Shares in EnCore Oil jumped nearly 6% yesterday after the energy firm said it was confident of significant oil on a commercial scale on the Cladhan discovery.
The announcement came amid growing speculation about the potential of Cladhan, which is in the UK North Sea 225 miles north-east of Aberdeen.
Some reports have said it could contain 100-200million barrels of oil, while online chatter among EnCore shareholders suggests the find could be much larger.
Chief executive Alan Booth said it was too early to put a precise figure on how large the discovery might be but he added: “We are now very confident that we have a potentially significant commercial accumulation.
“We hope to return to the area at the earliest opportunity to establish both the southern extent of Cladhan and drill further down.”
Announcing the initial results of a second sidetrack well on northern North Sea block 210.29a, which contains the Cladhan find, EnCore said drilling took place to a depth of 11,530 feet about two-thirds of a mile from the original 2008 discovery.
The sidetrack encountered a 258ft gross hydrocarbon-bearing reservoir interval, including 108ft of net pay.
EnCore said: “The well as established oil down to 9,643ft subsea. No water contact has been penetrated.”
The Alternative Investment Market-listed firm, whose shares rose 7.5p to 135p also said the original discovery well and two sidetracks indicated a hydrocarbon column of more than 425ft.
Andrew Reid, Aberdeen-based managing director of energy consultant Douglas-Westwood, said the figures were inconclusive but looked pretty healthy.
The equity in the Cladhan joint-venture partnership is Sterling Resources (39.9% and operator), Wintershall UK (33.5%), EnCore (16.6%) and Dyas (10%).
Sterling chief executive Mike Azancot said that the partners would spend the next few weeks studying the data before drawing any conclusions.
He added: “We have a significant accumulation here.”
Results announced last month for the first sidetrack well came in above the partners’ expectations.
Cladhan and two other sizeable oil finds in recent months have bucked a trend of declining discoveries in the UK North Sea.
In June, EnCore and Wintershall were among the partners celebrating a potential 300million-barrel find in the Catcher area.
Premier Oil – another partner in Catcher – followed this up a month later, saying it estimated recoverable reserves of 60-100million barrels for the area drilled to date. It added that Catcher also had significant untested potential.
Just last month, Wintershall – the oil division of German chemical giant BASF – announced a discovery estimated at 60-100million barrels of oil in place on the Blakeney prospect.
EnCore said that the next phase of drilling at Cladhan depended on rig availability but could start before the end of 2010.
The oil and gas explorer also announced that bad weather had disrupted its plans for Catcher by preventing the Galaxy II rig from getting there.