The Falkland Islands are located in the South Atlantic, approximately 500 km from the mainland of South America. The Islands have a population of about 2,400 with an economy based on sheep ranching and fishing industries.
Borders & Southern holds a 100% equity interest and operatorship in five Production Licences covering an area of nearly 20,000 sq km in the South Falkland Basin. The acreage is located approximately 150 km south-east of the Islands. The Production Licences, with an effective date of 1st November 2004, provide exclusive rights for surveying, drilling and production within the specified area.
The fiscal regime operating in the Falkland Islands is a Tax and Royalty system. There is a variable acreage rental, a 9% royalty on production and 25% corporation tax on profits.
The South Falkland Basin is unexplored. However, the stratigraphy in Borders & Southern’s acreage is expected to be similar to the adjacent Magallanes and Malvinas sub-basins located to the west of the Falkland Islands, where working petroleum systems are proven. It is also anticipated to be similar to geology recorded in DSDP wells 511 and 330 drilled to the east of the Falkland Islands in the Falklands Plateau sub-basin.
This regional geological data provides a high degree of confidence on the occurrence of a good oil prone source rock. Late Jurassic to Aptian organic rich shales have been documented to be present both to the east and west of Borders & Southern’s acreage along with locations off the coast of South Africa and the Antarctic peninsula. This indicates that the source rock is regionally extensive and therefore likely to be present within the Company’s licensed area.
Borders & Southern’s objective is to test the hydrocarbon potential of the North Scotian Fold Belt which marks the southern edge of the Falkland Plateau sub-basin. This east – west trending fold belt contains numerous leads, comprising simple folds and thrust related structures. Reservoirs are anticipated within the Tertiary, Upper and Lower Cretaceous. The Company plans to acquire over 2500 km of 2D seismic to further define prospectivity.
Fold belts often provide prolific hydrocarbon provinces due the number of large, simple, anticlinal structures. Providing there are good reservoir rocks and working source systems then significant discoveries can been found. Examples of giant discoveries include El Furrial (Venezuela), Cusiana (Colombia) and the San Martin / Cashiriari structures in Puru.
Prior to Borders & Southern’s 2D seismic programme there had been only a limited assessment of the fold belt trend due to the lack of data. The Company acquired 2862 km of new 2D seismic data in May 2005 and commenced a detailed technical analysis. The results demonstrated that a major structural fairway existed, comprising large 3 and 4 way dip closed structures and tilted fault blocks. Seven leads have been mapped that exceed 50 sq km in size, with one structure over 130 sq km. Many of these structures display the potential for stacked reservoir sands.
