Rockhopper Exploration, the oil explorer focused on the Falklands Islands, has more than doubled its oil estimates on its Sea Lion well to as much as 1.2bn barrels.
Using data from seismic tests and recent appraisal wells Rockhopper said it believed the Sea Lion prospect now held between 608m and 1.2bn barrels of oil, with a mid-range estimate of 1bn barrels.
Sam Moody, chief executive, said he was “highly encouraged” by the results, which give a significant boost to the commercial viability of producing oil from the region.
Rockhopper estimates it could deliver some 434m barrels from Sea Lion, assuming a 40 per cent recovery rate, up from a previous estimate of about 155m barrels.
Richard Rose, an analyst at Oriel Securities, said the revision made Sea Lion an attractive prospect for a partner, which would be needed to shoulder what would be significant development costs.
“The numbers today make it commercially attractive for a third party to come in and start developing oil there,” he said.
Rockhopper, which is expected to drill an additional three appraisal wells in Sea Lion this year, said a “10 per cent additional volume” of oil could be contained within a neighbouring licence majority owned by Aim-quoted Desire Petroleum.
The revision, which has yet to be independently measured by a third party, is a further fillip for Rockhopper whose shares have rebounded strongly amid equity market volatility in resources after positive drilling results earlier this month.
Oil companies have estimated that there could be several billion barrels of oil in the Falklands, although results to date have been mixed.
In April shares in Desire slumped by almost two-thirds when it announced it would plug and abandon its Ninky well, the most recent in a string of dud wells.
Last October Rockhopper shares fell nearly 20 per cent in a day after the company revised its reserve estimates down from 230m to 170m barrels at Sea Lion.
In 2009 four London-listed oil companies operating in the Falklands – Rockhopper, Desire, Falkland Oil & Gas and Borders & Southern – raised £250m from investors to sail a floating drilling rig from Scotland to the Falklands to drill for oil there for the first time since 1998.
The recent drilling campaign in the waters off the contested islands has been attacked by Argentina – which went to war with Britain over the islands in 1982 – as a violation of its sovereignty. Argentina has accused Britain of refusing to abide by UN resolutions calling for both sides to negotiate over their sovereignty claims to the islands which it calls Las Malvinas.
Rockhopper shares rose 19.2p to 237p, while shares in Desire increased 2.2p to 19.2p.
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