Thursday, June 23, 2011

US O&G Majors' Presentations in May - June 2011

Falkland Islands Oil and Gas Exploration in 2011 & 2012

The first exploratory drilling occurred in 1998 in a single drilling campaign when 6 wells were drilled. 5 of the wells had oil and/or gas shows, with one well flowing oil to the surface. The deposits were small and not commercial, and given the low price of oil prevailing then, no further drilling was undertaken. However, various estimates of volumes of oil that lie in the area have been made, with some sources saying about 60 billion barrels lie in the area. These potential huge undiscovered volumes have managed to keep some companies, albeit relatively smaller, interested in the area.
         

Well
Operator
Trap
Comment
14/5-1
Shell
Structural - valid
Gas discovery
14/9-1
Amerada
Structural - valid
Oil shows
14/9-2
Amerada
Structural - uncertain closure
Oil shows
14/10-1
Shell
Structural - valid
Recovered oil to surface
14/13-1
Lasmo
Structural - valid
Dry
14/24-1
Lundin
Structural - invalid
Oil & Gas shows
Table 1: Summary of results of the 6 exploratory wells drilled in 1998.

Enter Sea Lion!
Rockhopper, the company that holds exploratory acreage around the Falkland Islands, drilled the Sea Lion discovery well during April and May 2010. The well discovered 53 m of net oil pay in multiple zones of good sands and was flow-tested at over 2300 barrels of oil per day under restricted testing conditions. This was the first proper oil discovery and apart from pushing up Rockhopper’s share price considerably, it also significantly de’risked the area. After very positive appraisal drilling, plans are currently to test the well, and also drill another appraisal well. The 2nd appraisal well (
14/10-5) reportedly flowed at commercially viable rates. Further appraisal drilling is being progressed over the coming months to continue to define the extent of the Sea Lion resource. It is highly likely that this discovery will be commercial, and if so will herald a new chapter in the Islas Malvinas history.

At present there are 5 operators actively involved in exploration in the islands. These companies are:

A. Falkland Oil and Gas Ltd: Falkland Oil and Gas Limited (FOGL) is an AIM-listed oil and gas exploration company operating in the South and East Falkland Basins.

B. Desire Petroleum Plc: Desire Petroleum plc (Desire) is a UK company listed on the Alternative Investment Market (AIM) dedicated to exploring for oil and gas in the North Falkland Basin.

C. Rockhopper Exploration: Rockhopper Exploration ("Rockhopper") (AIM: RKH) is an AIM listed oil and gas exploration company based in the United Kingdom. Rockhopper has licences to explore for oil and gas in the North Falkland Basin

D. Argos Resources Ltd: Argos Resources Ltd is a quoted oil and gas exploration Company based in the Falkland Islands. The Company's principal asset is a 100 percent interest in Production Licence PL001 covering an area of approximately 1,126 square kilometres in the North Falkland Basin. 

E. Borders and Southern Petroleum: Borders & Southern is a UK-based, London Stock Exchange (AIM) listed company. It holds a 100% interest and operatorship in five Production Licences covering an area of nearly 20,000 sq km.

Who’s drilling and When?

Block/ Prospect Name
Operator
Wells planned in 2010
Wells planned in 2011
Wells planned in 2012+
FOGL - Falkland Islands Northern Licences
Falkland Oil and Gas Limited


2
FOGL - Falkland Islands Southern Licences
Falkland Oil and Gas Limited


1
Alpha
Desire Petroleum Plc
 1

Dawn
Desire Petroleum Plc
1


Liz
Desire Petroleum Plc
1


Ann
Desire Petroleum Plc
1


Ninky
Desire Petroleum Plc

1

Rockhopper Falkland Islands Exploration
Rockhopper Exploration plc
2
2
2
Borders & Southern - South Falkland Basin
Borders & Southern Petroleum Plc

2

PL 001
Argos Resources

1
1
Table 1: Companies looking to drill exploratory wells in the Falkland Islands in 2011 and 2012. Also listed are wells that these companies drilled in 2010. Source:  Derrick Petroleum Planned Exploration Wells Database


FOGL - Falkland Islands Northern Licences
Falkland Oil and Gas Ltd. (FOGL) holds interests in 7 exploration and production licences in the northern region (collectively called Northern Licences) and is the designated operator. The production licences cover ~ 50,000 sq km and are located in water depths ranging from approximately 200 m to 2,000 m. The licences contain many prospects which include the Loligo, Nimrod, Hersilia and Endeavour prospects. The Lologo prospect is scheduled to be drilled in Q1 2012, and possibly other prospects will be drilled depending on FOGL's ability to farm out and acquire funding.

FOGL Falkland Island Licences. Source: FOGL

FOGL - Falkland Islands Southern Licences
The southern licences lie offshore the Falkland Islands, in water depths ranging from ~ 200 to 2,000 m. The Toroa-1 well was spud on June 1st, 2010, but was dry. It was plugged and abandoned. FOGL’s top ranked prospects in the southern licences are Vinson, Diomedea, Thulla, Inflexible Undine and Lutra. The work obligation for Phase II, which the company is currently in, is the drilling of one well before December 2015, which the company intends to do. FOGL holds a 100% interest in the licences.

Alpha Prospect
The Alpha prospect lies in PL034 in North Falkland Basin offshore Falkland Islands in water depths of 145 m. Midsize estimates of recoverable resources are 7,800 BCF. The licence is currently in phase 1 which requires the drilling of a well by August 2012. So far, Desire Petroleum has not indicated when it plans to drill the well. Desire Petroleum holds 30% interest and is the operator which Arcadia Petroleum holds 70%.
 Desire Petroleum’s acreage in the Falkland Islands. Source: Desire Petroleum

Dawn/ Jacinta Prospects
 Desire Petroleum spud the Dawn/Jacinta 25/5-1 well in Tranche 1 in the North Falkland Basin in Dec 2010 targeting 2 levels; the Jacinta prospect, a lower Cretaceous stratigraphic sand pinch out trap with a targeted depth of around 3,281 feet (1,000 meters), and the Dawn prospect, a 3-way dip, fault bonded closure with a targeted depth of around 4,429 feet. The well encountered minor gas shows and was plugged and abandoned. Desire Petroleum holds a 100% interest in this licence (Tranche 1)

Liz Prospect
The Liz prospect lies in 350m of water offshore Falkland Islands in Tranche C. An exploration well was spudded on the prospect on February 22, 2010. The well encountered 17 metres of net hydrocarbon pay were encountered between 2961 and 3031 metres within a zone of over-pressured, predominantly sandstone, reservoir. The primary and secondary targets had hydrocarbon shows but reservoir quality in both was poor and was in complex stratigraphic traps. As on Feb 2011, the company is reprocessing 3D seismic over the Liz prospect and also plans to shoot more 3D around the prospect to define volumetrics. Desire Petroleum (92.5%) is operator and Rockhopper Exploration (7.5%) is partner.

Ann
The Ann prospect lies in PL 003 Tranche C Ann sub-area in 400m of water. The consortium was planning to spud a well in 2010. However, pending further announcements, it is unlikely this prospect will be drilled in 2011. Desire Petroleum (57.5) is the operator and the partners are Rockhopper Exploration (7.5%) and Arcadia Petroleum (35%).

Ninky Prospect
The Ninky prospect is located in Tranche D license area, North Falkland Islands. The company drilled the well 14/15-3 on the Ninky prospect which reached a total depth of 2,620 m in the Barremian source rock interval on 18 Apr 2011. The well failed to establish commercial quantities of hydrocarbons and will be plugged and abandoned. Desire Petroleum (92.5%) is operator and Rockhopper Exploration (7.5%) is partner.

Rockhopper Falkland Islands Exploration
Rockhopper Group has 100% of 4 licences in the North Falkland Basin, PL023, PL024, PL032 and PL033, between them covering an area of ~ 3800 sq. km. The Ernest prospect identified on the blocks was drilled in July 2010. However, the well did not encounter any hydrocarbons and was plugged and abandoned. On April 16, 2010 the Company spudded an exploration well Sea Lion 14/10-B on the Sea Lion prospect in PL032 which encountered oil. After very positive appraisal drilling, plans are currently to test the well, and also drill another appraisal well. As on 14 March 2011, a wider seismic acquisition programme, over areas of licences PL024, PL032 and PL033 and adjacent areas, is ongoing, and the company has secured four firm additional well slots and plans to drill in PL 032 in the near future.

Rockhopper’s Falkland Licences. Source: Rockhopper Exploration

Borders & Southern Petroleum- South Falkland Basin Exploration
Borders & Southern Petroleum holds a 100% equity interest and operatorship in five Production Licences covering an area of nearly 20,000 sq km in the South Falkland Basin. The Company has acquired and evaluated 2,862 km of 2D seismic and 1,492 sq km of 3D seismic survey over the area. Two prospects, Stebbing and Darwin, are planned to be drilled in Q4 2011 by the Eirik Raude rig.
Borders and Southern’s Licence shown in Purple. Source: Borders and Southern Petroleum.


PL 001
Production License 001 is located in the North Falkland Basin, offshore Falkland Islands and occupies an area of about 1,126 sq km. Argos Resources has completed 2D seismic survey over the license and based on the report about seven prospects and five leads have identified. The Company carried out a 1,415 sq kms of 3D seismic data aquisition in 2011 and plans to drill exploration wells in late 2011 or early 2012. Argos holds 100% interest in the licence.
Map of Argos licences in the Falkland Islands. Source: Argos Resources Ltd.

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