The North Falklands oil explorers were back in the limelight this morning after Desire Petroleum (LON:DES) announced a new oil discovery in the high profile exploration frontier.
The new Rachel well struck oil from 2,621 metres. Initial analysis indicates that the well encountered sands and shales with hydrocarbons with 349 metres gross interval, from which it has 57 metres of net pay in multiple zones.
“This discovery combined with Rockhopper's Sea Lion discovery confirms our belief that the eastern flank play fairway in the North Falkland Basin is highly prospective and that further oil fields will be discovered in this area," Desire chairman Stephen Phipps said.
Unsurprisingly the news has lit the blue touch paper under the North Falkland oil stocks.
On AIM Desire’s shares have rocketed over 50 percent on the news, and after pulling back somewhat it was up 31.5 pence, or 29 percent, at 137.25.
Rockhopper Exploration (LON:RKH) has a 7.5 percent stake in the well and its shares shot up 28 pence, or 8.5 percent to 355 pence. Meanwhile shares in Argos Resources (LON:ARG) – whose license area in the basin neighbours Desire and Rockhopper’s – shot up as much as 22 percent in early deals.
After its shares, and most of its investor appeal, has been supported by Rockhopper’s Sea Lion in recent months, Desire finally has an oil discovery of its own.
Desire had more than its share of ‘dusters’ in the basin both before and after the Sea Lion discovery. Its most recent well, the first Rachel well, initially disappointed but an inconclusive side-track gave Desire and investors hope.
Initially the first Rachel well failed to find any hydrocarbons, subsequently Desire believed the well was too far away from the mature oil source rock. It therefore sidetracked the well down-dip.
The sidetrack encountered oil shows however technical problems stopped any further analysis and the sidetrack was abandoned without a conclusive result.
Now this latest well tested Rachel prospect 1.7 kilometres from the sidetrack’s bottom hole location, and it appears the explorer's persistence has paid off.
"It is highly encouraging that the initial results from the Rachel North well endorse both our findings and geological model from the previously drilled Rachel sidetrack well,” Phipps added.
The new Rachel well encountered sands and shales with hydrocarbons from 2,621 to 2,970 metres.
The thickest zone is 8 metres thick with an average porosity of 20% , Desire said that the other zones are thinly bedded and with lower porosity.
Desire stressed that further analysis, from additional wireline logs, is required to establish the reservoir potential.
As such it now intends to complete the wireline logging and wireline sampling programme.
It hopes to gather more information on the reservoir quality, the hydrocarbon saturations and the fluid type.
This will allow Desire to assess the significance of the discovery.