Desire Petroleum (LON:DES) has secured both regulatory and partner approvals to drill the 14/15-2 Rachel North well to evaluate sands with oil shows encountered in a previous well.
Investors welcomed the news, sending shares in Desire up more than 5% in early deals.
Last week, Desire plugged and abandoned the 14/15-1 well and the rig is currently waiting on weather to move to the Rachel North location. Had the company failed to secure the approval on time, it would moved the rig to drill the Dawn/Jacinta prospect and returned to Rachel later in the drilling programme.
Broker Northland Capital Partners, formerly known as Astaire Securities, called this a positive development as it “makes much more sense for Desire to drill Rachel 14/15-2 now, than move the rig to the large Jacinta prospect”.
“Whilst we suspected partner approval from Rockhopper would be forthcoming, the rapid turnaround of the decision by the Falkland authorities is encouraging,” said Northland in its note.
The broker said the stock was “still very high risk”, but retained speculative interest.
The Rachel North well will be drilled vertically with an estimated total depth of 3,050 metres with drilling operations expected to take about 35 days.
The bottom hole location will be 1.7 kilometres (km) away from he Rachel sidetrack 14/15-1Z bottom hole location.
The well will evaluate the sands with oil shows encountered in the Rachel sidetrack as well as a number of possible additional sands not seen in the sidetrack.
When Desire announced the plugging and abandoning of the well last week, it said that the data acquired during drilling operations indicated that around 25 metres of sand with oil shows was encountered, making it the second well after Sea Lion to indicate the presence of hydrocarbons in what is now termed the east flank play fairway.
These results have given Desire hope that further oil fields will be discovered in this area.
The North Basin is the most explored with Rockhopper Exploration (LON:RKH) and Desire drilling through most of 2010. The South Basin has been actively explored by Falkland Oil & Gas (LON:FOGL) this year, Borders & Southern (LON:BORS) also have assets there.
The latest addition to the AIM-listed oil explorers in recent months was the listing of Argos Resources (LON:ARG) in July.
Rockhopper Exploration has a 7.5% working interest in the Rachel North well.