Oil & Gas Corporate News
Rockhopper Exploration (LON:RKH) (BUY, £5.00) (RKH, 468.5p, ? (11.55%)) reported the successful test of well 14/10-2 "Sea Lion 1?. Sea Lion 1 was drilled in a water depth of 451m during April and May 2010 and suspended for future testing, having encountered a gross oil column of 217m with net pay of 53m. Initial MDT samples were confirmed as medium grade crude oil of 26.4-29.2o API gravity. Sea Lion 1 was re-entered during September 2010 and was flowed for 18h. The well tested at sustained rates in excess of 2,000 barrels per day with a maximum rate of 2,304 barrels per day. The flow test results are in line with Rockhopper's pre-test expectations and were significantly limited by downhole and surface equipment. The well produced no water, no H2S and negligible CO2. Downhole pressures were recorded and their analysis will inform the Company's development scoping plans. A number of downhole and surface samples were collected and will be further analysed in the UK. The test was carried out with limited equipment owing to the length of the logistics chain and timelines involved in securing such equipment. Rockhopper anticipates that the additional equipment that would be incorporated into any future test, when combined with a more optimal well location, would result in a significantly higher flow rate. Rockhopper now intends to plug and abandon the well as planned.
Comment: Those are decent flow rates even though such a sand body should be able to flow at much higher rates given the reservoir characteristics and the quality of the oil. Given the limitations imposed by the equipment, we agree with the Company that much higher rates should be achievable. We are encouraged by those results and are raising our probability of success for Sea Lion from 50% to 67%, resulting in an increase in our price target from 350p to 500p.
Sterling Energy (LON:SEY) (HOLD, £0.85) (SEY, 80p, ? (37.74%)) provided an update on its Sangaw North #1 exploration well in the Sangaw North PSC in Kurdistan, Iraq. The well has been drilled to an intermediate depth of 2,395m and open-hole wire-line log data acquired from 1,450m to 2,395m. Analysis of the wire-line log data indicated potential hydrocarbon bearing zones and Sterling has completed open-hole drill stem tests…
