18th Oct 2006 07:01
Rockhopper Exploration plc18 October 2006 Rockhopper Exploration plc PRESS RELEASE FOR IMMEDIATE RELEASE 18th October 2006 Exploration Activity Update Integration of data provides greatly improved clarity on prospects •CSEM and 2D seismic data give direct hydrocarbon indicators •Ernest Prospect (formerly J1) significantly de-risked, potentially c. 100 million barrels of recoverable reserves •Potential discovered NPV10 over $1,000 million at $50 oil for prospect Ernest Rockhopper Exploration plc ("Rockhopper" or "the Company") has today announcedthat data from the two Controlled Source Electromagnetic Surveys (CSEM) carriedout on its behalf by Offshore Hydrocarbon Mapping plc earlier in 2006, whenco-rendered (superimposed) with recently acquired 2D seismic data, providesgreater clarity of the structures surveyed and significantly de-risks theacreage. Executive Chairman, Dr. Pierre Jungels, said: "This is great news, we took a bold step utilising CSEM and have substantiallyde-risked our prospects. We now have a drillable prospect, Ernest, which ifsuccessful could contain over 100 million barrels of recoverable oil. In little more than a year since listing on AIM, we have significantly increasedour understanding of and confidence in the prospectivity our North FalklandBasin acreage. We now have a highly de-risked drillable prospect and a number ofencouraging leads in licences PL023 and PL024. We intend making further progress in our understanding with a 3D seismic surveystarting later this month in licences PL032 and PL033 and conducting furtherevaluation of the 2006 2D seismic data on licences PL023 and PL024 with the aimof identifying a number of additional drillable targets for any drillingprogramme." Further technical information Ernest Prospect (formerly J1) 2D Interpretation of the 2D seismic acquired in 2006 has confirmed the robustnature of the prospect and also provided potential hydrocarbon indicators. Prospect Ernest is a relatively low risk independent 4-way dip closed structurein 160m of water only 100km from the Islands. The 4-way closure looks morerobust having interpreted the new seismic, with an areal extent of some 2880acres. It is also possible to map a much bigger, somewhat more risky closurearound it. This area depends upon closure against a major fault to the East andhas an area of over 6,000 acres. We have observed an AVO (Amplitude VersusOffset) response on the flank of the structure along with possible gas chimneysand flat spots within the area of closure, all of which are potentialhydrocarbons indicators. The new seismic also contains strong indications of thepresence of reservoir units in the area. CSEMThe CSEM data clearly shows resistors within the structure. On both the linesacquired over Ernest, a discreet resistive body is observed within the bounds ofthe 4 way closure. That resistor, in the opinion of the Company, when combinedwith the new seismic data, is suggestive of the presence of a hydrocarbonaccumulation trapped within the structure. Combining all the data and using fairly conservative assumptions leads us tobelieve that Ernest, as mapped to the less risky four way closure, could containapproximately 312 million barrels of oil, of which approximately 100 millioncould be recoverable. At the time of the admission to AIM, Scott Pickford independently risked theprospect at a chance of success of 19.4%. From that point and following theinterpretation of the 2D and CSEM data, we now believe that the chance ofsuccess has increased to over 40%, with the main remaining risk being reservoirquality. This reduction in risk, combined with a higher oil price environment,has hugely increased the EMV (Expected Monetary Value) of the prospect. At the time of the admission to AIM, Scott Pickford built an economic model forthe prospect. Using that model, the NPV of a 107 million barrel recoverablefield at an oil price of $50 per barrel is over $1,000 million, should the oilprice fall to $30 per barrel, the NPV would fall to $323 million. The prospect is now ready to drill. As a result, we have upgraded its status andnamed it Ernest. The prospect is named both after the son of Director RichardVisick who was born in the run up to the AIM admission, and after ExplorerErnest Shackleton, who had a strong connection to the Falkland Islands. Lead K 2DThe 2D seismic confirms the presence of a number of relatively shallow rolloverleads in the area of target K. More seismic is required to further define theextent of the structures in the area. CSEMThe CSEM resistivity data show a resistive body which appears to be coincidentwith a structural closure. However, it is not the original structure targeted inthe survey, but a flanking structure to the north east. This is an interestingand encouraging result and further investigation is required in the area. 2D seismic - other areas2D seismic was also acquired over a broad area in the south of licences PL023and PL024. Interpretation of these data is continuing and is allowing Rockhopperto focus its future exploration efforts in the most prospective parts of theselicences. New 3D seismic acquisition programmeOur 3D seismic programme with CGG Marine in licences PL032 and PL033 will nowbegin at the end of October, some 2 months earlier than anticipated. This willaccelerate our work programme and could lead us to have a number of additionaldrillable targets by the middle of 2007. At that point, we will be ready to joinany drilling programme in the Falkland Islands subject to funding. Images of the co-rendered 2D and CSEM data over Ernest and K will be placed onthe Rockhopper website: www.rockhopperexploration.co.uk. NB: This statement has been approved by the Company's geological staff whoinclude Keith Williams (Exploration Director), who is a Member of The EuropeanAssociation of Geoscientists & Engineers (EAGE) with over 30 years of experiencein petroleum exploration and management, for the purpose of the Guidance Notefor Mining, Oil and Gas Companies issued by the London Stock Exchange in respectof AIM companies, which outline standards of disclosure for mineral projects. For further information, please contact: Rockhopper Exploration plc www.rockhopperexploration.co.ukSam Moody - Managing Director 01722 414 419 Aquila Financial Ltd www.aquila-financial.comPeter Reilly 020 7202 2601Ross Bethell 020 7202 2603 Notes to editors www.rockhopperexploration.co.uk The Rockhopper Group started trading in February 2004 to invest in and carry outan offshore oil exploration programme to the north of the Falkland Islands. TheGroup, floated on AIM (RKH) in August 2005, is currently the largest licenceholder in the North Falkland Basin and has a 100 per cent. interest in fouroffshore production licences which cover approximately 5,800 sq. km. Theselicences have been granted by the Falkland Islands government. Background Rockhopper contracted Offshore Hydrocarbon Mapping plc in January 2006 toconduct two CSEM surveys over its acreage in the North Falkland Basin duringJanuary and February 2006. The surveys covered targets Ernest (formerly known asJ1) and lead K. Those areas were also the subject of a new 2D seismic survey,acquired during January and February 2006. Both targets (Ernest and K) are located in relatively shallow water of less than200m in licences PL023 and PL024, an undrilled part of the North Falkland Basinnear the Islands representing an independent play type from those plays andtargets in the more northern part of the basin. The targets are both relativelyshallow and this, combined with the shallow water depth, would make any wellsdrilled relatively quick and inexpensive should a rig be drilling in the area. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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