Falkland Oil and Gas Limited
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Falkland Oil and Gas Limited
EPIC : FOGL
Shares in Issue : 320 million
Web Site : http://www.fogl.com/fogl/en/home
Already have an account?
Login here
http://af.reuters.com/article/energyOilNews/idAFL6E8JNGFM20120823?pageNumber=1
UPDATE 1-Borders find boosts Falklands oil prospects
Thu Aug 23, 2012 2:28pm GMT
LONDON Aug 23 (Reuters) - British oil explorer Borders & Southern reported positive results from the latest tests at its well off the coast of the disputed Falkland islands, increasing the possibility of a second commercial oil and gas discovery there.
Borders is leading efforts to find oil off the south coast of the remote islands. Exploration in the region by British companies has inflamed tension with Argentina, which claims sovereignty over the islands it knows as the Malvinas, losing a war to Britain over them in 1982.
The explorer said on Thursday that the initial yield from gas condensate samples taken at its well in the South Falkland basin varied from 123 to 140 standard barrels per million cubic feet, more than what analysts said was needed for the find to have commercial potential.
Gas condensate is a liquid which often trades at a premium to crude oil.
"It looks good. It definitely looks good...What (the numbers) mean is that essentially this is a commercial discovery, the first in the South Falkland basin," said Numis analyst Sanjeev Bahl.
"There's potentially more adjacent discoveries to be made, because it's not going to be the only large condensate discovery in the South Falkland basin," he added.
Britain's Rockhopper found oil north of the islands in 2010.........................
http://seekingalpha.com/article/826001-is-borders-southern-s-falkland-islands-gas-condensate-discovery-really-commercial
Is Borders & Southern's Falkland Islands Gas Condensate Discovery Really Commercial?
August 24, 2012 | about: BDRSF.PK, includes: FLKOF.PK
On August 23, Borders & Southern (BDRSF.PK) released results of its fluid analysis on the Darwin discovery. You can read the press release here. The results are a 46-49 degree condensate with a mean recoverable volume of 190 million barrels. BOR has also mentioned tha.................................
....................I think the future of Darwin is heavily tied to the success or failure of the wells Falkland Oil and Gas (FLKOF.PK) are slated to drill this year. FOGL's massive prospects have already attracted two large industry players even without drilling a single well. If FOGL discovers significant hydrocarbons, it will turn the Falkland Islands into an oil boom that I think would give BOR the synergy it needs to attract an industry partner to develop Darwin. Any partner farming in with BOR after a discovery would be able to take advantage of the economies of scale that are going to come with a FOGL discovery, especially if FOGL finds any significant gas..............
As we all know, Edison SPA (the farm in partner) is owned/controlled by EDF.
If you look at the EDF presentation, on page 9 of the 242 pages :
http://shareholders-and-investors.edf.com/fichiers/fckeditor/Commun/Finance/Publications/Annee/2012/EDF2011_Fact-Figures_20120718_va.pdf
Below is also the link to that single page 9
Its says clearly that Edison SPA will "spearhead the EDF gas strategy...."
Lets all hope T1 and T1 deep are full of lovely gas for EDF, via Edison SPA, to get on with.
.
Comparing GMP's figures against my figures, link below :
http://www.moneyam.com/InvestorsRoom/posts.php?tid=16040&from=1404
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Mid case 45 TCF recoverable (between 30 and 60)
http://articles.economictimes.indiatimes.com/2012-06-11/news/32175164_1_gas-discoveries-mitsui-e-p-miozambique-lng
45 TCF mid case - 3 billion US$ for 10%
http://www.businessweek.com/news/2012-09-05/dhoot-said-to-seek-3-billion-for-africa-gas-block-stake
10% of 45 TCF recoverable is 4.5 TCF
3 billion US$ for 4.5TCF = circa 666 million US$ per TCF
Loligo 25 TCF recoverable on a P50 basis.
25 TCF with 75% ownership = 18.75 TCF net to FOGL recoverable.
18.75 x 666 million US$ = 12.48 billion US$ = £7.9 billion
£7,900,000,000 divided by 320m shares in issue = £24.68 per FOGL share for a full on gas discovery at Loligo.
(And FOGL's license area's could hold up to 300 Billion BOE in place)
With all the focus on the currently being drilled Loligo structure its easy to forget that Noble have no farm in on Loligo or Nimrod - their farm in excludes these - and Noble are very excited about the Scotia drill.
Noble Energy presented yesterday, 7th Sept (2012 Barclays CEO Energy-Power) and their CEO was quoted as being "very excited" by the potential of the Falklands.
Their full presentation is available to download on the below link.
http://www.nobleenergyinc.com/_filelib/FileCabinet/PDFs/Presentations/2012_09_September_books_FINAL.pdf
Page 39 as below link is for the Falklands. Note that "two 3D seismic surveys are scheduled for early 2013" !!!
Media coverage of Chuck's comments below :
http://www.bnamericas.com/news/oilandgas/noble-pegs-gross-unrisked-potential-at-12bboe
Noble pegs gross unrisked potential at 12Bboe
Falkland Islands | Oil & Gas
More Oil & Gas news
Published: Friday, September 7, 2012
By Abigail Wilkinson
Business News Americas
Noble Energy (NYSE: NBL) sees 12Bboe of gross unrisked resources on the Falklands Islands acreage it gained through a farm-in deal with Falkland Oil and Gas (AIM: FOGL).
"When we look at just our top 10 Cretaceous leads over this region, we see about 7Bb of gross unrisked resources," CEO Chuck Davidson said during a presentation at the 2012 Barclays CEO Energy-Power Conference.
Another 5Bboe of gross unrisked resources comes from other play types within the 10mn acres which Noble has access to under the deal, announced August.
Noble agreed to farm into FOGL's northern and southern area licenses for a 35% interest, excluding the Loligo and Nimrod-Garrodia areas, with Noble committed to spend between US$180mn and US$230mn over the next three years.
The first prospect to be drilled under the deal, named Scotia, will be drilled in the fourth quarter and has around a 20% geologic chance of success and is estimated to hold 900Mb gross unrisked mean resources, according to the presentation.
"What really gets us excited is that it is scale, and it is multiple opportunities," Davidson said of the farm-in acreage. "It's a little bit out of the normal neighborhood and we really believe it could open up a whole new basin."
The Falklands is one of the firm's three significant areas lined up for testing this year, with the other two prospects named as deepwater Gulf of Mexico and Cameroon, testing gross mean resources of about 1Bboe.
And do not forget the other farm in partner - who are "spearheading" EDF's gas strategy, which is very relevant to Loligo and the expectation of gas in the upper targets, of which the P50 estimate is over the 5 TCF recoverable needed to be commercial.
Edison SpA
Company Profile
Edison S.p.A., directly and through subsidiaries, generates and sells electricity and explores for, produces, and distributes natural gas.
Not looking good for the Loligo well, looks like its going to be dry - nothing commercial.
Results of the well soon.
Strong rebound today with volume, suggestions maybe the bottom target, Three Bears could be good and the upper 4 Loligo targets not good ? Who knows, not me.
If, and its only an IF, Three Bears were to be full of oil - would it suggest that with a very good top seal that the oil followed the arrows and also migrated horizontally into Nimrod and Vinson and not upwards into the upper 4 Loligo targets. (pic in link below)
Meaning Three Bears, Nimrod (ironic for CHAR holders) and Vinson have oil but top 4 Loligo targets are all dry, only the bottom is viable ?
Bit too much speculation for now really, what is needed is oil in Three Bears - then we can speculate as much as we like, else its going to be a duster perhaps.
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Good luck all, its high risk stuff, never forget that.
.
Nice little factoid on Three Bears from III.
Re: Three Bears Some people here guessing that Three Bears has come in all oily. If this were the case, it would be dripping in irony as well as oil. The reason?-
Three Bears is entirely a BHPB prospect- BHPB went through FOGL's infill 2-D data, and in the end identified a few of those lower targets in the Loligo complex. A female geophysicist at BHPB in the end named it Three Bears, in honour of one of her favourite surfing spots. If it came in, BHPB will have not only found the prospect, but will have paid $40m in effect not to participate in the drill. I ain't counting my chickens though.... rpoodle
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A female geophysicist at BHPB in the end named it Three Bears, in honour of one of her favourite surfing spots.
Are you sure she wasn't just a blonde who liked porridge?
She could be in trouble if the Three Bears' bowls appear to be empty......;-)
Some thoughts on "potential" oil in Three Bears and potential for something exciting in the Upper Cretaceous.
The Upper Cretaceous was to be "poked" with this drill. This is why the target depth is where it is, to hit into the Upper Cretaceous.
The Upper Cretaceous is the dark green colour band in the pic below, below that is the light green band mid-Cretaceous - this has proven very high quality reservoir sands (from the Toroa well). (Noble has farmed into mid-Cretaceous plays apart from where they are excluded).
http://img853.imageshack.us/img853/7461/threef.jpg
Toroa also had an excellent top seal and poor (non-existent) lateral seal. FOGL have nothing assigned in the Upper Cretaceous, so it is very important to get some data from there - which is why they were to poke into it at TD.
To continue further there is one thing you should talk about when you talk Upper Cretaceous.
That word is "Roncador".
Again - the analogue with the Falklands is the Campos Basin - and in the Campos basin they have found Tertiary reservoirs like the proposed Three Bears - but they also found......... a monster in the Upper Cretaceous..............
Could Three Bears have been hiding other reservoirs lower down in the Upper Cretaceous - just like at Roncador ?
The Campos Basin has long been said to the analogue of the East Falklands, and there are plenty of examples of all.
...........
Campos Basin - Offshore Brazil - The Roncador field, discovered in October 1996 by the 1-RJS-436A wildcat, is in water depths ranging from 1500 to 2100 m. This giant field contains large volumes of hydrocarbons (9.2 billion bbl of oil in place and total reserves of 2.6 billion BOE) accumulated in Upper Cretaceous (Maastrichtian) turbidite reservoirs. The discovery well found total net pay of 153 m of Maastrichtian reservoirs divided into five main zones, separated by interbedded shales. Only the uppermost reservoir zone shows a seismic amplitude anomaly that can be detected on seismic profiles. The other four reservoirs do not show acoustic impedance contrasts with the interbedded shales, and thus they have no amplitude anomalies..........
..........Campos Basin - Offshore Brazil - The Barracuda field was discovered in April 1989 by the 4-RJS-381 well in a water depth of 980 m. It covers an area of about 157 km 2 , in water depths ranging between 600 and 1200 m. It produces from Tertiary turbidite reservoirs. Seismic attribute analysis discriminates oil-saturated Paleocene, Eocene, and Oligocene sandstones encased in shale and marls, mainly in stratigraphic traps. This giant oil field contains in-place volumes of 2.7 billion bbl, and the total reserves achieved 659 million bbl (for Oligocene reservoirs) and 580 million bbl (for Eocene reservoirs)..............
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So what if there was some OIL ? What would it be ? How to produce it IF (a big IF) there is any ?
If any is found it is estimated to be in the range of 18API to 24API range.
The analogue would be the Marlim field offshore Brazil (Campos Basin) - which has been in production for a very long time (circa 500,000 barrels a day peak).
Marlim-South would perhaps be a good analogue, unconsolidated sandstone in the Tertiary.
Marlim South is operated by Petrobas -
Located 75 miles (120 kilometers) off the northern shore of Rio de Janeiro, Brazil, in water depths ranging from 2,500 to 6,300 feet (762 to 1,920 meters), is the Marlim Sul field. Situated in the Campos Basin area, roughly 80% of the field lies in water depths greater than 3,937 feet (1,200 meters). Petrobras, the operator, owns 100% interest of the field.
The Marlim Sul 4-RJS-382 well was discovered and drilled in 1987. Then an appraisal well, MLS 3B, was drilled by the Noble Leo Segerius drillship, which reached a total depth of 5,607 feet (1,709 meters). The drillship discovered 307 feet (94 meters) of net pay.
Marlim Sul consists of 14 reservoir blocks encompassing 148,263 acres (600 square kilometers). The main reservoir consists of Tertiary unconsolidated sandstone located in the Oligocene and Eocene formation, and contains heavy oil, API 17-24, with 32% porosity. The Marlim Sul field has estimated 1.47 Bboe of proven and 1.15 Bboe of probable reserves.
Petrobas use horizontal producers and horizontal injectors for Marlim South
Typical for the Campos Basin, the Marlim Sul reservoir is a Tertiary unconsolidated sandstone, particularly within the Oligocene and the Eocene ages, without strong water drive. It is a heavy oil reservoir (API 17-24), with 32% porosity, and 2000 mD permeability. Due to the need for high-rate injection to maintain reservoir pressure, and since high-rate producers are needed for economic development, Petrobras decided to develop Marlim Sul and several of the other fields in the Campos Basin with a series of horizontal producers and horizontal injectors.
Marlim Sul is a giant field located offshore Rio de Janeiro State, Campos Basin, Brazil. The field was discovered on December 1987 and it has been under development since 1994. It contains 1.47 billion BOE of proved reserves and additional 1.15 billion BOE of probable reserves. Laying in 2,625 to 8,530 feet (800 to 2600 meters) water depths, the field contains 14 reservoir blocks in a 600 square kilometers area.
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BUT BUT BUT - until there is results and results say there is some oil or gas or something down there - its all pure speculation and news could be its a pure and simple duster - just like CHAR's.
Interesting times ahead for sure.
The EIS stated 45 days of drilling operations (thats drilling and wireline).
3rd of August spud to 14th September is day 43.
So it is very close now to the EIS estimate.
Open hole logging will be complete now imo. They know if they have something that looks good, or nothing at all.
If there is something good we might get an initial wireline logging RNS (like Sea Lion) and like RKH did after their initial RNS, they will give another update a week later once all the wireline/sidewall coring has been done.
By my estimate they will finish the total wireline ops late next week (around day 50) and then 2 weeks of PA will see the rig ready to move about day 62 of well operations (not far past the 60 day estimate in the spud RNS).
Then onward to Scotia.
But of course, if its a duster they will be moving on quicker than that to Scotia.
At the end of the day its very very easy to call "Duster" and be right 80 times in 100.
Wildcat exploration is basically a 20% CoS and 80% Chance of Failure, which is why many of those not in FOGL or who sold out last week are now all proclaiming duster on Monday.
Its not a bad call, they have an 80% chance of being correct and are all posting it so that they can claim, in future, to be some kind of guru and quote back to "I called Loligo a duster and it was"........
That is how sad some people are, they will be linking back to their duster posts for years to come (or quickly deleting them if its not). I called CHAR a duster on ADFN from the 4th of Sept and it was on the 10th - so what - who cares - whooppee doo daa - it means nothing.
The laws of probability say the end result of this well will be a duster, you cannot argue with the odds, 80% chance of failure. Nobody is being brave or taking a big risk by saying "Its going to be a duster".
The important thing to look at is the share price reaction. Not everyone was like me and buying this big in the 40's and 50's - so many people will have higher averages.
History teaches you this about oily stocks. Its not over until the last well in a campaign is sunk.
DES never capitulated until its last well was drilled - the share price kept coming back up as each new drill offers multi-bagging potential. Only if your last well is done and you have no more cash for drilling - then its game over.
CHAR never capitulated after Tapir duster, it came back to near 130p ahead of Nimrod, but Nimrod was the last well for a long time and so it capitulated back to cash level of 31p when Nimrod was a duster.
BOR was 60p ahead of Darwin, it went up and come back down to 60p ahead of Stebbing (as you are drilling again). It only capitulated when the last drill was over (Stebbing) and they had no more funds for drilling.
FOGL will not capitulate and stay down if Loligo is a duster. They will have after the next Scotia drill over 40p a share cash, they have the Scotia drill up next and whatever price it falls to on a duster it should be back near the 80p levels ahead of Scotia drill results.
If Scotia is a duster (if Loligo is as well) then yes, they will do a CHAR and fall down to circa 40p a share cash levels - awaiting their next moves. They are fully funded to do 3D in 2013 and drill 4 or so wells in 2014.
There will be a large drop for a period of time on any duster news because -
The stupid people who have got spread bets or margin positions will be forced out. Never use margin on high risk plays !!!!!!!!!
Many people will have set stop losses - and the MM's will drive the price down as low as possible to knock out all the stop loss positions (they know like I know the price will bounce back ahead of Scotia). Most stop loss positions are highlighted to MM's via your broker and are on the order book hidden from your view but in the MM's view - they know where they are set and can knock them all out.
The ill informed will panic sell on seeing a large drop - assisted by the BB muppets screaming "Duster, told you so, its going to 20p".........
And thanks to the three categories above I (and many others including those presently saying duster, and those who will be screaming "its going to 20p") will be rushing to buy FOGL on any duster news RNS to pick up cheap stock - because everyone knows the price will recover again in the coming weeks/month as the Scotia drill comes into focus.
So be prepared for a duster, I am, and ready to buy hard on any fall. Do not lose sleep over it being a duster, its 80% odds on it will be. Do not think anyone saying its a duster is some kind of guru - they are just playing the odds, if you had a 5 cards and 4 were Aces and 1 not - you would be pretty sure you could pull an Ace from the 5 would you not.
And if its not a duster - then just enjoy it...................its rare to be long in a stock that pulls off wildcat success........
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Why could it be a duster ? Lack of charge - I hope not, that would be bad.
So what then ?
Firstly, this area has a high risk of Kaolinite - this clay is a "pore clogger" and make sandstone permeability very low - eg tight.
This could be the case in the upper Tertiary targets imo - could be hydrocarbon traces but Kaolinite or other clay (Chlorite) is blocking the pores, tight reservoirs - not commercial.
Lower tertiary and upper cretaceous, you would expect unconsolidated sands (that means loose sand as opposed to sandstone). Most of the Tertiary and Upper Cretaceous wells offshore Brazil and also West Africa are "unconsolidated" sands - they used to be together did South America and Brazil - yes, we know that).
In this scenario clays are not an issue.
Thats just my thoughts though on if its a duster, then why.
Possible that :
a/ Bottom of the Tertiary or Upper Cretaceous has sealed off the upper targets, which are dry.
b/ Potential the upper Tertiary targets were tight, due to Kaolinite or other clay.
c/ I hope its not a lack of charge !
Monday RNS - 4 choices :
a/ Duster ?
b/ Hydrocarbons traces but tight reservoirs due to clays (Kaolinite/Chlorite) ?
c/ Upper targets cut off from charge and also tight - due to lower being charged, and lower is a unconsolidated sand reservoir - eg strike at Three Bears or lower.
d/ Still drilling or logging - news later - meaning the upper was dry, they found some oil down at the bottom and are now exploring for hydrocarbons in the Upper Cretaceous, but only as far as the well integrity will let them go - its not designed to go that much deeper. Very exciting to find oil in the Upper Cretaceous as many production wells offshore Brazil and West Africa are the same - will be studying the data and returning to drill a "Loligo very deep appraisal" next time.
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Worth noting, as the drill bit was going to go down further into the Upper Cretaceous.
FOGL retain 75% of Tertiary only prospects of Loligo and Nimrod.
So if Three Bears strikes and comes in, then its 75% Loligo as its Tertiary, and 25% Edison.
If the drill bit goes into the Upper Cretaceous and strikes oil, then its 40% FOGL, 35% Noble and 25% Edison.
Noble are only excluded from Tertiary prospects at Loligo Complex and Nimrod Complex.
Mr Flarn on LSE has taken one of my FOGL enlarged map cuts and put the Toisa Sonata's recent movements on it. If you look at the Orange outline of Three Bears, the TS does seem to be touching the edges, which could indicate additional seismic work ongoing in relation to Three Bears. It did the same after the Darwin strike for BOR - which was for VSP. Now doing VSP could all be about learning more from your duster, but it does seem to be focused on Three Bears ??
This pic also highlights the location of the rig and the compromised position of this single drill, as its not about hitting thick net pay, its all about hitting 5 targets, in whatever was possible, with a single drill trajectory.
Three Bears is the Orange outline in this map, quite a big size, P50 recoverable estimates of 1.5 billion barrels potential - oil being API18 to API 24 range.
Owing to the sub optimal well location (trying to hit 5 targets in 1 drill - as opposed to trying to hit a single target in its sweet spot) of this drill, if they hit any net pay over 10 meters I would be a happy bunny - mind you, I would be happy if they just hit some gas/oil, that would prove generation and migration and bring the whole East Falklands Basin firmly into play and no longer speculative.
Another speculative Sunday ahead and then finally its going to be somewhere in between Agony and Ecstasy with news Monday.
Quick comment. Excellent news to get so much potential pay in such a compromised well location - with T5 even better than expected pre-drill.
This well was not about hitting net pay, it was about drilling all the targets to sample them all, and it did that.
The appraisal wells in the next drilling round, after 3D seismic is done early next year will be all about hitting the thick net pay.
With the sweet spots it could certainly be a 25 TCF recoverable total for Loligo now - way past the needed 5 TCF recoverable for commercial development and in excess of the 10 TCF recoverable needed for very attractive commercial development.
Edison SPA must be well happy, they are EDF's gas development side - spearheading EDF's gas exploration and development program.
Excellent news and now on to Scotia - for a 1 billion recoverable barrels P50 potential there - and Scotia is pure oil prospect :)
Very happy the whole Eastern Falklands is now in play.
P50 for the East Falklands is potentially 80 billion BOE recoverable, and now its all systems go !!!
Very happy - and thats all I have to say :)
From the RNS:
...gas discovery...... the main hydrocarbon phase within the T1 to T5 aged reservoir objectives is gas, but it has not been possible to determine whether this gas has any liquid content....... all six targets comprise fine grained sandstones, siltstones and claystones. FOGL interprets that these sediments have been deposited either outside, or at the distal (outer) end of the slope channel system.
......T1 to T3.... porosities ranging from 18% to 35% in the gas bearing zones. Due to the thin bedded nature of these sediments it is difficult to assess precisely both hydrocarbon saturation and the total net hydrocarbon bearing reservoir. Preliminary estimates however, suggest hydrocarbon saturations ranging from 40% to 60% and net hydrocarbon bearing reservoir of between 10 and 20 metres.
Within the T5 target two main hydrocarbon bearing zones were encountered (3,462 to 3,558 metres and 3,608 to 3,705 metres). The net hydrocarbon bearing reservoir in these two zones was 46 and 59 metres respectively. Porosities ranged between 23% and 30%, averaging 24% and hydrocarbon saturations between 40% and 75%.
Attempts were made to obtain pressure data and collect fluid samples. This was unsuccessful, probably due to the fine grained nature of sediments in the gas bearing zone and also, not having access to the specialised test equipment appropriate for this type of formation.
Further detailed evaluation of all the well data, together with the existing seismic is now required in order to better define reservoir distribution and more precisely map the channel systems. Determining the reservoir potential of the thin bedded sandstones and siltstones using detailed petrophysical evaluation will be undertaken once the sidewall core samples have been analysed back in the UK. These studies will facilitate a better assessment of resource potential and also help define the work that will be required to further appraise this discovery over what is a large complex. The area of the previously mapped amplitude response at the target horizons range from approximately 250 square kilometres at T2 to over 600 square kilometres at T1. The T5 hydrocarbon zones were better than expected based on pre-drill estimates, but more work will now be required to define their areal extent.
FWIW this is my take on the RNS:
In sum, I am reminded of two previous situations which showed much early promise but which ultimately disappointed: TGD for SOCO International (LON:SIA) in Vietnam (lots of hydrocarbons that ultimately (probably) couldn't be moved commercially) and Chinguetti for a number of companies off Mauritania (lots of hydrocarbons in thin channel sands but which eventually disappointed and led to write-downs after a full field development followed by disappointing production experience).
Loligo may well turn out to be commercial for LNG (and could still be massive). But it seems at least as likely to turn into a money-pit if the partners try to do a full appraisal. My guess would be that the priorities are now going to be Scotia and other targets and that an appraisal anytime soon on Loligo is unlikely unless a rabbit can be pulled from the hat in the labs (despite an apparent lack of some data that would have been - at the minimum - desirable).
ee
http://www.offshore.no/international/article/Searching_for_sweet_spots_at_Loligo
Searching for sweet spots at Loligo
Posted 17.09.2012 10:02:54 av John Bradbury
Work is starting straight away to see if the Loligo gas find in the Falklands is commercial.
Tim Bushell, chief executive of Falklands Oil and Gas, which operated the Loligo gas discovery well with 75%, said the although up to 100 metres (328 feet) of hydrocarbon-bearing reservoir has been encountered, further work needs to focus on reservoir distribution, to find the sweet spots within the discovery.
“The initial results of the Loligo well are encouraging,” Bushell declared today. “They have demonstrated that hydrocarbons have migrated into the Tertiary Channel Play. It is also clear that Loligo is a valid trap that contains multiple gas bearing zones, with over 100 metres [328 feet] of hydrocarbon bearing reservoir.”
And he continued: “We now need to focus on reservoir distribution within Loligo in order to find the sweet spots. A work programme will be undertaken to achieve this, assess the resource potential and commercial viability of this discovery.”
FOGL holds 75% equity in the 42/07-01 Loligo discovery well, which was drilled with the Leiv Eiriksson semi-submersible. Edison International holds the remaining 25% in the well.
With the results from the Scotia prospect – the next well on FOGL's South Atlantic drilling programme – Bushell said these should help determine the company's future exploration efforts.
He indicates that the company has the necessary funding in place for further 3D seismic surveys and for drilling again in 2014.
http://seekingalpha.com/article/871091-falklands-oil-gas-makes-a-gas-discovery-in-the-south-falkland-basin
Falklands Oil & Gas Makes A Gas Discovery In The South Falkland Basin
September 17, 2012
Disclosure: I am long FLKOF.PK. (More...)
On September 17, Falklands Oil and Gas (FLKOF.PK) announced the results of their Loligo well. The press release stated that all of the sands contained gas with the largest prize coming in the lower T5 zone. FOGL was unable to retrieve fluid samples from any of the zones.
The upper zones are relatively small compared to the size of the T5 zone. The press release details the T5 zone as follows:
Within the T5 target two main hydrocarbon bearing zones were encountered (3,462 to 3,558 metres and 3,608 to 3,705 metres). The net hydrocarbon bearing reservoir in these two zones was 46 and 59 metres respectively. Porosities ranged between 23% and 30%, averaging 24% and hydrocarbon saturations between 40% and 75%.
Since the T5 zone is the main zone of interest, I would like to try and quantify the amount of gas there using simple original gas in place (OGIP) calculations. Certain things will have to be assumed for a simple lack of data. My assumptions are as follows:
I will assume a reservoir pressure of 5,500 psia. This is more or less a saltwater gradient and is likely correct or actually conservative. An actual pressure that is higher will increase the OGIP volumes.
I am also assuming 250F reservoir temperature. This is simply an educated guess.
Gas Gravity of 0.8
Z-Factor of 1.05 based on correlations using the above pressure/temperatures with a corresponding formation volume factor of 0.00680438 RB/SCF
I have assumed an area of 200 sq km. This is simply a very conservative guess based on the size range given for the upper zones (250-600 sq km).
Net pay height was given as a combined 105m (343 ft). Porosity is given as 24%. We will take the mid point of gas saturation which is 58%.
OGIP can be calculated as Area * Height * Porosity * Gas Saturation / Formation Volume Factor.
Combining all of the above into the OGIP calculation, I come up with 27 TCF gas in place for the T5 interval. Assume a 75% recovery factor and the FOGL WI of 75% and FOGL's reserves just from the T5 sand could be 15 TCF. Compare this to the 2011 reported US proved reserves of a few large companies:
ExxonMobil (XOM) 26 TCF
Chesapeake (CHK) 15.5 TCF
BP (BP) 13.5 TCF
Devon (DVN) 9.5 TCF
Anadarko (APC) 8.4 TCF
Clearly if T5 is actually this big, it is a game changer. It will put FOGL on the same level of reserves as the $14B Chesapeake Energy. On the flip side, there are portions of this press release that are disappointing. FOGL was unable to gather fluid samples or pressure data. These are huge pieces of information especially in a gas reservoir. I can't comment on why exactly they were not able to recover data. Typically permeability would be associated with these two data points. A low permeability reservoir could cause issues with FOGL, however one would expect a Tertiary formation with 24% porosity to have some decent permeability. In the coming weeks, the sidewall cores and related data will give us a much better picture of what FOGL actually has.
Until then, FOGL will plug the Loligo well and move the rig to drill the Scotia prospect, which has been advertised as potentially 1.1B bbls of prospective resources. FOGL has a 40% WI in Scotia and believes the oil story there is not compromised based on the gassy Loligo results. Look for Scotia results in roughly two months.