Rockhopper Exploration (LON:RKH), the Falkland Islands focused oil and gas exploration company, this morning confirmed that it had safely plugged and abandoned the dry hole that it had drilled on the Ernest prospect in the North Falkland basin following completion of all logging runs. Rockhopper revealed initial results from the Ernest well last week but the failure did little to dampen investor enthusiasm for the company, which discovered oil in its Sea Lion exploration well in May this year.

The Ocean Guardian drilling rig is now preparing to proceed to Rockhopper’s Sea Lion prospect where the Company intends, subject to all necessary consents, to carry out a flow test on the Sea Lion discovery well 14/10-2. Submission for approval of the final design for the flow test programme was made to the Falkland Island Government on August 24, 2010.

The design for the initial flow test uses equipment that is available on the Ocean Guardian and certain chemicals which are expected to mitigate the wax appearance temperature and the pour point of the oil. The flow test is expected to give an early indication of the production potential of the reservoir sands and will be an essential part of the planning process required as the company moves towards its full appraisal and possible development programmes.

Analysis of Rockhopper’s Sea Lion discovery so far appears to show that the company has opened up a new play fairway in the region and that the well penetrated a regional seal between 2,250 metres and 2,374 metres subsea. Every sand in the well beneath that regional seal is charged with oil leading independent consultants RPS Energy to upgrade its best estimate of recoverable contingent resources from 170m barrels to 242m barrels. You can read further analysis and discussion of Rockhopper here. Over the next few months the Ocean Guardian rig will be used for drilling programmes around the Falklands by a number of oil and gas exploration companies, including Rockhopper, Desire Petroleum (LON:DES) and Falkland Oil & Gas (LON:FOGL) .

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