The Zebedee well is on License PL004b and according to todays set of press releases on the matter, all seven of the reservoir targets at the well were encountered and three of the targets were oil bearing. Initial data shows that the wells encountered 18.5 metres of net gas pay, and 27.9 metres of net oil pay.
Premier holds a 36% stake in the Zebedee well, Rockhopper holds 40% and Falkland owns 25%.
Broken down the three oil bearing targets were as follow. TheHector sand target showed a net gas pay of 18.5 metres but no oil. The Zebedee sand, which was theprincipal target of the well, provided a net oil pay of 25.3 metres. According to Premier and the companys partners, the reservoir quality oil this target was amongst the best encountered to date. Finally, the third target,F2 sandprovided a net oil pay of 2.6 metres.
Following these successful results, the Zebedee well will now be plugged and abandoned as a successful well. The Eirik Raude rig is now moving todrill the first exploration test on the Elaine/Isobel fan complex in the southern part of the North Falkland Basin. Initial results from the Isobel well are expected during April.
Unfortunately, the market isnt impressed with these well results. All three companies have seen their share prices move lower after opening up by a high double-digit percentage this morning.
And investors are right to remain cautious. Even though these well results were impressive, the economics of the prospects remain in doubt as the price of oil shows no signs of recovering any time soon. Additionally, these prospects will take time to develop and theres plenty that could go wrong between now and initial production.
Still, the share price performance of these companies shouldnt detract from the fact that the results from the Zebedee prospect are excellent. Rockhopper had previously stated that the chances of success at the Zebedee well were between 9% and 52%. With that being to case, todays news is a huge relief for the company and its investors.
These results alsoadd significantly to theproven hydrocarbon resources of licence PL004b and the greater Sea Lion area. Further, as Rockhopper, Falkland and Premier are all fully funded, theres no near-term liquidity risk.
So, while the marketsreaction to todays the news might be disappointing, the well results have only served to improve the long-term prospects of Rockhopper, Falkland and Premier.
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