Falkland Oil and Gas (LON:FOGL) unveiled plans to survey prospects across its acreage before its next phase of drilling in the South Atlantic.
The company is exploring the South Basin, a separate area of the Falklands Islands from the oil juniors that have been grabbing the headlines in recent months - Rockhopper Exploration (LON:RKH), Desire Petroleum (LON:DES) and Argos Resources (LON:ARG).
FOGL was sent back to the drawing board after its unsuccessful first well, Toroa, failed to find hydrocarbons in July 2010.
This morning the company gave the reasons behind the first well’s failure.
It stressed that after full analysis of Toroa it believes that there is no negative impact on the plays and prospects in the deepwater area of its licenses.
"The Toroa exploration well was the first well in a previously undrilled frontier basin and although the outcome was disappointing the full analysis of the data has provided encouragement,” chief executive Tim Bushell said.
“The mid Cretaceous and Tertiary plays are entirely unaffected by the result and we are pursuing these in 2011.”
FOGL’s major partner BHP Billiton (LON:BLT, ASX:BHP) dropped its 51 percent stake in the FOGL's southern licenses shortly after the Toroa result and now the junior explorer retains a 100 percent interest. BHP does however still own a 51 percent interest in the northern licenses.
The partners have recently begun negotiations to secure a deep-water rig - to drill the Loligo prospect.
In its wholly-owned southern licenses, FOGL plans to start a site survey programme shortly and it may add a 1,300 kilometre 2D seismic survey to help it define prospects and select future drilling locations.
It said the vessel is already on its way to the Falklands and the survey is expected to begin in late February 2011.
Several separate prospects will be surveyed initially, including Vinson - a Tertiary channel play - and another prospect in the mid Cretaceous fan play. It is also considering two other prospects, which are similar to Borders & Southern’s (LON:BORS) 2011 drill targets nearby.
The data gathered from the site surveys will be used as part of an environmental impact statement (EIS), which will be submitted to the Falkland Islands Government this year as FOGL applies for drilling approval.
Reflecting on the Toroa results FOGL revealed that its post-drill analysis suggests that Toroa had no lateral seal to trap migrating hydrocarbons - this was one of the major pre-drill risks.
“The main risk prior to drilling was integrity of the trap”, the company said.
“In order for hydrocarbons to be trapped in Toroa an effective side seal was required. Such a seal is created by sands passing laterally into sealing shales and is referred to as a stratigraphic trapping mechanism.
“There are many giant fields (greater than 500 million barrels) that rely on such stratigraphic seals.”
FOGL concedes that it thought the target contained hydrocarbon filled sands, this was the result of a ‘false positive’ in its pre-drill analysis.