REFILE-UPDATE 3-Rockhopper ups estimates for Falklands well

(Corrects spelling of Buenos Aires in second paragraph)

* Best estimate for recoverable reserves 242 mln barrels

* Says further upgrades possible

* Shares jump as much as 52 percent

(Adds detail on sovereignty; updates shares)

By Victoria Bryan

LONDON, June 4 (BestGrowthStock) – British oil explorer Rockhopper
(RKH.L: ) upped its estimates for the closely watched Sea Lion oil
find in the Falkland Islands and said further upgrades were
possible, sending its shares soaring.

The Sea Lion well is the first oil find of an exploration
programme in the Falklands and has sparked protests from
Argentina, which almost 30 years ago fought a war with the
United Kingdom over sovereignty of the British-governed islands,
called the Malvinas by Buenos Aires. [ID:nLDE64C1CY]

“Our analysis of the data from the Sea Lion well suggests
that there is significant potential upside on our acreage,”
Rockhopper said in a statement on Friday.

Shares in Rockhopper, which takes its name from a breed of
penguins found in the Falklands, jumped as much as 52 percent in
early trading and were up 35 percent at 326 pence at 1042 GMT.

Other Falklands-based explorers Desire Petroleum (DES.L: ),
Falkland Oil & Gas (FOGL.L: ) and Borders & Southern (BSTH.L: )
gained between 10 and 26 percent.

Interest in the drilling campaign is high, not least because
it may renew tensions between Britain and Argentina, and the
share price fluctuations of the companies involved attest to the
high risk/reward ratio involved in investing in small cap oil
explorers.

Rockhopper shares have multiplied in value more than 5
times over the last month but plunged almost 60 percent earlier
this week on fears the oil quality would not be as high as
expected.

It means that investors buying the shares at their lowest
point of 110 pence on Wednesday could have more than tripled
their money on the back of Friday’s news.

Shares in Desire Petroleum have veered from 53 pence last
September to 133 pence once it started drilling and then down to
below 40 pence after its first well turned out to be of poor
quality.

Rockhopper said on Friday samples analysed confirmed the oil
at Sea Lion was of medium-grade quality and even at the low case
estimates, the prospect would be commercial down to an oil price
of $50 a barrel.

While commercial production could lead to an economic boom
for the remote British territory, which is home to about 3,000
people, environmental concerns will no doubt be raised,
especially after the disastrous BP (BP.L: ) oil spill in the Gulf
of Mexico. [ID:nN0444097] [ID:nN17257558]

Rockhopper said that pressure data indicated the existence
of two separate oil columns and that the oil level goes down to
116 metres below the lowest previous mapped point of the Sea
Lion fan.

According to RPS Energy, the best estimate for recoverable
reserves is now 242 million barrels, compared with a previous
estimate from last April of 170 million.

Oriel Securities analyst Richard Rose said he now valued the
Sea Lion prospect at 750 to 800 pence per share, but highlighted
Rockhopper would need to raise more funds for flow testing.

“There was no specific guidance on the other prospectivity
on Rockhopper’s blocks although the Sea Lion result has clearly
derisked the potential of the northern acreage in the North
Falklands Basin where the company has several prospects,” he
added.

Rockhopper said it would seek to test Sea Lion well 14/10-02
as soon as possible, as well as to start drilling the high-risk
Ernest prospect.

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(Editing by Rhys Jones, Michael Shields and Karen Foster)
($1=.6783 Pound)

REFILE-UPDATE 3-Rockhopper ups estimates for Falklands well