Borders find boosts Falklands oil prospects

LONDON | Thu Aug 23, 2012 3:38pm BST

LONDON (Reuters) - British oil explorer Borders & Southern (BSTH.L) reported positive results from the latest tests at its well off the coast of the disputed Falkland islands, increasing the possibility of a second commercial oil and gas discovery there.

Borders is leading efforts to find oil off the south coast of the remote islands. Exploration in the region by British companies has inflamed tension with Argentina, which claims sovereignty over the islands it knows as the Malvinas, losing a war to Britain over them in 1982.

The explorer said on Thursday that the initial yield from gas condensate samples taken at its well in the South Falkland basin varied from 123 to 140 standard barrels per million cubic feet, more than what analysts said was needed for the find to have commercial potential.

Gas condensate is a liquid which often trades at a premium to crude oil.

"It looks good. It definitely looks good...What (the numbers) mean is that essentially this is a commercial discovery, the first in the South Falkland basin," said Numis analyst Sanjeev Bahl.

"There's potentially more adjacent discoveries to be made, because it's not going to be the only large condensate discovery in the South Falkland basin," he added.

Britain's Rockhopper (RKH.L) found oil north of the islands in 2010.

Borders chalked up an initial success in April, when it found gas condensate at its first well, but disappointed with a dry well last month.

It said on Thursday that following the positive results it would drill to confirm resource estimates and establish a commercial development, and carry out further exploration drilling.

It would look to bring in partners to help fund that next phase, it said.

Argentina has made a number of moves to make life difficult for British oil explorers, most recently saying it will take legal action against them.

The sticky political situation is likely to put some oil majors getting involved, but Borders will hope it can follow Rockhopper, which secured a $1 billion deal with Premier Oil (PMO.L) last month to help it develop the oil it had found.

Shares in Borders, which lost two-thirds of their value after July's dry well, began to recover some of those losses to stand at 27.8 pence at 0324 P.M., up 36.6 percent on the day.

(Reporting by Rosalba O'Brien and Sarah Young; Editing by Erica Billingham)

Source: http://uk.reuters.com/article/2012/08/23/uk-bordersandsouthern-falklands-idUKBRE87M0KI20120823?feedType=RSS&feedName=businessNews

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