long is a optimal time.?

They already know the reservoir pressure from the wireline MDT tool that was run during the logging suite. The first short flow rate and shut in would have established the reservoir pressure as measured by a different set of pressure gauges. In absolute terms it should be very close to the MDT pressures when extrapolated to the same depth. The statement that the pressure was still building up is not significant. It is just saying there will be a minor correction (increase) that will be applied to get the final stabilised pressure. A much larger correction will be applied to translate the pressure at gauge depth to the reservoir pressure to allow for the column of oil below the gauges.

My statement about the final pressure build up referred to the build up of pressure that would have taken place once the well had been shut in at the end of 18 hours flow and after the withdrawal of about 1500 bbl oil from the reservoir. The pressure builds up (recovers) from the flowing bottom hole pressure towards the initial reservoir pressure.

It is the analysis of that pressure build up that can provide good estimates of reservoir permeability which is so important in understanding future production well deliverability. They probably omitted the statement because most city types would not understand the significance and RKH management have limited DST experience themselves.

A bit clearer now I trust.

Cheers,

cynic, GKP I purchased it at a tad over 70p and sold it for a tad under 70p. It was not performing so I dumped it and put it into DES at 100p levels.

Since selling GKP I have no need to post on the thread any more, or any need to read it, I have sold.

Was it a mistake ? Well, GKP has doubled and DES has gone up 60%..... so at this moment in time I have only not gained as much, however, should Rachel strike oil and the DES price multibags I shall be able to post all over the GKP thread how this was the best thing I ever did selling GKP :)

Swings and roundabouts........ how do you want to spin your poor trading today ? ;)

i don't need to .... had a very good day yesterday to round off an excellent week, where i bought a bit, sold a bit and BANKED some very juicy profits indeed ...... stinker stock remains PXS (dumb buy a couple of months back) and WOS which i shorted with typical bad timing, thinking the market was going to tumble (no doubt there'lll be a sharp correction, probably just after i've bitten the bullet!)

Excellent article Marky...thanks....no doubt Rockhopper have hit the jackpot.....appraisal wells now needed I would think to find out the extent of the field, but first Desire will probably have the rig for these next 3 slots I would think.....so a lull in activities for a bit before a spring drilling campaign gets underway.....they need to test the next well a lot longer....

Re the testing equipment. As I read it they thought that the equipment they had requested would be sufficient for the job, so did not feel they required the more expensive stuff. Hindsight is indeed a wonderful thing.
Several oil experts today have forecast the Bent Oil price to reach between 100$ and 150$ within the next two years, even if the recession bites badly, making the production of oil a more viable project. Some are forecasting the return to the 70's type spike. Due to this the UK government has asked officials to look at the effect such a price increase would have on the UK economy.
As to the continuing mention of the cost to Rockhopper in connection with any production costs, remember they are an exploration company and will stay as such unless anyone has info to the contrary.
The FI fields will 'NOT' be another bubble. I am sure the major oilies are watching and waiting, and when the fields re a bit more developed, or/and the results are more finalized, they will be forming a queue at the door.
It will be like an auction where everyone wants to buy.

Marky...... Yes good post, but can you clarify the comment re the well pressure of 120 psi (appreciate that is probably just me) but can you clarify that that is the minimum pressure and that with adjustment, IE the choke system it can be higher.

Regards Greek.

The FT Article :

http://www.ft.com/cms/s/0/8b38f5b0-c805-11df-ae3a-00144feab49a.html


Caution advisable over soaring small-cap oil explorers

By Neil Hume

Published: September 24 2010 20:02 | Last updated: September 24 2010 20:02

Is a bubble developing in small-cap oil exploration stocks, or is the dizzying rise in share prices justified? And can it continue?

Those are questions being asked around the Square Mile as the market value of several explorers has soared (in some cases to as high as 1bn) even though the companies in question have yet to turn a profit or even ship a single barrel of oil.

While the big, integrated oil companies might be out of favour at the moment, the same cannot be said of the 100 or so explorers listed on Aim and the main market. The Aim Oil & Gas index has risen 32 per cent this year, outperforming the broader Aim index by 12 per cent and the FTSE 100 by 29 per cent.

A number of big exploration successes, in a packed drilling calendar, have focused investor attention on the sector. The North Sea has enjoyed something of a renaissance in the wake of two big discoveries: Catcher and Cladhan, which analysts estimate could have recoverable reserves of 60m-100m and 70m-90m barrels of oil respectively. A discovery called Sea Lion has also been made off the coast of the Falkland Islands that analysts believe could contain recoverable reserves of about 240m barrels.

It is these discoveries that have propelled share prices higher. Encore, which has interests in both the Catcher and Cladhan prospects, has risen more than 600 per cent this year while Nautical Petroleum, which has a stake in Catcher, has climbed by a similar amount. Rockhopper Exploration, holder of the Sea Lion licence, has surged 700 per cent and is now valued at almost 1bn.

But for every success there have also been failures and dry wells. Shares in Sterling Energy slumped this week after tests at its Sangaw well showed gas flows had quickly been replaced by water. Desire Petroleum, another Falklands explorer, failed to find oil at its first well.

It is important to put this years successes in perspective and also to remember that this has been an unusually busy year for drilling, as projects delayed by the credit crisis finally went ahead. There are more to come, too. The large Anne-Marie prospect, to the west of Shetland, is being drilled.

As such, it was always possible there would be a number of big discoveries. But statistically, given the large sample size, success rates have not dramatically improved. In other words, oil has not got easier to find.

Investors seem increasingly to have been blinded by these few big successes.

Consider Desire Petroleum. Even though it has found no oil, the company is still valued at 500m and its shares are up 70 per cent. To justify that valuation Desire needs to find 150m barrels of oil at its other Falkland wells. Similarly, Borders & Southern, which is searching for oil in the deep waters to the south-east of the Falklands, is valued at nearly 400m. Yet it has still to even secure a drilling rig.

These valuations seem bizarre when compared with some of the more mature, diversified explorers that also produce oil. Indeed, one reason why Dana Petroleum fell to a hostile 1.2bn bid from Koreas state oil company is because investors were not prepared to ascribe much value to its exploration programme.

It should not be forgotten that small-cap oil stocks are still a geared play on the oil price. As long as the crude price remains between $60-$80 a barrel, exploration projects remain financially viable. Below that level the sums simply dont add up in many cases.

However, the fact that share prices are starting to run ahead of themselves is unlikely to worry most investors. After all, exploration stocks are one of the few areas of the stock market where you can make six or seven times your money in a relatively short period of time. Indeed, there is a good argument that every portfolio should contain one or two of these spicy jalapes.

But investors need to choose carefully. Analysts reckon there are only 30 small-cap explorers worth looking at; the rest are unlikely to find oil or even turn a profit. And those that will, such as the North Sea plays, are looking increasingly fairly valued.

No list of the 30 small-cap's then ?

Greek,
My take on it is the waxing on the riser was acting
as a choke, restricting the flow. I can"t recall a
static head of pressure (at the wellhead) mentioned with no flow.

Thanks Tyketto, obliged.

The Company is continuing to evaluate the information acquired during its successful drilling and testing of the Sea Lion prospect, in order to plan the next phase in proving the reserves discovered, as well as participating in a number of wells on licences PL003 and PL004 (Rockhopper: 7.5% working interest), which are operated by Desire Petroleum.

More of the same below with an interesting final comment

Rockhopper plans next move after Sea Lion 1
Date: Monday 27 Sep 2010

LONDON (ShareCast) - North Falkland Basin oil and gas explorer Rockhopper confirmed today it has plugged and abandoned the Sea Lion 1 well while it pores over the drill and test results.

Sea Lion 1, the first oil discovery in the area, said it now has to look at the data and plan the next phase in proving the reserves discovered.

It is also participating in a number of wells on Desire Petroleum-operated licences PL003 and PL004 in which it has a 7.5% working interest.

The 1bn company, which only floated on AIM five years ago, said last week that flow tests on Sea Lion 1 might have been twice the 2,000 barrels a day recorded had it not been for a technical glitch.

Analysts at broker Westhouse arent too worried though. They think theres nothing in the results which cannot be mitigated by engineering solutions, albeit at additional cost.

delete

Got a few more at 4.77.....am a happy chappy thanks to Argos

markymar

Maybe you are not alone on buying a few more, but the spikes down is because is ( short term going down ) called it profit taking, call it retracement but is a trend.....


From another RKH thread, but guest who it is, all start with ........P


Pro_S2009 - 27 Sep'10 - 08:41 - 10152 of 10164

Thats why fully paid for stock is so relaxing :)

I care not where the price goes, but if it gets cheap I buy more :) !!

It was cheap at 491p and 494p for some last Friday, but today it was cheaper.

I can see 465 / 470p as a good support at the moment but if it breaks down, it could well go well down