INTERVIEW - Swedish Sodra optimistic on Falklands oil
By Michael Rank
LONDON, April 16 (Reuters) - Swedish company Sodra Petroleum AB believes it has a one in eight chance of striking oil off the Falkland Islands, where it is to start drilling later this year, managing director Magnus Nordin said on Thursday.
Sodra is 100 percent owned by Lundin Oil AB (LOILb.ST) and is planning to float on London's Alternative Investment Market (AIM) by July.
Recognising the risk involved, the Sodra shares can be converted back into new shares in Lundin. Investors will get their money back even if no oil is found off the Falklands if the parent company achieves 90.50 crowns per share by the time of the conversion in the year 2001. Lundin is currently priced at about 42 crowns per share on the Stockholm stock exchange.
Nordin said Sodra will be the fourth company to drill off the Falklands once drilling starts this month or next. The Borgny Dolphin rig is due arrive north of the Falklands in the next few days.
''We are quite confident that if any of the four wells to be drilled over the next six months encounter oil shows, then it's just a matter of time before a large commercial discovery is made,'' Nordin told Reuters in an interview. Lundin has a 100 percent exploration licence in tranche F off the Falklands and plans to start drilling in October.
''We do have so-called bright spots on our seismic (data) which is frequently an indication of the presence of hydrocarbons, but before a well is drilled we are all a bit in the dark,'' Nordin added.
His company needed to find at least 200 million barrels of oil for a find off the Falklands to be commercial, he said. He described the area in the south Atlantic as ''high risk, high reward'' and said the Falklands have a ''very good fiscal regime.'' The Falklands Basin, 100 to 250 km off the islands in water depths of 150 to 500 metres, is one of the world's few undrilled sedimentary basins.
Nordin said Lundin was in a strong position because tranche F is in the middle of the 12,800 square km of the North Falklands Basin opened up to oil exploration.
Seven tranches, equivalent to 48 U.K. North Sea blocks, have been licensed for exploration. Operators in the other tranches are Amerada Hess Ltd (AHC - news; tranche A), Royal Dutch/Shell (RD.AS) (quote from Yahoo! UK & Ireland: SHEL.L; tranche B), Lasmo Plc (quote from Yahoo! UK & Ireland: LSMR.L; tranches C and D) and Desire Petroleum Plc (tranches I and L).
Desire, which is also a partner with Lasmo in tranches C and D, floated in London last week, raising 14.4 million pounds and valuing the company at 59.2 million pounds.
"The response that Desire has received has been most encouraging for us," Nordin said.
Lundin Oil, which currently produces oil and gas in the British sector of the North Sea and oil in Malaysia, was formed through the recent merger of Swedish company Sands Petroleum and Canadian firm International Petroleum Corp.
Lundin last week announced the discovery of about 84 million barrels of oil (64.3 million net to Lundin) in the En Naga North field in Libya, which almost doubles the company's oil and condensate reserves.
The Falklands are a British colony claimed by Argentina. The two countries went to war over the Falklands in 1982 after Argentine forces invaded the islands.
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