UK oil companies Rockhopper Exploration and Desire Petroleum saw their shares soar yesterday after Rockhopper revealed an oil discovery in the Falklands.
Rockhopper shares jumped 152.7% to 93.5p and Desire, which has licences close to its peer’s, climbed nearly 63% to 61.5p.
The find is the first oil discovery of an exploration programme in the waters around the Falklands.
Analysts said it was very positive for Rockhopper and the share price reaction had not been overdone, but added that more information was needed on the quality of the oil reservoir. One said: “If it does prove to be a good-quality reservoir, we’re looking at maybe a discovery of 200million barrels.”
Rockhopper said a well on its 100%-owned Sea Lion prospect had found oil. It said data so far indicated the well had hit 180 feet of net pay in several zones, and it now intended to collect additional data before making a decision whether to plug and abandon the well or suspend it for future testing.
The firm said it was also considering whether to drill an appraisal well on Sea Lion later in the drilling campaign. Managing director Sam Moody said: “We are extremely excited by the results of this well. Current indications are that we have made the first oil discovery in the North Falkland Basin.”
Rockhopper has four 100%-owned licences in the basin and has also farmed into two operated by Desire, in which it holds 7.5% stakes.
After an extensive work programme by Rockhopper and Desire over many years, Aberdeen-based Diamond Offshore Drilling UK’s Ocean Guardian rig arrived in Falkland waters in February to carry out a multiwell exploration drilling campaign.
Desire made a gas find in the basin in March but said it had abandoned the well because the gas present was in poor-quality reservoirs.
Falklands expert, Gavin Farquhar, a partner in law firm McGrigors’ energy and infrastructure team, said: “Rockhopper’s discovery is a welcome boost for all companies engaged in the current Falklands drilling campaign.
“It is expected up to eight wells will be drilled, and while we are still in the early days of this campaign, the signs are positive. After locating oil in one well it would be surprising not to find it in some of the other prospects in the area.
“Desire Petroleum will have been buoyed by the news and this is reflected in the movement in its share price.
“Its next prospect to be drilled is again in the North Falkland Basin. If oil is discovered in commercial quantities the independents exploring around the islands are likely to look to support from the global operators, who have the necessary resources to maximise recoveries.”
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