Institutional investors are backing a decision by technology-savvy oil company Rocksource to drill the “low-risk” Cheval North prospect offshore Senegal in West Africa.

Rocksource shares were up nearly five percent on news the company would be drilling and that the prospect count was rising in an area where some 1.7 million barrels of oil equivalent are said to lie in wait.

Oslo-based Rocksource will drill to satisfy the terms of a production-sharing deal that earns a 15 percent and then a 25 percent stake on successive wells paid into. The company will inject $12.5 million to be part of Cheval drilling in 2010.

Cheval North is “Phase 2” of a campaign to drill in the deepwater off Senegal. Rocksource and its institutional investors will spread the risk with oil company partner Ophir Energy, itself mostly owned by Black economic-empowement investment fund, Mvelaphanda Holdings of South Africa.

Estimates put Cheval North reserves at 429 MMboe, and Rocksource said Monday the chances of success are 50 percent for this “low-risk” well. A nearby prospect could add 200 million barrels.

The company’s controlled-source electromagnetic data testing has interpreted four new prospects in the production-sharing contract, giving the PSC 16 total.

“Robust and significant resistivity anomalies" have been interpreted "to be likely caused by hydrocarbons,” a statement said, adding, “These (electromagnetic) positive prospects represent potential resources of 942 MM boe.

Tags: Rocksource ASA