Rockhopper withdraws from ‘dry’ Hagar Qim well

Oil exploration firm Rockhopper has informed the Maltese government that it will be withdrawing from the Area 4 licence it took over from Mediterranean Oil and Gas on 18 January 2015.

The decision follows results from the Hagar Qim well drilled in mid-2014, but elsewhere in Area 3 the processing of a 2D broadband survey is nearing completion. Its interpretation will enable a decision on whether an extension to the Exploration Study Agreement with a 3D survey commitment will be made.

Although based in the Falklands, in August Rockhopper completed the acquisition of Mediterranean Oil & Gas plc, acquiring a portfolio of production and exploration interests in Italy, Malta and France.

Malta’s most anticipated oil prospects in 20 years fizzled out as quickly as they had started: weeks before plugging the Hagar Qim well in June, oil exploratory firm Mediterranean Oil & Gas (MOG) sold its shares to the Falklands oil firm for €37 million, at a premium of 31.1% over its average share price.

The acquisition of MOG provided Rockhopper with a low cost entry into the Mediterranean apart from gas facilities both onshore and offshore Italy.

The Hagar Qim well was proved a dry hole by the time that MOG spudded a well and sold off to Rockhopper.

The company ascribed “no value” to the well upon acquiring MOG for €37 million in May this year. The other licensee in the Hagar Qim well – Genel – proceeded with drilling the well.

For Rockhopper, acquiring MOG would give it “access to better exploration assets such as the Monte Grosso exploration prospect in the southern Apennines region of Italy” and new prospects in offshore Montenegro.

“The ‘no value’ given by Rockhopper Exploration was not related to the petroleum prospects of the area. The fact that Rockhopper is interested in exploration offshore Malta is a good sign which should be encouraged,” a spokesperson for transport minister Joe Mizzi said earlier this year.

Over €8 million was spent just in data collection by MOG before Tony Hayward’s Genel was brought in with a 75% share in the licence for Hagar Qim in 2013.

In March 2014, Hayward estimated a 20% chance of success of Hagar Qim.  “Frontier oil exploration always carries a high risk,” minister Joe Mizzi’s spokesperson told MaltaToday. “Phoenicia Energy and Melita Exploration invested large sums of money for this exploration well and such an investment would not have been made if their technical and economic evaluation was not promising.”

Two companies have visited Malta since the government participated in the annual European Association of Geoscientists and Engineers conference in June, to view oil exploration data. The government also signed an agreement with TGS for seismic data reprocessing, to provide oil companies with better information to evaluate the offshore acreage.