Rockhopper rockets on 'crunch well' success

21st Mar 2011 10:48

Falkland Islands oil explorer Rockhopper is up more than a third Monday after it said success at its 14/10-4 appraisal well makes it "highly likely" that the Sea Lion field will prove commercially viable. The company encountered a "significant" reservoir package and hydrocarbon column at the well in the North Falkland Basin - about 33 metres of net pay in a good quality reservoir.It believes the find has "significantly" increased P90, or 'proven', reserves. Analysts at Matrix Capital reckon that means a jump of 50% from about 60 million barrels of oil (mmbbls) to 90 mmbbls."Following this positive result we believe Sea Lion is highly likely to prove commercially viable," chief executive Samuel Moody said Monday. "The well has confirmed our ability to identify good reservoir units on the seismic in our acreage with the sands coming in very close to prognosis.""We can now continue to appraise the Sea Lion discovery and to explore additional prospectivity within our acreage with added confidence."Matrix called this a "crunch well" for Rockhopper. "Failure would have raised enormous questions about the viability of the Sea Lion discovery," said analyst Charlie Sharp. "But the result appears to have matched or beaten expectations." Westhouse also remains positive, especially about the chances of improving P50, or 'proved & probable', estimates. "At the very least, it will derisk those figures and, as the company suggests, improve the outlook for commerciality.""In the absence of new volumetric estimates, we are derisking our current P50 estimate of 170m barrels and raising our target price to 494p. We retain our BUY recommendation."