http://oilbarrel.com/news/rockhopper-exploration-and-desire-petroleum-agree-farm-in-terms-to-test-sea-lion-extension
October 20, 2011
Rockhopper Exploration And Desire Petroleum Agree Farm-In Terms To Test Sea Lion Extension
Rockhopper Exploration, the AIM-quoted owner of the Sea Lion oilfield, the sole discovery of two much-hyped multi-million pound exploration campaigns in the waters off the Falkland Islands, may be about to spread its winning touch to another AIM explorer. The company believes the Sea Lion complex may extend into a neighbouring licence operated by Desire Petroleum, which has suffered following a run of dry holes on its own licences in the North Falkland Basin.
Now, however, Desire may get to participate in some of the success enjoyed by Rockhopper as the two companies join forces to drill a well in the north-western portion licence PL004 known to Desire shareholders as Tranche D. Rockhopper believes this portion of PL004, which is about 23 per cent of the licence, could hold up to 10 to 15 per cent of additional prospective resources in addition to its current high case for Sea Lion of 1.4 billion barrels. This is a possibly material volume and explains why the company is keen to secure control of the acreage by farming-in to two portions of the licence, known as Area 1 and Area 2. Desire will retain 92.5 per cent of the remainder of Tranche D.
Area 1 is the main interest and will now be operated by Rockhopper with a 60 per cent interest, with Desire holding 40 per cent. Rockhopper, which recently raised 46.5 million through a placing priced at 180 pence a share, something of an achievement given the challenging market conditions, has secured an additional drilling slot on the Ocean Guardian rig to drill the commitment well on a 100 per cent basis in Area 1. This mini-licence is also home to the recently delineated Shona West prospect, the Casper West prospect and part of the Beverley prospect.
Rockhopper will also earn a 25 per cent interest in Area 2, with Desire retaining 75 per cent equity and operatorship. This area is home to the Jayne, Shona East, Casper East and Catriona prospects and the remainder of the Beverley prospect. Drilling here would be contingent on Desire, which has seen its share price collapse due to poor drilling results, raising the necessary funds to support its 75 per cent share of the well costs.
Rockhopper itself hasnt had it all easy of late, with its most recent well on Sea Lion yielding water but no oil. The 14/10-8 duster was drilled to test an area of relatively low amplitudes within the Sea Lion complex as well as testing the Casper and Kermit prospects. Encouragingly it did find a thick reservoir section, albeit water wet, in the low amplitude area, which could be positive for other low amplitude areas within the field and extend the areal extent of the field. Even so, a dry hole is a blow as the company seeks to fully appraise the field and determine the best ways to develop, and critically, finance, this project in these remote waters.