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Falkland Oil and Gas - 2012 - its over for now

Sunday, Jan 01 2012 by
11

 

Falkland Oil and Gas Limited

EPIC : FOGL

 Shares in Issue : 320 million

Web Site : http://www.fogl.com/fogl/en/home

 


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Falkland oil and Gas Limited (FOGL) is an oil and gas exploration company operating in the South and East Falkland Basins. The Company’s operations are focused on oil and gas exploration activities in the Falkland Islands. The principal subsidiary of the Company is FOGL Finance Limited, which is 100% owned by the Company. FOGL owns and is the operator of 100% of its license areas. The Falkland Islands comprise some 340 islands, located approximately 480 kilometer from the nearest point in South America. On March 20, 2012, FOGL announced that it had granted an option to enter into a Farm-Out Agreement to an oil industry counterparty. more »

Share Price (AIM)
27p
Change
0.0  0.0%
P/E (fwd)
n/a
Yield (fwd)
n/a
Mkt Cap (£m)
142.7

Borders & Southern Petroleum plc is an oil and gas exploration company. The Company’s area of activity is in the Falkland Islands. The Company has a 100% interest and operatorship in three production licenses covering an area of nearly 10,000 square kilometers. The acreage is located approximately 150 kilometers south-east of the Islands. The Falkland Islands are located in the South Atlantic, approximately 500 kilometers from the mainland of South America. The Company holds a prospect inventory, which includes reservoir targets in the Tertiary, Late Cretaceous and Early Cretaceous. more »

Share Price (AIM)
11.25p
Change
0.0  0.0%
P/E (fwd)
n/a
Yield (fwd)
12.1
Mkt Cap (£m)
53.3

Rockhopper Exploration plc (RKH) is engaged in exploration and exploitation of its oil and gas acreage. RKH has discovered oil in the Falkland Islands. Its Licences include Licences PL023 & PL024, which represents the southern acreage that it holds within the North Falkland Basin and RKH holds these licences 100% and is the operator; Licences PL032 & PL033, which represents the northern acreage that the group holds within the North Falkland Basin and holds these licences 100% and is the operator, and Licences PL003 & PL004. The Company has a 7.5% working interest in licences PL004a and PL003 and is not the operator. The Company also holds a 25% working interest in licence PL004c. In May 2011, RKH concluded a three dimensional (3D) seismic acquisition program. more »

Share Price (AIM)
95.38p
Change
0.0  0.0%
P/E (fwd)
n/a
Yield (fwd)
n/a
Mkt Cap (£m)
274.8



  Is Falkland Oil and Gas fundamentally strong or weak? Find out More »


212 Posts on this Thread show/hide all

Proselenes 1st Jan '12 1 of 212
1

Well, it fit in to the header, quite a long header now :)

Good luck to anyone holding FOGL in 2012, its going to be a hell of a ride.

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emptyend 1st Jan '12 2 of 212
2

In reply to Proselenes, post #1

Top class summary, pro. Very good effort!

I've been intrigued by Loligo for years, having seen John Armstrong present at an Oilbarrel back in around 2004 (?). IIRC at the time Armstrong noted that the potential reserves had been heavily marked down, because on some measures they might be in the region of 60bn bbls - which would just be "silly".... though I see that the views on the gross potential haven't really changed (now 67bn per the header).

At the time I held an interest in FOGL via Global Petroleum (LON:GBP), though as ever these things take an age to come together to the point of drilling. This year is certainly key though....and either end of your range of 5p to £30 doesn't sound to me to be an impossibility (though I'd think funding needs would crimp the upside significantly).

Unless BOR make a strike though (and I'm not especially confident of that) I have a feeling that FOGL may get even cheaper before they get the rig....the market could have your 5p number firmly in mind if BOR are unlucky and the Argies start getting difficult (as I expect they will in Q2).

Certainly a situation to keep a close eye on though. I'm certain there will be enough movement to make or lose very large amounts of money this year on FOGL.....

....only wish I knew which.

I may have a dabble at some point if I see a good entry point.

ee

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Proselenes 1st Jan '12 3 of 212
1

Hi EE,

Yes, its certainly is going to be an exciting ride for both BOR and FOGL this year. Given that FOGL are drilling different play types to BOR one would hope that most people can appreciate that and would therefore not mark down FOGL too much for BOR's failures, as the market is giving very little value, if any, for the same type play prospects that FOGL has, that BOR are drilling first.

For sure short term it will do down on BOR failure as people panic sell and shorters short, but it should come back pretty quick as Loligo is, well, Loligo and its massive.

The same token says that if BOR strike then FOGL are going to rise considerably as positive sentiment develops.

Yes, for sure the potential is often given a very conservative outlook in terms of size, as the prospects FOGL has are "silly" in terms of size, not actually silly but very difficult for people to comprehend as they are just so big.

I am for the ride on this one, fingers and toes crossed.

I would love Aminex to start this year off with some good news, a nice oil or gas find at Ntorya-1 would see me buying a few more hundred thousand FOGL shares with the profits .

| Link | Share | 1 reply
emptyend 1st Jan '12 4 of 212

In reply to Proselenes, post #3

...mmmm...well personally I am more looking to SOCO International (LON:SIA) to come good in time to fund a few new positions. I have a feeling that the timings might just fall nicely.

Good luck anyway.

ee

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Proselenes 2nd Jan '12 5 of 212
2

Something interesting that has been raised elsewhere is the difference between BOR and FOGL in terms of their targets and derisking.

BOR, as part of their license extension agreement had to get 3D seismic done.

FOGL as part of their license extension agreement had to get CSEM done.


Toroa, which was drilled at coastal edge had, AFAIK, no DHI's (direct hydrocarbon indications) but had positive CSEM.

The positive CSEM appears to have come from coal, which can be expected at coastal edge location, which is where Toroa was. Positive CSEM in deep water away from the basin edge will not be coal, it should be oil or gas.


So BOR on their targets for 2012 have : DHI's, 2D seismic and 3D seismic but no positive CSEM (none done)

FOGL on their targets for 2012 have : DHI's, 2D seismic and Positive CSEM but no 3D (none done).


Which one is less risky ? I would suggest FOGL is less risky due to there being DHI's and positive CSEM.

Others may disagree, but thats my opinion and another reason why my weighting is more to FOGL than BOR.

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Proselenes 3rd Jan '12 6 of 212
2

For reference here are the well locations for BOR and FOGL, and also the anticipated API of oil (worst case in terms of an emergency are the FOGL figures, BOR appear to have put in the average figures).   BOR being 32API for Darwin and 25API for Stebbing, and FOGL being 18API for Loligo (Nimrod/Vinson) and 30API in the case of Scotia.


BOR's targets are 32API oil (av.) for Darwin and 25API oil (av.) for Stebbing. 

 

 

FOGL's targets are 18API oil (worst case) for Loligo (or Nimrod/Vinson) and 30API (worst case) oil for Scotia

 

 

 .

 

 

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loglorry 3rd Jan '12 7 of 212

As has been pointed out FOGL is a very special situation. Enormous upside and almost no downside protection. So what is the best way to play this?

Well I think it will run up towards well results on Loligo and its variants of deep/shallow etc. The hot money will flow in for this and this may have already started. On a bad drill result though it will sink like a stone.

For me then the best way to play this is to wait for a positive result on Loligo. Maybe the price will run up to say 100p before the Loligo result but if the result is good I can't see the price more than doubling within the first few minutes of trading. It might be hard to find a lot of stock but I'd reckon you'd get in under £2. If the result is very good though that will turn out to be an absolute bargain price with then quite a bit of downside protection.

So in my opinion buying a few now or on any decline probably Argentine rumble related will be worth while and then selling into any hot money rise around the Loligo spud. Then buy in hard after the well results assuming they are very/pretty good. Alternatively, just do the later part e.g. wait for well results. The potential size of the field probably means the market won't price in any field from day one in my view.

Log


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flyinghorse 3rd Jan '12 8 of 212

If these are wildcat areas why state 18api. Thats heavy oil territory.
It does not make sense as it a deep well(for heavy oil). Could it be a typo? I hope so or else it opens up all sorts of issues when the data comes in re commerciality prospects.

The data required to evaluate loligo commerciality if 18api would be samples,viscosity checks,flow test,not just a quick induction sonic density neutron.

FH

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Proselenes 4th Jan '12 9 of 212
2

Flying horse.

The well is expected to encounter oil of API 18 to 25. They have used 18 as the worst case for a spill and environmental concerns.

If you read my post in the header you will see that Loligo is an analogue of the Campos basin offshore Brazil.

I have also highlighted the Marlim Field which is producing 500,000 bopd of 17 API to 22 API oil and is considered to be the benchmark for oil production offshore of this type of oil. If Loligo were to be 16 API or lower then commerciality would be in question.

If it is 18 API or higher then it is commercial pretty much without doubt, pending size only.

You must remember this is not shallow North Falklands but much deeper South Falklands. Where viscosity is a big issue in shallow water (due to pressure gradients of the reservoir and indeed RKH run their second flow test with a pump) - you should be aware, as per the Miram Field, at greater depth you can easily produce much heavier oils.

I have deliberately made a big fuss over the API and highlighted it time and time again in the past few days. This is so we can have these discussion now - and not after an oil discovery. If everyone is very clear on the commercial viability of this type of oil, offshore deepwater - then we will not be getting into discussion later this year on sudden surprise comments its 18API and its too heavy.

17API or above is commercial in these locations/types of potential field, as proven by the Marlim field offshore Brazil.

The part I put in the header is below :

"...............The prospect is believed to be analogous to the large fields in the Campos basin offshore Brazil. A comparator for production of this oil at these  levels would be the Marlim Field in the Campos basin of Brazil, which presently produces circa 500,000 bopd of 17 to 22 API oil. ( http://en.wikipedia.org/wiki/Campos_Basin )

Any oil at Loligo is expected to be in the range of 18 to 25 API............."

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Proselenes 4th Jan '12 10 of 212
1

Its a little out of date with the information as its old, but here is some detail on the production at the Marlim field offshore Brazil in the Campos Basin, which has been ongoing for years now.

The Campos Basin is the analogue for Loligo/Nimrod/Vinson etc.. - with the targets at Loligo/Nimrod/Vinson all expected to have oil in the 18API to 25API range (production at the offshore Marlim field is 17API to 22API)

http://www.offshore-technology.com/projects/marlimpetro/

.

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emptyend 4th Jan '12 11 of 212
2

In reply to Proselenes, post #9

It is well beyond my technical knowledge to know the implications, but it strikes me that (for an undrilled target) the margins of error re API appear to be quite small at Loligo.

They are not looking at nice light 40-45 API. They are not even looking at solidly commercial 30-40 API. Whilst 25 API may well be commercial in the setting, I'd think that the difference between 17/18/19/20 API is really so tiny as to be likely to be overwhelmed by other factors.

Put another way, if the results show very much less than 25 API, there are going to be doubts - at least until there is a fully-appraised discovery and a solid development plan.

And then there is the double-edged sword that the more evidently commercial any discovery, the stronger will be the Argie interest.....

ee

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rpcroft 4th Jan '12 12 of 212
1

Key point that ee...

From an Argentine point of view the 100's of millions of barrels in the north are a irritant.

Multi billion barrel fields in the south, however, will be an incentive.

And it won't be just Argentina ...not only will the whole of South America back them (some, such as Chavez, militarily) but the rest of the world isnt overly friendly right now....Obama refers to the Falklands as the Malvinas and the great defender of our right to those islands has always been France, which has similar island territories, and our relations with France and the rest of Europe aren't exactly perfect right now.

I wouldn't dislike my hand if I were Mrs Kirchner.

I anticipate the Argies getting at least a cut if there is a mega find.



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