Rockhopper confirms potential of Falklands basin oil discovery

By Angelina Rascouet on 5/17/2016

LONDON (Bloomberg) -- Rockhopper Exploration confirmed potential oil resources in a discovery in the Falklands basin, sending its shares higher.

An independent audit showed that the best estimate of contingent resources—also known as 2C resources—at the Sea Lion complex came in at 517 MMbbl, of which London-based Rockhopper’s share is 258 MMbbl, it said Tuesday in a statement.

Today’s announcement is higher than the 482 MMbbl Bank of Montreal was expecting.

“It adds to confidence on the prospectivity of the region,” David Round, an analyst at BMO, said by email. “But there remain a number of hurdles, namely the oil price, before the resources can be commercialized.”

Shares in Rockhopper gained as much as 6.2% to trade at 38.75 pence a share in London, the highest in two weeks. They were 3.4% higher as of 9:17 a.m. Premier Oil Plc, a London-based explorer with a 60% stake in Sea Lion, gained 2.9% to 79.75 pence a share.

“The current size of Sea Lion at over 500 MMbbl is good to see, helping confirm a significant second phase beyond the current development,” Daniel Slater, research director at Arden Partners Plc, said in a note.

The 2010 Sea Lion oil discovery was the first off the Falklands, the south Atlantic archipelago which Margaret Thatcher fought to keep British in 1982. No discovery there has yet been commercially productive.

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