The Erik Raude deep-water rig was contracted by operators Premier Oil and Noble Energy in June. It provides for more than 20 new wells to be drilled, with six ‘firm’ wells initially and as many as 16 additional drilling options.
Argos chairman Ian Thompson said he is confident Argos will be able to get a place in the schedule when the funding is secured.
"I am hopeful that the recent contracting of the Erik Raude deep-water drilling rig and the clarity that brings on a 2015 drilling timetable around the Falkland Islands will now allow us to conclude our own farm-out on satisfactory terms for our shareholders,” Thompson said.
“Negotiations are currently underway with potential partners to secure funding for drilling"
Argos, during the six months to June 30, had its independent competent person's report updated for its Falkland acreage and that delivered a significant increase in the scale of its prospect inventory.
The company has previously noted that its acreage position is the most prospective of all the blocks in the North Falkland basin. Indeed, it now has 52 identified prospects and 40 leads.
The independent best estimate puts ‘unrisked recoverable prospective resources’ at 3.1bn barrels of oil - the ‘high’ estimate comes is in excess of 10.4bn barrels.
Argos said it is particularly encouraged by the views of potential farm-in partners regarding the sub-surface interpretation and prospect ranking, which align closely with the company’s own interpretation.
The pre-revenue explorer reported a US$0.7mln loss (H1 2013: US$1.2mln) and it had US$2.1mln of cash reserves (H1 2013: US$2.9mln).
Whilst repeating a ‘buy’ recommendation and a 41p price target, Cenkos Securities analyst Ashley Kelty said: “We believe that the Argos acreage would be attractive to an industry partner seeking a position in this frontier exploration basin.
“With Argos offering greater prospective resource (more than 3bn boe) than the combined prospective resource for the peer companies operating in the North Falkland Basin (Premier, Rockhopper and FOGL), we believe Argos offers greater potential upside than peers.”