Falkland Oil and Gas FOGL Scotia (FI31/12-01) Well Results

  Falkland Oil and Gas (FOGL) - Scotia (FI31/12-01) Well Results

RNS Number : 0526S
Falkland Oil and Gas Limited
27 November 2012




27 November 2012



                           Falkland Oil and Gas plc

                                      

                          ("FOGL" or "the Company")

                                      

                       Scotia (FI31/12-01) Well Results



FOGL, the oil  and gas exploration  company focused on  its extensive  licence 
areas to the South and East of the Falkland Islands, announces the results  of 
the Scotia exploration well.



FOGL is the operator of the well, holding a 40% interest, whilst Noble  Energy 
Inc. holds a 35%  interest and Edison International  Spa, holds the  remaining 
25% interest. Under the terms of  the farm-out agreements, FOGL is paying  15% 
of the costs of this well.



Well 31/12-01 was drilled to  a depth of 5,555m.  The well penetrated the  mid 
Cretaceous aged reservoir  objective on  prognosis. The  Scotia objective  had 
been identified on  the basis of  its seismic amplitude  response. Strong  gas 
shows (C1  to  C5^1)were  encountered  whilst  drilling  the  target  section. 
Interpretation of wireline log data  indicates that the target interval  4719m 
to 4769m  comprises 50m  of hydrocarbon  bearing fine  grained sandstones  and 
claystones. The wireline logs indicate  that, at this location within  Scotia, 
the sandstones form fairly poor quality reservoir, although some zones have up
to 20% porosity.  Other thin hydrocarbon  bearing sandstones were  encountered 
beneath the main target in the interval 4900m to 5164m. Subsequent  evaluation 
of the main  interval using  a wireline formation  testing tool  did not  flow 
hydrocarbons, indicating that the reservoir has low permeability.



The well was deepened below the main  target in order to penetrate and  sample 
Cretaceous aged source  rocks. Rock  cuttings and sidewall  core samples  have 
been obtained from several potential source  rock intervals and these will  be 
sent to the laboratory for detailed analysis. The results should provide vital
information on the quality and maturity of these source rocks and also provide
a better understanding of the distribution of oil and gas within this part  of 
the South and East Falklands basin.  A further announcement on the results  of 
this work will be made in the first quarter of 2013.



The Scotia well has proven a working hydrocarbon system in the mid  Cretaceous 
Fan play and has also demonstrated that Scotia is a viable stratigraphic trap.
Whilst reservoir quality at  this particular location was  poor, it should  be 
recognised that the seismic  amplitude anomaly that  defines Scotia covers  an 
area of approximately 350 square  kilometres. As such, further technical  work 
is required to assess just how  representative this result is, and whether  or 
not better quality reservoir may exist elsewhere within Scotia.



The well data will be invaluable for calibrating the forthcoming 3D seismic
programme. The 3D seismic will be used to map sand fairways in the play and,
when combined with detailed analysis from the Scotia well, should allow
identification of better quality reservoir and differentiation between oil and
gas prospects.



FOGL now intends to  plug and abandon  the well and this  is expected to  take 
approximately 10 days.  On the basis  that the well  is completed within  this 
timeframe, it  is estimated  that the  Company's cash  balance post  the  2012 
drilling campaign will be approximately US$220 million.



The PGS  M/V Ramform  Sterling is  expected  to arrive  in the  Falklands  and 
commence 3D seismic acquisition imminently. A further update on this work will
be provided in due course.





Tim Bushell, Chief Executive of FOGL said:



"The results of the Scotia well provide further endorsement of the hydrocarbon
potential of the South and East Falkland Basin andhave proven the presence  of 
hydrocarbons within the mid Cretaceous Fan Play."



"We now plan to fully evaluate the results of the Loligo and Scotia wells. The
forward programme will focus strongly on three key themes:



· The  evaluation of  source rock  potential and  hydrocarbon migration  in 
order to define potential oil bearing prospects

· The  identification of  good quality  reservoir within  the Tertiary  and 
Cretaceous prospects and plays

· The  potential commercialisation  of gas  and associated  liquids in  the 
South and East Falklands basin."



"During 2012  we have  drilled  two encouraging  wells,  both of  which  found 
hydrocarbons and were completed safely  and within budget. They reinforce  our 
confidence in the potential of the basin."



Enquiries:



Falkland Oil and Gas

+44 (0) 207 563 1260

Tim Bushell, Chief Executive



Oriel (Nominated Advisor and Joint Broker)

+44 (0) 207 710 7600

David Arch / Gareth Price / Ashton Clanfield



Jefferies Hoare Govett (Joint Broker)

+44 (0) 207 029 8000

Alex Grant / Chris Zeal / Graham Hertrich



FTI Consulting

+44 (0) 207 831 3113

Ben Brewerton / Ed Westropp





Notes

1) C1 to C5: Refers to the composition of a 'wet gas' including both methane
(C1) and more complex alkanes including Ethane (C2), Propane (C3), Butane (C4)
and Pentane (C5). The gas detection equipment used on the rig can only  detect 
up to C5.



The technical information  included in  this announcement  has been  reviewed, 
verified and compiled by the Company's geological staff, including a qualified
person, Colin More BSc., MSc. (Exploration Director), who has over 26 years of
experience in petroleum exploration, for the purpose of the Guidance Note  for 
Mining, Oil and Gas Companies issued  by the London Stock Exchange in  respect 
of AIM companies, which outline standards of disclosure for mineral  projects. 
Mr. More  is  a member  of  the Geological  Society  of London,  the  American 
Association  of   Petroleum  Geologists   and  the   Society  of   Exploration 
Geophysicists.

                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


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