First Falklands well in two years looks positive

An oil discovery at the 14/5b-5 well is a successful start to the four well North Falkland Basin campaign for Rockhopper (RKH 24%), Premier Oil (PMO 36%) and Falkland Oil & Gas (FOGL 40%). The well sits immediately to the south of Sea Lion in PL004b and was testing the extension of the F2 sands that represent the existing discovered resources at Sea Lion, as well as the the deeper untested F3 sands. All seven predicted reservoirs were encountered with oil in the primary target, Zebedee, and gas in the shallower Hector target. Good oil shows were recorded in the F3 targets, but the sands were not well developed at this location.

Of the targets encountered, pre-drill chances of success were highest at Zebedee (52%) and Hector (27%) so it is perhaps not a surprise that these are the two zones that have been most successful. However, even at these confidence levels there was a decent chance that the well could have failed, so we consider these results to be broadly positive.

The Zebedee fan encountered 25.3m of net oil pay with reservoir quality among the best found in the region to date. Pre drill resource estimates for all the targets ranged between 165mmbbls (PMO) and 281/282mmbbls (RKH/FOGL) with the Zebedee fan expected to contribute in the region of 50mmbbls. Of particular interest we note that FOGL believes that the Zebedee fan is in communication with Sea Lion based on pressure measurements. This would potentially impact FOGL’s share of Sea Lion itself once unitisation discussions get underway at some point in the future.

The rig will now move some 40km to the south of Sea Lion to drill Isobel Deep. This well is higher risk than Zebedee and is only targeting the F3 sands. The F3 oil shows in Zebedee have demonstrated their potential to be hydrocarbon bearing, but better developed sands will need to be present here for the well to be successful.