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)
    25p
    Change
    -0.3  -1.0%
    P/E (fwd)
    n/a
    Yield (fwd)
    n/a
    Mkt Cap (£m)
    133.4

    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)
    13.38p
    Change
    0.0  0.0%
    P/E (fwd)
    n/a
    Yield (fwd)
    5.9
    Mkt Cap (£m)
    64.7

    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)
    94p
    Change
    0.0  0.0%
    P/E (fwd)
    n/a
    Yield (fwd)
    n/a
    Mkt Cap (£m)
    267.6



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


    212 Posts on this Thread show/hide all

    flyinghorse 17th Sep '12 173 of 212
    3

    I must say that I am dissappointed in the data acquisition preparedness.

    Petrophysics from sidewall cores will be difficult. Palynology & mineralogy perhaps.

    They say the did not get liquid samples-not gas samples. Thats ambiguous. Are they calling gas a fluid at this depth. Is there water or an oil rim,possibly big transition zones?

    It sounds like tight gas as a normal MDT type tool should be able to sample gas even in low milli darcies. I guess they needed the packer modules and sounds like they did not have them.

    Seems like they were caught on the wrong foot with the result & the logging equipment on board. Surprised no NMR logging or rotary coring was conducted -but then they dont say they did not run one.
    The porosity values dont jive with the inability to sample fluids (whatever they mean).

    FH

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    Proselenes 23rd Sep '12 175 of 212
    1

    Rig is on the move to Scotia now.

    FOGL estimated 60 days of well operations at Loligo - with the rig now on the move they managed it in 52 days - the P&A operation appears to have gone really well (6 days instead of 10).

    Thats 8 days saved on the total allocated time - and 8 days time saving is a wonderful thing at over a million dollars a day.

    Well done FOGL and the crew of the LE rig !

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    Proselenes 24th Sep '12 176 of 212
    3

    Scotia well.


    As of this moment in time the rig has about 16 miles to go to get to the Scotia location.

    Spud will therefore be this week for Scotia.

    Scotia is

    50 deg 23' 54.50" South
    53 deg 37' 11.61" West

    Water depth is 1762 meters (thats your mudline)
    TD is estimated at 5198 meters.

    Total drilling depth is therefore 3436 meters.

    Based on Loligo progress they should be at TD and stopping drilling in around 45 days to 55 days range - total well operations should be in the 60 to 65 days range (which includes wireline work and P&A and rig on the move)

    Scotia is targeting oil, believed to be around API 30 if found as per pre-drill prognosis (gas signatures have also been seen at this location so gas or gas/condensate is also possible).

    .......The Mid Cretaceous Fan Play is well developed in the northern part of the FOGL acreage. This geological play was developed when the Falklands were still attached to the southern part of the African continent. A large amount of sediment, sourced from the continent and the Falklands Plateau area to the north, built up in near shore shallow seas. When a drop in sea level occurred, these sediments were deeply eroded and the reworked sands were shed far offshore into deep water. Several prospects have recently been mapped in this play in the northern licences. These are Hersillia, Scotia and Hero.

    The Scotia prospect is located in quadrant 31 (PL027).Although the area had been mapped on seismic data before, it was only when the entire data set was reprocessed in 2008-09 that Scotia stood out as an attractive prospect.A distinctive sandy unit on laps the base of the old shelf. The formation dips to the south, which controls the spill point of the prospect, but it relies upon the pinchout of the sands in other directions to define the trap.

    The prospect has a strong element of structural control and is supported by a conformable AVO anomaly. The primary target is in Albian age sands (about 100 million years old). The source rock for the oil sits just below this target and FOGL anticipates oil generation in the area. However, FOGL also recognises gas signatures on the seismic data and so either ‘phase’ is strictly possible. The Scotia well location sits in 1810 metres of water. The target is about 3,290 metres below the sea bed and the TD of the well is estimated to be at 3,440 metres below the sea bed. The Scotia well location lies approximately 330 kilometres east of Stanley...........


    The Scotia well is targeting P50 recoverable barrels of just over 1 billion
    (so thats over 3 billion barrels in place (for those that like OIP figures and not recoverable barrels), FOGL have 40% share and so net to FOGL on a P50 basis would be 400 million recoverable barrels (net to FOGL would be about the same size as Sea Lion in total for PMO/RKH)

    The drilling program is running at approx 980K US$ per day (based on BOR Darwin costs of 96 million dollars for 98 days rig use) for everything needed.

    Loligo cost would be 55 days @ 980K US$ per day of which 75% is the cost to FOGL, so Loligo will have cost FOGL circa 40.43m US$.

    This saving in time/money should help push the leftover cash up from 212m US$ stated at Noble farm in to circa 220m US$ post Scotia (it no delays) or circa 43 pence per share.

    The Scotia well is being paid for 60% by Noble, 25% by Edison and 15% by FOGL.

    Estimated well operations time of 65 days and on the move would work out the net cost to FOGL for the Scotia well on a 15% contribution basis of about 9.6m US$.

    Any time saving here will have minimal impact of cash going forward owing to FOGL only contributing 15% costs on this well for their 40% share of it.

    Total drilling cost for the 2012 campaign should work out :

    Loligo 40.43m US$
    Scotia 9.6m US$
    Mob/Demob 15m US$ (FOGL share)

    Total cost for 2012 drilling campaign of circa 65m US$.


    End of 2012 drilling campaign should be circa 220m US$ left over cash (circa 43p a share cash at 1.6 exchange rate)

    According to Noble/FOGL the 2013 Seismic will cost net 65m US$ and FOGL share will be circa 30m US$. Admin costs circa 3m US$ in 2013.

    So 220m less 30m for seismic less 3m for admin will leave FOGL entering 2014 with circa 187m US$ cash.

    Well costs going forward will be circa (net to FOGL).

    45m US$ per Loligo/Nimrod/Garrodia Tertiary well) (75% net FOGL).
    28m US$ per well anywhere else (40% net FOGL).
    With a circa 15m US$ mob/demob charge (or 7.5m if BOR also use the same rig)

    FOGL could drill 3 Loligo drills in 2014, or 5 Mid-Cretaceous wells in 2014, which is why you see them say the plan is 3 to 4 wells - likely, imo, 1 Loligo appraisal in 2014 and 3 Mid-Cretaceous.

    Once the 3D is done and all processed I would expect FOGL to farm down the Tertiary at Loligo/Nimrod/Garrodia in late 2013 to Noble as well to the same level (eg give up 35% and go down to 40% net to FOGL) and allow them to gain additional cash from past costs and a free carry on a lump of the next wells.

    Such a move will give Noble incentive to farm in, and allow FOGL to be in a position to undertake say a 10 well drilling program (from late 2014) without the need for any fund raising.


    I have some time this week I hope, to do a full write up on Loligo results, if not this week then next.

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    Proselenes 25th Sep '12 177 of 212
    1

    Scotia spud RNS out.

    I would suggest its going to be 65 to 70 days well operations. Loligo they said 60 days well operations and were done in 52 days (8 day saving).

    Yesterday was 1 day for arrival and set up

    Drilling time to TD at Scotia should be in the 45 day to 55 day range.

    10 days for clean up and testing

    10 to 14 days for P&A operation

    1 day for pack up and go.

    Monday 19th November they should be at TD already, or nearly there imo.

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    Proselenes 25th Sep '12 178 of 212
    1

    http://oilbarrel.com/media/pub/var/release_downloadable_file/40361.pdf


    FOGL spuds Scotia

    FOGL announced that on 25 September 2012 the Scotia exploration well was spudded. FOGL is operator and holder of a 40% interest. The remaining interests are held by Noble Energy Inc. (35%) and Edison International Spa (25%), subject to finalisation and governmental approvals.

    The well has a target depth of 5,000m and FOGL estimates that depth will be reached in the first half of December 2012.

     Our 152p/share target price and BUY recommendation are premised principally on our estimate of a 16.6% chance of success (for liquids) at Scotia. We have assumed that if hydrocarbons are encountered there is a 50% chance that they are liquids. Given the gassy nature of Darwin (condensate) and Loligo (wet gas, although analysis is ongoing) there is downside risk to our assessment of the probability of finding liquids.

    We maintain our view that Scotia is a particularly attractive because i) the source rock control is excellent (and thought to be oil prone), ii) the scale is extraordinary (circa 1.1 bn bbls of gross prospective resource) and iii) it is a play opener.

    Scotia is 114km away from Loligo. It is a Cretaceous target (fan) the source rock is expected to be Aptian. It exhibits a strong amplitude anomaly that conforms to structure.

    Investors should be aware of the high risk nature of drilling in frontier basins.

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    Proselenes 25th Sep '12 179 of 212

    http://www.proactiveinvestors.co.uk/companies/news/48407/falkland-oil-gas-scotia-well-particularly-attractive-says-broker-

    ......Oriel Securities, which also rates FOGL as a ‘buy’, said that if Scotia is successful the company has a number of ‘follow on’ prospects of a similar size and that it remains well funded.

    “FOGL has the highest impact exploration programme in the UK listed E&P sector,” Oriel analyst Richard Griffith said in a note..............

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    Proselenes 25th Sep '12 181 of 212
    1

    And my thoughts on the Loligo results are here :

    http://www.moneyam.com/InvestorsRoom/posts.php?tid=16040&from=2095

    .

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    Proselenes 26th Sep '12 182 of 212
    1

    Someone asked if I could put the Loligo post into a PDF, so I have.

    For those not interested, just ignore. For those interested a PDF link is below.

    http://www.mediafire.com/?1lx5jj53wiulr7d

    .

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    Proselenes 27th Sep '12 183 of 212

    http://www.globes.co.il/serveen/globes/docview.asp?did=1000787276

    It's not how much gas, but where

    A new discovery in the Falkland Islands outdoes Israel's Leviathan reserve for size, but that isn't necessarily reflected in the price.

    27 September 12 19:20, Amiram Barkat
    inShare

    First surprise: Israeli gas reserve Leviathan is, as is well known, the biggest deep-water gas discovery in the past decade. Then again, maybe it isn't. Over the Jewish New Year, Leviathan lost the title to a new reserve, discovered on the other side of the w...................

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    emptyend 28th Sep '12 184 of 212
    4

    In reply to Proselenes, post #183

    First surprise: Israeli gas reserve Leviathan is, as is well known, the biggest deep-water gas discovery in the past decade. Then again, maybe it isn't. Over the Jewish New Year, Leviathan lost the title to a new reserve, discovered on the other side of the world. The reserve is about 100 kilometers east of the Falkland Islands, in a license area known as Loligo. The amount of gas and oil in the reserve has not yet been announced, but, according to preliminary estimates, made before drilling commenced, it could hold 25 TCF (trillion cubic feet) of natural gas, which compares with just 17-20 TCF for Leviathan.

    All very interesting. Remind me how many wells have been drilled again? :-)

    Compare this with ENI's announcement on 1st August:

    Eni announces a new giant natural gas discovery in the eastern part of Area 4, offshore Mozambique, at the Mamba North East 2 exploration prospect. This is the fifth exploration well successfully drilled in the area.

    The new discovery adds at least 10 trillion cubic feet (tcf) of gas in place to Area 4, confirming at least 62 tcf of gas in place already discovered. The resources exclusively located in Area 4 are at least 20 tcf plus of gas in place.
    This result further increases the total potential of the discoveries of  Area 4, which is now estimated at 70 tcf of gas in place.

    Mamba North East 2, where Eni will conduct a production test, was drilled in 1,994 meters of water and reached total depth of 5,365 meters. The well is located approximately 9 kilometers east of Mamba North East 1 and approximately 23 kilometers from Mamba South 1, 60 kilometers off the Capo Delgado coast.

    The well encountered 200 meters of gas pay in stacked multiple high-quality Oligocene, Eocene and Paleocene sands. The discovery has proved the existence of hydraulic communication with the Oligocene reservoir in Mamba North East 1 and with those of the Eocene age in Mamba North East 1 and Mamba South 1, through a unique gas column of 460 meters. Lastly, Mamba North East 2 has identified a new exploration play in the Paleocene located exclusively in Area 4.

    The Mamba complex is so big that it is certain to be unitised with the Anadarko/PTTEP consortium next door....meanwhile neighbour Anadarko says:

    “With this latest discovery at Atum and a successful upcoming appraisal program, we believe the total estimated recoverable natural gas resource in Mozambique’s Offshore Area 1 is between 30 and 60 Tcf, and the current upside for total gas in place for the discovered reservoirs on the block is approaching 100 Tcf. We still have additional exploration opportunities that could expand the resource potential further,”

    So the operators of Areas 1 & 4 think their two blocks (alone!) have the potential for c.170TCF GIP. What ENI know as Mamba is known on the Anadarko side as Prosperidade.....and Anadarko's latest presentation says that appraisal drilling on Prosperidade is complete and they think there is 17-30+TCF recoverable......so add that to the 40TCFin place in Mamba that ENI say will be unitised and you have probably got Mamba/Prosperidade alone as having 50-60TCF recoverable. Reserves will be independently certified next year, now that about 10 wells have been drilled on the structure.

    So lets not exaggerate the potential or size of Loligo in a global context, eh? Sure it may have the potential for 25 TCF in place (so maybe 15-20 recoverable), but Mamba/Prosperidade is already proved to be three times that size!

    ee

    ps...not really in a very relevant thread but feel free to link/quote from the post elsewhere.

     

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    Proselenes 1st Oct '12 185 of 212
    1

    This was the Noble presentation from 7th September.

    http://www.nobleenergyinc.com/_filelib/FileCabinet/PDFs/Presentations/2012_09_September_books_FINAL.pdf


    Few points to note - from one page of it :

    http://img513.imageshack.us/img513/7458/noblefalksmall.gif

    They say well before Loligo result that Scotia will be drilled next. A Loligo appraisal was never on the cards once Noble farmed in, they want Scotia drilled.

    You will note Noble refer to Scotia as BBbl (that means Barrels of OIL), they also refer to follow up leads of 7 Billion Barrels of Oil.

    They also differentiate with "other play types" being a possible 5 BBoe (that means gas).

    So Noble are pretty happy that Scotia will be oil, IF it strikes hydrocarbons.

    They are pretty well experienced on oil West Africa and know what they are looking for, bodes well.

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    Proselenes 7th Oct '12 186 of 212

    Noble to discuss their deep oil prospects in the Falklands and other places on Thursday 11th Oct. Wonder why they do not say deep "gas" prospects ?? Loligo was expected to be gas, and it was. Scotia is expected to be oil and.... well, lets see......


    http://investors.nobleenergyinc.com/releasedetail.cfm?releaseid=711499

    October 5, 2012

    Noble Energy Announces Conference Call To Discuss New Venture Exploration Opportunities

    HOUSTON, Oct. 5, 2012 /PRNewswire/ -- Noble Energy, Inc. (NYSE: NBL) announced today that it will host a conference call to discuss its new venture exploration program at 9:00 a.m., Central Time, Thursday, October 11, 2012.

    The intent of the call is to provide insight into several frontier plays where the company has activities in progress - the deep oil potential of the Eastern Mediterranean, the Falkland Islands, and Northeast Nevada.

    The webcast will be accessible on the 'Investors' page of the Company's website, www.nobleenergyinc.com. Conference call numbers for participation are 888-401-4691 and 719-325-4766. The passcode number is 5184314.

    A replay will be available at the.....................

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    Proselenes 11th Oct '12 187 of 212
    1

    Todays presentation :


    http://files.shareholder.com/downloads/ABEA-2D0WMQ/2074476913x0x604773/91d68f22-d086-4f31-92e2-f089ded3f296/2012_10%20Exploration%20Conf%20Call%20[Final].pdf


    Looks good, they do like Scotia prospect.

    30% Geologic Chance of Success.

    I had heard they were looking for a rig even now, this is confirmed it seems as they are looking at appraisal drilling end of 2013 going on until next round of exploratory drilling in late 2014.

    Perhaps only 12 months without any drilling in the South Falklands now, after Loligo proved the hydrocarbons are there.

    Very active - non stop drilling and appraising program from late 2013 onwards for years.........

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    Proselenes 11th Oct '12 188 of 212
    1

    Highlights of the broadcast (you can listen yourself on the link from Nobles website) :

    Falklands.

    They describe it as a "highlight” and "potential game changer".

    It will provide a 40% increase in their global net acreage.

    30 leads in lower cretaceous alone.

    Noble contractually obliged to drill two more wells.

    Will become operator in north part of the acrege in March 2013, southern part by March 2014.

    They will have TWO seismic boats active in 2013. 1,500-2,500 sq miles of 3D.

    Area offers early entry scale of, among others, Angola, GoM, Med and Norweigan North Sea.

    AVO will be an important technical tool (one of their expertise).

    They are hoping that Scotia will be a discovery, and they can use AVO to derisk further plays.

    Timing of investment spending fits well with cashflow

    Above ground risk v managemable. Sohistoicted regulation and financial terms positive.

    During Jurassic FI attached to southern Africa. Thick wedges of deepwatrer tubidite sand.

    Reservoir rocks proven by Darwin. Loligo proved working hydrocarbons system (gas) in northern acreage.

    Scotia P75-25 145-960m barrels of oil, CoS at 30%. Primary risk is containment. Same rig as drilled Loligo “discovery”

    If Scotia success, will have rigs drilling nearly continuously from late 2013.

    Development drilling would begin in 2015. First production 2018/19'

    Similar development plan as Noble carried out in equatorial guinea

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    Proselenes 11th Oct '12 189 of 212

    I think the market likes the firm commitment from Noble to get appraising Scotia from late 2013 and continue appraising and exploration drilling "non stop" for many years...........

    Pretty much going to hit the "fast track" appraise and explore button if Scotia hits oil.

    First production late 2018 - but loads of exploratory drilling from late 2014 onwards......... after appraisal drilling starting from from late 2013.


    I would guess FOGL will fund a lot of that from doing 3D on Loligo and Nimrod and then farming down Loligo/Nimrod/Garrodia from the current 75% - to Noble in return for free carries and reduced contributions on the appraisal of Scotia etc...

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    Proselenes 12th Oct '12 190 of 212

    Quick summary of the Q&A session that someone has done.


    1) The first question on the topic was concerning why Scotia is viewed as an oil opportunity, rather than gas.

    According to Noble, the gas discovery (Loligo) was in a younger section, whereas Scotia is in a deeper zone. Also, the seismic attributes are indicative. They had expected Loligo to be gas, but very different with Scotia.

    2) Another question on seismic.

    Will be shooting 3D at end of this year. Noble would prefer to explore after 3D, but was not possible in this case. 2D adds more risk, so really important to get the 3D. If fortunate, and initial well successful, great, but get a better picture with the 3D. Good thing is that Scotia will give some real data, and will set up for a multi-well exploration programme in 2014. Kind of like Noble did it in west Africa.

    4) Question on Loligo.

    Noble looking for oil, not gas, which was one of the reasons why they did not participate in the first well (which they felt would be gas)

    5) Question on NFB, and rig market

    Not going into the North Falkland basin. South large enough to keep them busy for a long time. Regarding the Loligo well, they do not have the well results. From own interpretation, they feel there is some encouragement regarding their hopes that Scotia will be an oil well. But they know no more than what is in FOGL's press release.Regarding 2014 programme, they are looking to see what rig might be available--c.20 rigs would fit in that environment, and just canvassing the market at the moment. Still early in the process.

    6) Appraisal drilling question

    Appraisal would be an appraisal of a Scotia success. If not successful, would start exploration after 3D. Length of drilling programme depends on success.

    7) If thin sands came on Scotia, but oil shows, would this be OK?

    Anything that indicates oil would be "very interesting". Quite broad possibilities as to what they'll find. 3D will tell them more. But "finding oil would be very encouraging"

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    Proselenes 12th Oct '12 191 of 212

    I guess from Noble's statement of "we will appraise from late 2013 if Scotia has oil" means that the new drill ship they are taking for 3 years could well be redirected to the Falklands if Scotia strikes oil, if not it goes East Med ? Certainly an option for them now, and for sure if Scotia strikes oil then it becomes top priority for Noble owing to the massive upside potential.


    http://finance.yahoo.com/news/noble-energy-announces-agreement-build-115400586.html


    HOUSTON, Sept. 27, 2012 /PRNewswire/ -- Noble Energy, Inc. (NBL) today announced that it has entered into a 36 month contract with a subsidiary of Atwood Oceanics Inc. (ATW) for a new build drillship to support its global new ventures efforts in deepwater exploration and development. The agreement demonstrates the Company's commitment to global offshore exploration.

    The drillship Atwood Advantage is currently under construction by Daewoo Shipbuilding & Marine Engineering Co., Ltd. in South Korea. Delivery is anticipated in the fourth quarter of 2013 when the rate of $584,000 per day will be initiated. The dual BOP stacks, enhanced offline capabilities, 12,000 feet water depth/40,000 feet drill depth ratings and the increased mobility will add flexibility to Noble Energy's global exploration program. ................

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    Proselenes 12th Oct '12 192 of 212

    The 3 year contract for the Atwood Advantage drillship just announced end Sept, and then yesterdays plans showing non-stop appraisal and exploratory drilling for 3 years in the Falklands, if Scotia strikes oil.... sort of ties in does it not......

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