Falkland Oil & Gas (LON:FOGL) told investors that drilling of the deep water Humpback exploration well in the South Falkland basin has run into delays.
They were described as ‘unforeseen equipment and operational issues’ and it has added just over a month to the schedule – to about 100 days from 65 planned days – so the well results are now expected during September.
A proportion of the additional costs are expected to be borne by partner Noble Energy, under a commercial arrangement that is currently being negotiated, FOGL said.
The AIM-quoted oil explorer, in this morning’s interim results statement, also revealed that plans for the next well in the North Falkland basin are being reassessed.
FOGL, a pre-revenue exploration company, reported a US$1.95mln pre-tax loss for the six months to June 30 and said it ended the first half with a US$40.1mln cash balance.
Rather than drilling the initially planned Jayne East well, an alternative well to follow up at Isobel Deep is currently being considered.
Isobel Deep, the second well in the programme so far, made a potentially significant oil discovery that could ‘open up a new play’; however, it was not possible to run logs or garner much further analysis due to technical difficulties and high pressures.
Premier Oil (LON:PMO), the project operator, estimates that the area has some 400mln barrels of oil resources.
Discoveries Isobel Deep and Zebedee - the first wells in the ongoing drilling programme – were key highlights of a first half which new chairman John Martin describes as “highly successful”.
Zebedee confirmed an extension to the Sea Lion project, whereas ‘play opening’ Isobel Deep could potentially add another ‘Sea Lion like’ hub to the basin.
Humpback is by far the largest exploration prospect in the programme, and it is anticipated that a success – an oil discovery – could be transformational for FOGL.
"Drilling on the Humpback prospect in the South Falkland basin is currently on-going and we look forward to receiving and sharing the results of this well following completion of the drilling operations," Martin said.
"With two successes under our belt already and two more wells to complete, the board looks to the future with confidence".