UK explorer Desire Petroleum announced Thursday an oil discovery with its third exploration well off the disputed Falkland Islands in the South Atlantic, sending its shares surging.
Desire said well 14/15-2 on its Rachel prospect in the North Falkland Basin found 57 meters of net oil pay in multiple zones. The thickest zone is 8 meters thick with an average porosity of 20%, the company said.
The Rachel North discovery needs further sampling to test the reservoir quality and the significance of the find.
The Rachel prospect lies some 23 km to the south of landmark Sea Lion oil discovery made by Desire's North Falkland drilling partner Rockhopper earlier this year. The Rachel North well was testing the same hydrocarbon play-type as the Sea Lion find.
"This discovery combined with Rockhopper's Sea Lion discovery confirms our belief that the eastern flank play fairway in the North Falkland Basin is highly prospective and that further oil fields will be discovered in this area," Desire chairman Stephen Phipps said in a statement.
Desire, which was hoping to find some 180 million barrels of recoverable oil in the Rachel prospect, saw its shares jump by up to 51% after the announcement. By 0948 GMT they had fallen back and were trading 24% higher at GBP1.32 ($2.06).
Rockhopper, which has a 6.5% stake in the Rachel prospect, was trading 8% higher at GBP3.48 in London. FLOW CONCERNS
"The initial indications are positive and the porosity looks goods, but a lot depends on the ability of this (oil) to flow," said Evolution Securities analyst David Farrell, noting reservoir difficulties with previous oil shows in the basin.
"The more important thing here is proving up an oil province for a potential future commercial oil development," he said.
Desire and Rockhopper have been two of the most volatile UK-traded companies' stocks since launching a long-awaited, highly anticipated drilling campaign off the remote South Atlantic islands earlier this year.
Investor interest over the frontier drilling has been intense, with sovereignty of the UK self-governing overseas territory disputed by Argentina.
Last month, Desire plugged and abandoned the first well and sidetrack on the Rachel prospect, which found oil shows but was prematurely shut before further testing due a mechanical failure in the wellbore.
The Rachel North well reached a total depth of 3,052 meters and encountered a 349 meters gross interval of sands and shales with hydrocarbons from 2,621-2970 meters, Desire said.
In March, Desire's shares slumped after it said it found poor reservoir quality with its first well on the Liz prospect.
Desire plans to drill at least another two exploration wells in the basin, one of which will likely test its Dawn/Jacinta prospect.
Desire said well 14/15-2 on its Rachel prospect in the North Falkland Basin found 57 meters of net oil pay in multiple zones. The thickest zone is 8 meters thick with an average porosity of 20%, the company said.
The Rachel North discovery needs further sampling to test the reservoir quality and the significance of the find.
The Rachel prospect lies some 23 km to the south of landmark Sea Lion oil discovery made by Desire's North Falkland drilling partner Rockhopper earlier this year. The Rachel North well was testing the same hydrocarbon play-type as the Sea Lion find.
"This discovery combined with Rockhopper's Sea Lion discovery confirms our belief that the eastern flank play fairway in the North Falkland Basin is highly prospective and that further oil fields will be discovered in this area," Desire chairman Stephen Phipps said in a statement.
Desire, which was hoping to find some 180 million barrels of recoverable oil in the Rachel prospect, saw its shares jump by up to 51% after the announcement. By 0948 GMT they had fallen back and were trading 24% higher at GBP1.32 ($2.06).
Rockhopper, which has a 6.5% stake in the Rachel prospect, was trading 8% higher at GBP3.48 in London. FLOW CONCERNS
"The initial indications are positive and the porosity looks goods, but a lot depends on the ability of this (oil) to flow," said Evolution Securities analyst David Farrell, noting reservoir difficulties with previous oil shows in the basin.
"The more important thing here is proving up an oil province for a potential future commercial oil development," he said.
Desire and Rockhopper have been two of the most volatile UK-traded companies' stocks since launching a long-awaited, highly anticipated drilling campaign off the remote South Atlantic islands earlier this year.
Investor interest over the frontier drilling has been intense, with sovereignty of the UK self-governing overseas territory disputed by Argentina.
Last month, Desire plugged and abandoned the first well and sidetrack on the Rachel prospect, which found oil shows but was prematurely shut before further testing due a mechanical failure in the wellbore.
The Rachel North well reached a total depth of 3,052 meters and encountered a 349 meters gross interval of sands and shales with hydrocarbons from 2,621-2970 meters, Desire said.
In March, Desire's shares slumped after it said it found poor reservoir quality with its first well on the Liz prospect.
Desire plans to drill at least another two exploration wells in the basin, one of which will likely test its Dawn/Jacinta prospect.
