Premier Oil shares jump despite cancelled contract in the Falklands

Jessica Morris
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The contract was agreed in June 2014 (Source: Getty)

Premier Oil and Rockhopper Exploration today announced the early termination of a drilling contract in the Falklands.

The companies said their contract for the Eirik Raude rig was terminated with immediate effect yesterday, due to operational issues.

"As a result, Premier will no longer be drilling the Chatham exploration well during the current campaign" it said in a statement to the London Stock Exchange this morning.

"However, we are in discussions with the Falkland Islands government regarding the possibility of drilling this prospect in the future."

But shares in the the FTSE 250-listed Premier Oil still rose as much as 7.56 per cent to 32p this morning. Meanwhile, Rockhopper Exploration fell 8.53 per cent to 24.92p.

Chatham was the final well in the Premier Oil and Rockhopper current exploration drilling campaign in the Falkland Islands, which was initially entered into by the companies in 2014.

"Premier Oil has terminated early the contract for the Eirik Raude drilling unit. This means the Chatham well will not be drilled as part of the current Falklands campaign, which is disappointing," analysts at Liberum said.

"However, the resources added at the Zebedee location along with the potentially significant discoveries in the Isobel/Elaine area, mean that this has been a hugely successful drilling campaign."

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