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Falkland oil drillers boosted as rig arrives for 2015 programme

Last updated: 09:41 03 Mar 2015 GMT, First published: 10:41 03 Mar 2015 GMT

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Falkland oil drillers Rockhopper (LON:RKH) and Falkland Oil & Gas (LON:FOGL) are jointly presenting to analysts ahead of the imminent 2015 exploration campaign.

The AIM quoted companies today revealed that the Eirik Raude drilling rig has now arrived in the waters off the Falkland Islands.

Eirik Raude will be moved to the location of the Zebedee prospect, in the North Falkland basin, for drilling shortly.

It kicks off a programme of at least six wells. 

The first two wells will be drilled in the North Falkland basin; then the third scheduled well will be drilled further south. Operations will then revert to the North basin for slots four and five, and the initial programme will end in back in the south.

Zac Phillips, analyst at SP Angel, says the City presentations and the start of drilling present something of a fillip for the junior explorers.

He is positive about the prospects for this new wave of Falkland drilling, though he highlights politics (on the Islands) could become an impediment to the future development of oil resources in the South Atlantic.

“We believe that there is a significant amount of opportunity within the Falkland's basins, and that with the right governmental support (i.e. allowing near/onshore developments), then the hiatus in development that is occurring with premier oil might be less likely to happen,” the analyst said in a note.

“To develop the northern and southern basins will require some input from the Falkland Island government, and they need to start to engage constructively, not just putting up impediments to progress, such as trying to rewrite the tax laws now that there is a discovery.”

Last week, Canaccord analyst Charlie Sharp said it promised to be a highly material” drilling campaign.

In the North Falkland basin, Rockhopper has 24% interest in the planned Zebedee, Isobel Deep and Jayne East wells. It has a larger stake in the Chatham well, which will appraise the western flank of the Sea Lion discovery.

FOGL has a 40% stake in three of the four wells planned in the North Falkland basin (Zebedee, Isobel Deep and Jayne East). 

In the South, where it is partnered with Noble Energy, FOGL has a 52.5% stake in the Humpback prospect and will have between 40-52.5% in the second southern well.

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