Faroe Petroleum saw its shares jump more than 40% at one stage yesterday after investors welcomed a second potentially large gas discovery in the Breagh area of the southern North Sea.
The Aberdeen oil and gas company and its co-venturers reported success with a pilot well and subsequent horizontal well on the promising West Breagh prospect.
Graham Stewart, chief executive of Faroe, said the prospect plus nearby East Breagh could lead to one of the largest gas developments in the UK North Sea for years.
Mr Stewart said it had been talked of by some of the partnership involved as potentially having 1trillion cubic feet of gas (more than 160million barrels of oil equivalent) in place, of which typically 60-90% could be recovered, but added that operator Sterling Resources had not yet said this.
He said: “We are very pleased to report the successful drilling of this horizontal well, a first for operator Sterling Resources, which has confirmed the presence of significant sands.
“The Breagh gas field has been a great success for the partnership, having proved up substantial resources on both West Breagh and East Breagh.
“We now look forward to providing a further update on the results of the well test programme, which are expected to be available by the end of January.”
Faroe said the 42/13-5 pilot well was drilled from the same location as the 42/13-3 vertical appraisal well drilled in 2007, which tested at rates up to 17.6million cu ft per day. The latest well encountered 165ft of gas-bearing sands.
It also said the horizontal well 42/13-5z had confirmed about 1,200ft of gas-bearing sands and the well was now being prepared for flow testing. It will then be suspended as a potential development well.
Alan Booth, chief executive of EnCore Oil, a partner in Breagh, said: “We are very pleased with the progress made so far on this well.
“It has confirmed the ability to successfully drill a horizontal well within the Breagh reservoir and testing should establish the reservoir performance from a horizontal well. This will give the partnership a better understanding of development options, production profiles and recoverability.”
Partners in the licence in which the Breagh finds are located are operator Sterling Resources (45%), EnCore (15%), RegEnergys (15%), Faroe (10%), Stratic (10%) and Petro Ventures (5%).
Faroe’s shares lost some of the ground gained in early trading yesterday, but still closed up 29.6% at 72.25p.