Premier, Rockhopper and Falkland gain on Isobel Deep oil discovery

Shares in Premier Oil, Rockhopper Exploration and Falkland Oil & Gas gained on Thursday after the companies announced an oil discovery at the Isobel Deep exploration well in the North Falkland Basin, approximately 30km south of the Sea Lion field.

Falkland Oil & Gas and Rockhopper are partners in the well, with 40% and 24% respectively, while operator Premier has 36%.

Premier said the Isobel Deep exploration well has been drilled to a depth of 8,289 and the bottom 75 feet of the well consist of oil bearing F3 sands.

These sands were at a higher than expected reservoir pressure and this resulted in an influx into the well. As part of the operations to remove the influx, oil was recovered to the surface and Premier said it appears similar in nature to crude from the known Sea Lion discovery.

Premier Oil exploration director Andrew Lodge said: "This is an important play opening discovery in the previously unexplored southern area of Licence PL004. The well has successfully demonstrated a trapping mechanism and the presence of moveable oil in the Elaine/Isobel fan complex."

As a result of the new geological information, the company has decided to suspend operations on the well and release the rig to drill in the South Falkland Basin. The rig is expected to return to continue operations in the North Falklands Basin in August.

“This is obviously positive news for the partners who have their eye on an estimated 510 million barrels of prospective resources in the southern Elaine/Isobel complex that on further success would effectively double the discovered resource base in the Falklands,” said Societe Generale.

However, SocGen said it remains cautious after just one penetration of the well and waits for appraisal activities to recommence in late Summer.