Desire Petroleum (LON:DES), the exploration company working in the North Basin of the Falkland Islands, this morning reported that it had so far failed to find oil and gas in its Rachel exploration well, which spud at the end of September. While the initial wireline logging has proved to be disappointing, Desire said it was planning to sidetrack the well towards potential sandstones that have now been identified downdip from the existing location. Of note, the drilling encountered a substantial thickness of sandstone in the upper part of the target zone, comprising 103m of gross sandstone of which 81m is net reservoir with an average porosity of 23%. The news was enough to send shares in the AIM lusted group down by 27% to 80p in early trading.

The company said the Rachel well had provided much new valuable data on the distribution of the reservoir targets within the Eastern Flank play and in particular the calibration of the 3D seismic data for sandstone prediction. “Our understanding of this play type is rapidly evolving but one of the biggest remaining uncertainties relates to the oil charging mechanism from the mature oil source rock to the fan sandstones,” it said.

As a result of the latest information from this well, the company is going to drill closer to the mature oil source rock, significantly reducing the oil charge risk. The sidetrack will start when the current logging operations are complete. The total depth of the sidetrack is planned to be 3,418 metres measured depth (2,970 metres vertical depth) with an offset of around 1.2km from the total depth of the original vertical well. The sidetrack will be designated 14/15-1Z and is expected to take 20 days.

In a Competent Persons Report (CPR) prepared by Senergy and published by Desire late last year, using a reservoir thickness range of 30 to 85 metres, Senergy calculated a gross unrisked mean recoverable potential of 318m barrels of oil at Rachel. As a result of further work Desire has previously said it believes that the sand thickness in Rachel may exceed this range in a series of stacked sands, with a consequent increase in the recoverable potential.

Earlier this year Desire became the first of a group of oil and gas explorers in recent years to drill…

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