Oil & Gas Corporate News
Desire Petroleum (LON:DES) (HOLD, £1.00) (DES, 153.75p, ? (3.61%)) announced that the Rachel 14/15-1 exploration well was spudded on 27 September 2010. The Rachel prospect is located in Tranche D and has an estimated target depth of 2,850m. Drilling operations are expected to take approximately 35 days and a further announcement will be made once drilling is completed.
Comment: The Rachel prospect is a post-rift lacustrine fan play on the eastern flank of the North Falklands basin, similar to Rockhoppers Sea Lion discovery. The pre-drill resources size is 294MMbo for the mean estimate with P90-P10 of 38-630MMbo and a chance of success of 15% as given in the Senergy competent person report of September 2009. Given the success of Rockhopper at Sea Lion, we would attribute a higher chance of success than 15% to Rachel. Using a 15% chance of success, Rachel is worth close to 90p per share. After the disappointment at Liz, a lot of Desires fortune rest on the results of the Rachel 14/15-1 exploration well.
Falkland Oil & Gas (BUY, £2.50) (FOGL, 156.25p, ? (0.95%)) announced that due to the tight rig market it is increasingly unlikely that the next phase of the drilling programme will commence in 2010 as required by the current terms of the licences. Following recent discussions, the Falkland Islands Government has agreed to extend the first phase of the northern 2004 licences by one year, so that they will now expire on 15 December 2011. No additional work obligations or acreage relinquishment will be required in respect of this licence extension and the existing Phase 1 work commitments remain unchanged. Separately, BHP Billiton (LON:BLT) has advised the Government and FOGL that it has elected not to enter the second phase of the southern 2002 licences which commences on 3 December 2010. FOGL believes, based on the drilling results from the Toroa well analysed to date, that these licences are still prospective. Furthermore, the results of the analysis of some key well data are now expected to be available in October. FOGL has identified a number of prospects and leads which may prove to be of interest, particularly in the event of drilling success in the deepwater area of the northern licences, or in the south, where the licences…
