I posted this on TMF yesterday - some of you may have missed it:
Oriel issued a good, measured 16 page report on the four Falklands oilies on 15.Oct. They recommend FOGL and DES as buys and BOR and RKH as holds.
Summary:
The Falkland companies offer investors exposure to frontier exploration, and in the
event of success could yield returns measured in multiples of current share prices.
However the upside potential needs to be balanced with the significant probability
that the proposed drilling campaigns will not yield any commercial discoveries, which
we estimate to be over 50%. Balancing the downside risks with the upside potential
we highlight Desire in the North and Falklands Oil & Gas* in the South as our
preferred plays.
History has shown that investor interest in the region will heighten into exploration
drilling and we expect the shares of both Rockhopper and Desire to be volatile before
and during the drilling programme. Whilst these shares have enjoyed a strong run
since the announcement of the rig contract in early September, we will be surprised if
they were not materially higher into the drilling campaign once funding issues have
been clarified.
Oriel discloses as NOMAD and corporate broker to FOGL; no connection to RKH; market maker to the other three.
I can't provide a link, but will forward the pdf if e.mailed through this board or TMF
M.
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