Falklands oil no longer a dream, says Rockhopper

1st Jul 2011 07:49

Rockhopper Exploration, the AIM listed oil firm, has reasserted its belief it has found a minimum of 155m "recoverable" barrels of oil in the seas off the Falkland Islands.The statement accompanies its final results for 2010/11 which also show significantly increased funding with two new stakes in the company being acquired for nearly £400m.The big test for the company, however, will be establishing exactly how big its Sea Lion basin oil field really is.The whole project began to look hopeful in February this year when the first drill test took place on the Sea Lion field. The test indicated a potential flow rate of 2,700 barrels per day. Subsequently a second test on a site nearby netted a sustained flow-rate of 5,508 barrels per day.The firm maintains these are commercially viable rates, which of course would have huge ramifications for the Falkland Islands' economy, not to mention relations between the UK and Argentina which still lays claim to the territory.Rockhopper has now identified the next stages of the project. Alongside working out how big the oil field is, it also needs to prepare for the engineering challenges involved in drilling in the South Atlantic, not the least of which is recruiting the right people to get the job done. Finally it has to finance all of this activity. The company says the exploration phase is fully funded, certainly the near £400m equity stakes will help in that respect. But persuading banks and investors to part with money for the next stage will prove challenging. The firm says it has already started initial talks with lending banks.It is also fair to say that an brand new offshore oil Industry would have a huge impact on the 2400 inhabitants of the Falkland Islands who currently make their money from fishing and wool. Rockhopper says it has "open and cooperative relations with the Falkland Islands Government". Those relations will need to be sustained.Although there are undoubtedly massive challenges ahead, "something" is definitely happening in the Falkland Islands and the world is now watching. Pierre Jungels, the group Chairman says of the results:"Rockhopper has been transformed by the discovery on Sea Lion, of which we are in the rare position of holding 100%. We are progressing through a very exciting and valuable phase in the group's development."