This was a very badly kept secret – at last Arcadia Petroleum has Falkland Islands government approval to farm into North Falklands Basin Tranches C and I.
The administration in Port Stanley has also granted Desire and Arcadia new acreage adjacent to Desire’s existing stakeholding in Tranche I in the north.
Under the terms of the farm-out, Arcadia will drill and test the Ann prospect, paying 85% of the costs to earn a 35% interest in a sub-area of Tranche C covering the Ann and Orca South prospects.
Rockhopper Exploration, as part of a larger arrangement, will be funding the remaining 15% of the Ann well costs to earn a 7.5% interest in Tranches C and D.
The end result is that Desire will have a 57.5% interest in the Ann prospect, for which the potentially recoverable reserves are 200million barrels of oil. Desire puts the chances of making a hydrocarbons discovery at 50%, having reinforced its case with an AVO survey.
In a nutshell, AVO is a way of high-grading bright spots on seismic sections and of finding subtle anomalies. It stands for Amplitude Versus Offset. AVO can help to answer the question of whether that amplitude anomaly is due to gas or tight carbonate cement, or coal, or salt, and so forth.
Arcadia will also drill and test a major new prospect named Alpha, paying 100% of the costs to earn 50% in block 25/10 and part of block 25/15. This prospect also extends into the newly awarded blocks 25/8, 25/9 and 25/14b, where Arcadia has an 80% interest and Desire 20%.
Based on current mapping, Desire has calculated that it has about a 30% interest in the total Alpha prospect.
Alpha is described by Desire as a large, well defined structural closure covering an area of more than 300sq km.
It is associated with a very strong AVO anomaly which, in addition to significantly de-risking the prospect, suggests that the reservoir is gas-charged.
The company’s mid-estimate for the potential recoverable reserves for Alpha is 7.8trillion cu ft of gas, with 15TCF as a possibility.
These volumes are considered more than adequate for a commercial gas development in the event of a discovery.
This prospect represents an exciting new major exploration play in the North Falkland Basin.
Besides drilling two wells, Arcadia will also pay the associated mobilisation and demobilisation costs. Further, Desire has undertaken to drill two wells for its own account.
Desire’s chairman, Stephen Phipps, said in a statement: “The majority of the prospects in the Desire inventory are still held 100% by Desire, and with the funds currently available and at current rig rates, we are able to drill two of these for our own account.
“With our new partner on board, we are now in a far stronger position to pursue actively all available rig opportunities for drilling our prospects.”