The company had hoped to complete a Competent Persons Report (CPR) by the end of 2010, but due to a lack of data the report is now expected in the second half of 2010.
Rockhopper told investors that new data is required as a CPR based on the data gathered so far, would cut both the existing oil in place and contingent resources reported in a ‘volumetric’ update in June.
“This would not reflect the board's view of the prospectivity of Sea Lion,” Rockhopper stated.
“The Board is comfortable with the existing range of contingent resources as contained in the preliminary volumetric update.”
Rockhopper is now preparing new work programmes to gather enough data for the new CPR.
Crucially it is discussing a new drilling contract with Diamond Offshore Drilling to keep the Ocean Guardian rig in the Falklands for at least three more wells.
The company will also have options to extend the contract for further five wells.
Also new 3D seismic programme is being planned. The seismic work is slated for January 2011, subject to contacting.
Rockhopper said it is evaluating its funding options for the new work programmes. A fundraising may include an equity issue.
After a sharp fall in opening trading on London’s AIM market, Rockhopper shares have bounced somewhat and were last trading at 384p, down 16.5%.
In this morning’s Fox-Davies ‘Daily Monitor’ the analyst highlighted that whilst the news is likely to un-nerve the market it intends to hold firm with previous guidance. "We would see it as short-term jitter and see no reason to change our forecasts,” Fox-Davies said.
Similarly Westhouse Securities oil and gas analyst David Hart acknowledged the "significant adverse impact" of today's news, but remained positive in his overall outlook.
“We believe this is overdone ... there remains significant upside associated with Sea Lion, which will be unlocked following additional work”.
“For now, assuming a more conservative resource estimate of 170mbbl for Sea Lion, we have reduced our target price to 495p but retained our BUY recommendation.”
The high profile Falklands oil story has featured a number of peaks and troughs, with the initial challenges in getting a rig to the remote location, mixed results from initial drilling and a number of technical hiccups.
However just a glimpse at the charts for AIM’s North Falkland explorers quickly tell their own story.
The high level of investor interest and buoyant share prices have been driven by Rockhopper’s Sea Lion discovery back in May.
Since the discovery Rockhopper shares have risen from just 35p to hit a new high of 549p in September.
Rockhopper’s peers Desire Petroleum (LON:DES) and Argos Resources (LON:ARG) have also performed well in the market.
Desire is currently drilling the Rachel exploration well in the North Falkland basin, and it had mixed success with earlier joint venture drilling alongside Rockhopper. Since May the shares have advanced from 39p to reach 170p earlier this month.
Argos joined the AIM market in July, bringing its earlier stage assets near Rockhopper’s Sea Lion to investor’s attention. With the growing profile of the Falklands play the Argos share price has risen particularly strongly.
After floating at 31p in July it more than doubled to hit 71p in September. This morning Argos was last trading at 51.5p per share.