Falkland news drives up oil firms' shares

TWO UK exploration companies hunting for oil around the Falklands Islands saw their share prices rise sharply yesterday after positive updates.

Rockhopper Exploration said it had increased its estimates of the reserves at its Sea Lion discovery to between 608 million and 1.27 billion barrels, compared to a previous figure of around 500 million barrels.

Chief executive Sam Moody said he was "highly encouraged" by the latest seismic data and that the company believed there were other promising areas for exploration close to Sea Lion.

Last week, shares in the company had increased by more than a third after it confirmed it would be commercially viable to produce oil from the discovery.

Desire Petroleum also yesterday saw its market value rise on the back of the announcement which raised hopes for a prospect close to Sea Lion, which it jointly owns with Rockhopper. Although Desire welcomed the news, it stressed it had yet to assess the seismic data itself.

Shares in Rockhopper closed up 19.25p, or 8.8 per cent, at 237p while Desire rose 2.25p, or 13.2 per cent, to 19.25p.

Meanwhile, shares in Aberdeen-based Faroe Petroleum also saw strong gains after the firm said that drilling was now under way on the Butch prospect in the Norwegian North Sea.

Faroe holds a 15 per cent stake in the well which chief executive Graham Stewart said "offers an exciting opportunity to test a good prospect". Shares closed up 14p, or 10.3 per cent, at 150p.