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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (919)	2/8/1999 7:39:00 AM
From: Tomas	Read Replies (1) \| Respond to of 2742

The Falklands: Exploratory drilling update, February 7 By J. Brock, Falkland Islands News Network (this is an addition to the February 2 article) From what both Phyll Rendell (Director of the Mineral Resources Department) indicated, and what Dr. Phil Richards of British Geological Survey has said, the timing of the exploration round in the North Falklands Basin was spot on. The oil industry fluctuates between periods of boom and bust and during the time when oil prices are at their lowest point in decades is not an ideal one for exploratory drilling. Indeed during recession in the industry the exploratory budgets of oil companies are amongst the first casualties. All is not lost, however. Data from the six wells drilled in the North Falklands Basin is most encouraging and while hydrocarbons in commercial quantities was not found, geological systems have been identified and hydrocarbons in non commercial quantities have been found within the very short span of five months and only six exploratory wells. Data taken from all of the wells will take months and months to analyse. If a prospecting consortia find hydrocarbons and decide to drill a second well, the wait will be up to two years, at least before the data is worked through enough to warrant optimum placement of the rig. Drilling a second exploratory well after a "Quick Look Analysis" of the data is a recipe for financial disaster in that holes cost somewhere in the region of $15 to £20 Million each and any prudent operator will want to be sure he has worked through the data before placement of a rig for drilling. This is one reason why FINN did not jump on the speculative band wagon when Shell decided to drill their second exploratory well in the North Falklands Basin. Even if a huge strike had been found, the companies would go away not only to work the data but also to plan strategies that would optimise any future effort in the area. As it is, we planned for five wells, could have drilled ten, and finished off by drilling six exploratory wells. With two good hydrocarbon systems identified, the prospectors will be back when the oil prices rise. The industry has been through these cycles before and rest assured, the price will rise. sartma.com