Rumour mill rife on new drilling rig for Falklands

There’s been plenty of speculation that the oil companies involved in the Falkland Islands will announce a drilling rig for their 2015 exploration shortly. An article appeared in the Mercopress which seems to confirm the bulletin board stories that the Eirik Raude semi-submersible rig has been contracted by Falkland Oil and gas, Noble, Rockhopper and Premier Oil. There are also rumours that Noble Energy will take part in the farm in of the Sea Lion discovery which is jointly being developed by Rockhopper Exploration and Premier Oil.

Rockhopper’s shares are languishing in the low 90’s after it became apparent that Premier Oil’s involvement in the Falklands was still under question following the departure of Simon Lockett who was a big fan of the Sea Lion development which holds at least 350 million barrels of oil. Premier have announced they are seeking a farm out partner for the project and clearly Noble Energy seems an obvious partner given its existing relationship with Falklands Oil and Gas (FOGL) in the South Falkland basin. Edison (owned by French company EDF) also farmed into the FOGL acreage in June 2012.

The key question for Rockhopper Exploration shareholders is whether their share in Sea Lion will be diluted further by any arrangement with the likes of Noble. The original deal with Premier announced in July 2012 meant that Premier farmed-in 60 per cent of Rockhopper’s licence interests in the Falkland Islands, which includes the Sea Lion development. Premier would probably like to retain operatorship in the licences which means that either it holds onto at least 40 percent or Rockhopper also give up some of their 40% interest to the new third party. So the negotiations may be complex and long winded to complete especially with the new Chief Executive at Premier Oil due to come on board. If a deal can be thrashed out it will be good for all the companies operating the Falklands, with more potential for sharing of infrastructure and technical knowledge meaning the area may become a major new oil province in years to come. There’s plenty of risks right now especially after the drilling failures of the South Falkland basin which only delivered gas condensate to Borders and Southern, but a good rig announcement and positive progress on the Premier Oil farm out and final investment decision will be very positive for sentiment.

Mercopress stated that :

Falklands’ Premier and Noble have contracted a rig, according to Norwegian energy website

Ocean Rig has reportedly received a contract for its Eirik Raude semi-submersible rig for a drilling campaign in the Falkland Islands. According to Offshore.no, a Norwegian energy news website, the rig will be used by Noble Energy and Premier oil for their respective drilling campaigns in the Falkland Islands waters in 2015

Ocean Rig has reportedly offered a better bid compared to the one made by Seadrill and its West Navigator drillship, which will, according to sources quoted by Offshore.no, now look for an opportunity to deploy the drillship in the Shetlands area.

Last week Premier Oil said a rig contract and an associated rig sharing agreement for the Falklands drilling program was expected to be signed shortly. The campaign is planned to start in Q2 2015 and is expected to comprise four operated wells on Premier acreage; three on PL004 and one on PL032 Premier said.

Noble Energy in February this year completed an extensive seismic survey campaign over its licenses in the area, and, according to FOGL (Falkland Oil and Gas Ltd.), a stakeholder in the blocks, drilling is scheduled for early 2015.

According to Offshore.no, the Eirik Raude rig will earn as much as 500.000 dollars per day.

The Eirik Raude is a 5th generation self-propelled semi-submersible drilling rig, currently working for Russian privately-held oil company Lukoil. According to a fleet status chart on Ocean Rig’s website, the contract with Lukoil expires in early 2015. The rig recently completed an exploration well in the Ivory Coast off west Africa.

The rig, built in 2002, has an extensive drilling history. The Eirik Raude has drilled deep water and ultra deep water wells in Canada, US Gulf of Mexico, Cuba, Norway, Ghana and Ivory Coast whilst working for Encana, PetroCanada, Imperial Oil, Repsol, Statoil Hydro, ENI, Exxon, Chevron, Tullow Oil and Anada.

http://en.mercopress.com/2014/05/22/falklands-premier-and-noble-have-contracted-a-rig-according-to-norwegian-energy-website

Contrarian Investor UK

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