A UK exploration company currently drilling off the Falkland Islands has said it has discovered oil.
Rockhopper Exploration, which is one of four junior exploration companies looking for oil in the area, said that its Sea Lion prospect has been drilled to a depth of almost 3,000 metres, with initial data showing that the well is an oil discovery.
The find would be the first in North Falkland Basin, the area currently being explored. Rockhopper said it will now carry out further tests on the well, which is located approximately 220 kilometres north of the islands.
Shares in Rockhopper soared 138 per cent after news of the discovery, which was made after 20 days of drilling through rock and sand.
The company said it had encountered a 53 metre-thick deposit of oil distributed in several layers, the largest of which was 25 metres thick.
Analysts have suggested that the find could amount to 200 million barrels of oilÔÇöworth around ┬ú17 billion at current prices.
Sea Lion is one of two blocks which Rockhopper has permission to explore. Later this year, it will drill its Ernest prospect, which is of a similar size.
Commenting on the discovery, Samuel Moody, managing director of Rockhopper, said: ÔÇ£We are extremely excited by the results of this well. While we are presently acquiring additional data, current indications are that we have made the first oil discovery in the North Falkland Basin.
ÔÇ£We will now focus on analysing in more detail the data gathered from the well, in addition to continuing preparations for the drilling of our Ernest prospect later in the year.ÔÇØ
The discovery was made using the Ocean Guardian, a 14,400-tonne rig that was towed 13,000 kilometres from Scotland last autumn, a journey which took six months. The Ocean Guardian is set to drill another four wells around the Falklands over the next few months.
Once Rockhopper has completed its testing in about two weeks, the rig will be moved to the east of the islands, to a project known as Toroa, where Falkland Oil and Gas will begin its exploration programme.
Toroa is previously unexplored, with Falkland Oil and Gas citing seismic data that points towards potential reserves of up to 1.7 billion barrels.
As well as the Sea Lion prospect, Rockhopper has a 7.5 per cent interest in the Liz prospect, a site 50 kilometres to the east of where it is now drilling. Desire Petroleum holds the majority interest in the prospect.
The presence of oil in the Falklands could dramatically improve the UK's tax income from drilling, which is falling as North Sea reserves dwindle. However, exploration of the area is controversial, as Argentina still claims sovereignty over the islands and the surrounding waters.
