Falklands oil and gas explorer Rockhopper Exploration is to boost its holdings in the region by agreeing a farm-in with Desire Petroleum which could extend its Sea Lion discovery.
The proposed deal, which saw Desire’s shares rise 21%, would see Rockhopper farm in to an exploration area covered by a 3D seismic survey earlier this year covering part of Desire’s Tranche D licence in the remote North Falkland Basin.
This would be split into two areas. Rockhopper would become operator of the first, which includes a possible extension to Rockhopper’s Sea Lion oil discovery, the only discovery in the region so far deemed commercial.
It also includes the Shona West prospect, the Casper West prospect and part of the Beverley prospect.
The terms of the deal include a commitment by Rockhopper to drill a well in the area during the current drilling campaign, earning it a 52.5% interest, taking its holding to 60% alongside Desire’s 40%.
Rockhopper will earn 17.5% interest in the second area by drilling another well, taking its total equity here to 25%.
The second area includes the Jayne, Shona East, Casper East and Catriona prospects and the remainder of the Beverley prospect.
The farm-out agreement is subject to Rockhopper raising enough cash through an equity placing and approval of the Falkland Islands government.
Stephen Phipps, chairman of Desire, said: “We are very pleased that this agreement to farm out part of Tranche D to Rockhopper will enable another well to be drilled on our acreage in this current drilling campaign, at no further cost to Desire.
“Under the terms Desire still retains a significant interest in the prospectivity of Tranche D.
“In addition, the recently evaluated fast track 3D seismic data shot earlier this year has brought some exciting new prospects into play and underpins our core belief in the prospectivity within our acreage.”