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From http://www.thetimes.co.uk

Natural selection benefits Borders in Darwin gas find off the Falklands

Borders seems to have struck lucky in the Falklands even if it didn’t strike oil

Market report Billy Ehrenberg, Gary ParkinsonLast updated at 33AM, August 24 2012

It has been a long time coming, but the wait is finally over for shareholders in Borders & Southern Petroleum.Nearly five months after the disappointment of striking gas condensate, not oil, off the Falkland Islands, the exploration company has at last published the results of tests on what it found.And the results were good. In fact, they were very good. Not only is the gas condensate of sufficiently high quality to be used in plastic and fuel, but there looks to be enough to make the discovery commercially viable.

Panmure Gordon, Borders’ broker alongside Ocean Equities, had pencilled in a discovery of 160 million barrels as the minimum to make the Darwin field in the Falklands commercial.

There are between 130 million and 250 million present, Borders said, with 190 million barrels the “mid case”.Not only that, those who watch the exploration industry closest reckon the news makes Borders’ other prospects in the region much more exciting. It has ones of similar size and seismic profile to Darwin and a lone discovery would be rare indeed, experts opine.

Late last month, the company revealed that its efforts to discover more natural resources there were over for this year at least. Availability of a rig means Borders does not expect to resume exploration until 2014.Between now and then, the company intends to compile more seismic data and process what it has.

Borders is also looking at ways to lay hands on the estimated $2.9 billion (£1.8 billion) that it will take to commercialise a discovery of Darwin’s size.That will include bringing in a bigger partner with deep enough pockets to pick up the bill, in return for a hefty stake in the discovery.

Falkland Oil and Gas, drilling next to Borders and 7¼p higher at 95p, recently brought in America’s Noble Energy and Edison International to do just that.All of which spurred Borders shares 12p, or 58.5 per cent, to 32½p — though that is still well below the 131p mark at which they changed hands in April after almost doubling over four days when the bulletin boards on financial websites lit up with rumours, unsubstantiated, as it turned out, of a huge oil find.

Panmure lifted its target price for the shares from 61p to 68p, and still rates Borders a “buy”

Risen a lot more than I would have thought.....perhaps might make the upper forties...

I said yesterday and its pretty much done that :



To be fair add on a 50% farm out discount - and use the low case.

So 130mmbo * 50% * 5 US$

=$325m or say 200m sterling market cap for now.........which is 41p a share.

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 that a seismic program will be initiated starting in 2013 and future drilling will realistically take place in 2014. BOR is fully funded for the seismic; however, it will be required to raise funds to drill. BOR stock in London is up roughly 37% on the Darwin news.

Is a 190 million barrel condensate find in deep water at the ends of the world truly going to be commercial?

First, the size of the prospect is relatively small given its location. The Falkland Islands are one of the most remote places on the planet. Darwin is in over 2,000 meters of water. Contrast that to Rockhopper's Sea Lion find, which sits in 400m of water. The seas are also much calmer on the North side of the island, with the Southern area closely resembling the North Sea. The technological complexities between these water depths is very significant.

Any partner coming in is obviously going to have less than 100% of the 190MM bbls. Rockhopper had to cut a very unfavorable deal in order to find a partner to develop Sea Lion. Premier took 60% of Rockhopper's Sea Lion find, which, in total, was around 350MM recoverable barrels of oil. Borders is probably going to have to give up a similar portion or more, given the challenges with developing Darwin. If they give up 50%, the partner is going after 95MM bbls. Who is going to bring their operations to the extreme deepwaters of the remote Falkland Islands to develop 95MM bbls of condensate? Field development costs are going to be significant as well, due to the water depth, remote location, and the need for reinjecting gas for pressure maintenance. Something can be stated as commercial on paper, however, getting someone to act on it can be a different thing, given the intangibles you can't present on a piece of paper. Keep in mind Darwin hasn't even been appraised yet. BOR has a single well down. Sea Lion had a full appraisal done before the Premier farm-in. This only adds to the uncertainty of the economics for a potential partner.

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.

Future adjacent discoveries by BOR could also help push Darwin to true commerciality, even without FOGL finding something. Although, if FOGL comes up dry, it may be hard to attract partners to continue exploration in the general Falklands area. How hard will it be to find a partner willing to take on a relatively mediocre Darwin in a very challenging environment and continue needed exploration to try and make the project big enough to be worth it? If BOR can't find a partner, lots of capital will need to be raised through stock dilution to fund further exploration and appraisal of Darwin.

I have had BOR shares since after the Darwin discovery and sold them today after the jump in share price. The share price over the past few days shows the news obviously leaked out before the official announcement. I felt like today was a sell the news event with much still uncertain about the Darwin area and the size not being that large. I still hold my FOGL shares as I believe they are the true key to turning the Falkland Islands into an oil province. FOGL has almost four billion net BOE prospective resources in their first two wells along with having two large energy companies as partners already. Of course, this is the oil and gas industry and wild things happen, so there is a definite possibility I will eat crow on this, but with BOR so dependent on FOGL results, I think I would rather invest money in FOGL for a much better risk reward situation.

Disclosure: I am long FLKOF.PK. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Long FOGL and FLKOF

What is going on?

marked up from the start and profit taking took place
prices went below yesterday's close, so buyers came in
now has stayed around 33/33.25p were a large buyer place 25K lots on the order book, bought stock of over 500K eventualy as AT @ 33p

now the bounce back to this morning highs is on the way

why have you guys all been so quiet during my "conges a velo"? ....... don't tell me you all got too greedy and got caught by brokers putting out a buy note to get the price up and then dumping? ...... you didn't take fat profits when on offer? ..... sorry to be be so smug, but i do persistently tell you that a profit is only a profit when banked

and yes i did trade very swiftly and profitably in and out as already posted

Back in since Wednesday after the large retracement ( or capitulation )
nothing much yesterday but on the up today.

Looks like there is a bottom base now after the retracement

--------------
Is someone calling (himself ) " smug " there must be some truth on it ........... coming from the horse's mouth

neigh neigh and thrice times neigh! ..... at least i tell it as it is, and in my very smug opinion, this remains a real muppet share

smug and muppet ........

......... but it makes me money


How it has been performing for the last 5 days

i know the feeling well ... per post, i rode the momentum for 30/60 minutes and got out with a good profit .... you too appear to have banked profit but an awful lot of folks here do not understand that a profit is no profit until it's in the bank

wouldn't put it a bank..........dodgy places them r

get back to your donkeys on the beach!

Post from marlonmonkey over at III.




Silverfoil..as requested..sorry to anyone easily bored it is a bit waffle-filled.

The Falklands Campaign; where are we now?

Silverfoil asked an excellent question as to where we are with regards to the Falklands campaign with all five “explorers” and their partners.


Starting with Rockhopper Exploration:

Rockhopper entered the 2010 campaign with enough funds to drill two targets (Sealion and Ernest) and a tiny share of the DES acreage. In the words of Sam Moody they “hit the jackpot”. The share price as the OG arrived in the Falklands was around 50p and today it sits at £1.60. Some jackpot?

Rockhopper overturned massive odds, firstly in making the Sealion discovery, and secondly in finding that it stretched 10-20km further south into an area not covered by the 3D seismic. This enabled them to deliver a 300-500mmb discovery. They appraised, flowed it and called it commercial, farmed it out and will develop it…all for a share price trebling…it’s a harsh world.

When the 14-2 result came, ANYTHING was possible. Every sand encountered was charged with oil..WOW. Who could ever have imagined that we would find an OGC and an OWC within the range of charged sands of the 14-2 well/ In some ways 14-2 was misleadingly good as it promised so much.

Make no mistake, sometime in 2018-2019 RKH will be the proud owners of 30,000bpd production at a very low tax and duty rate. This is a reasonable mid-sized oil company and is worth multiples of today’s mcap..it will get there.

The next steps for RKH:
1) How do we add to the reserves?
2) How can we add to the 30,000bpd?
3) How can we ensure a seamless and flawless production process?

It would seem that reserves are for show, production rate (income) is for dough, but nonetheless Dave Bodecott has stated that his job is to increase the contingent resources owned by Rockhopper exploration. In my opinion Rockhopper have four avenues to pursue to achieve this:

I) Further appraise and book the resources attributable to the satellite discoveries
II) Explore their remaining acreage
III) Farm into one or other of the two NFB explorers
IV) Go look elsewhere (African AMI, SFB, AN other)

Not only are the satellite appraisals an easy way for DB to meet his objectives, it is almost essential for a coherent Field development plan. As I have said on many previous occasions, I am more aligned with the Senergy analysis than the Gaffney Cline, purely as GC have used a maximum radius methodology and Senergy a fully mapped pick. Either could be right, but first we need more drills and an assessment of “how do you solve a problem like Desire?” More on that subject later. There could be as much as 50mmb net to RKH here.

Rockhopper’s remaining acreage is IMO nothing special. It is ok. Clearly if they can find good reservoir sands in Chatham, then that prospect has a reasonable chance of success…you can then assume that other prospects in the North-South channel and fan play of late F2-early F3 age, might work. The promising 1-2m pay in the 15-4 well certainly bodes well for the Chatham South fan and possibly the George South B. We will see, again another 50-100mmb net to RKH if it is successful.

Other prospects which might work for Rockhopper are the fans north of Sealion B30, S2, the downthrown prospects, the pinch-out prospects including Jason and possibly the Berkeley prospect overlaying Johnson.

IMO, Johnson needs other big gas discoveries to make it viable...see below!
So, all that leaves Rockhopper with a strong position going forward but currently a weak mcap, looking at the fundamentals it would seem a bargain:

£450m market capitalisation
150mmbs of contingent resources (must be approaching reserves status)
Fully funded to first oil
30,000bpd production from c2019
Tax and duty payable at 36%
First mover advantage in the NFB
Cash of $300m, free carry on 3*40% exporlation wells
Significant exploration upside with appraisals of the satellite fields and further exploration.



So, Desire Petroleum

What a terrible, terrible campaign that was!! Unlucky and incompetent in equal measure…with the redemption at the end.

Liz proved once again that deep in the Jurassic and pre-rift there is gas, wet gas and dry gas. This is a recurring theme of all the campaigns and will “one day” make the Falklands a major global LNG producer in my opinion.

The bad news of the Liz well was the Barremian Liz target, pretty much didn’t exist. For all the high amplitude and 3D seismic, when DES got to drill it, the reservoir quality was poor to non-existent…same goes for the deeper Beth. For all the Danny Forsten saga, and the collapse of the sp, the abiding result from the Liz well is that the main target wasn’t present. This doesn’t bode well for other targets sourced from the west over the intra-basin high, simply the sand deposition didn’t occur as projected.

DES’s mistakes predate the campaign though. We already know that North of the 2004 3D seismic there is oil in Casper and Shona, and now the best future targets are South of the 3D seismic in Elaine and Isobel. All those looking to suggest that “things would have been different under Colin”, DES’s woes go right back to 2004 and the choice of where to run the 3D.

There is no doubt that the Rachel wells were unlucky, there would appear to be three different failure modes across six different horizons, it would have been the make of the NFB had Rachel come in at either the F1, F2 or F3 levels. Rachel really was “KEY”, as before then the dream of billions of barrels was on..since then, we have hoped for a billion or so.

DES made a fatal error with their failure mode analysis, it left them with more drill slots than sensible targets, in this period of inactivity that “crime” seems all the more heinous. They then gave up >100mmbs for $20m in their desperate scrambling to get a score on the board. Not completing that 3D back in 2004 got a bit expensive huh DES?

However, all things pass, and Jacinta and Ninky are consigned to the dustbin, 60% of Casper and Casper South are given away, but DES do have up to 85mmbs on their books.
So what to do next?

I never thought I would say it, but since the 15-4 result DES have seemed to be doing the right things, their presentations have approved, they are focusing on the large high COS prospects, and are looking to sell their share of Sealion and Caspers. GOOD.
I am personally very positive about DES’s prospects. The general consensus suggests DES have 4% of Sealion, no cash and are good at finding water. I see it as something different:

DES has circa 15-20% of the Sealion complex which they want to sell and some large high COS prospects in the East Flank fairway.

How or what deal is done between DES and RKH/PMO to resolve the Sealion Field Development Issue, whether a third party is interested in taking Des’s share, how DES can become involved in the next campaign to further explore Jayne, Pam , Anna, Elaine, Isobel will remain to be seen. I definitely see greater upside potential in the DES acreage of PL03 and PL04 than in the RKH acreage of PL032 and PL33.

Further to obvious upside of the larger targets, I am also very positive concerning the Chatham South, and to a lesser extent the George South B prospects, which DES own 40% of, as discussed in the RKH section. I could easily see Area PL04b returning 100-120mmbs to Desire…if only they’d had the 3D in 2004!



Argos Resources:

The quiet man of the NFB. They have watched and waited, and watched and waited. It is often forgotten that Argos Evergreen took part in the 1998 and oil shows were seen in a couple of the wells.

For me, they could watch and wait another decade for Johnson, which I believe they own the greater portion of, it’s not a priority unless someone else moves first.

Argos need the North South propagating channels and fans to work as a play type. At the moment it is far from clear that they will…but they might!

Starting with Kratos, down through Rhea, Poseidon, Selene, George Central, right into Pam..this play type could yield 300-500mmbs if it is successful. However the risks are many.
1) Reservoir quality unproven as we saw with the western fed play Liz, high amplitude didn’t necessarily give thick reservoir.
2) Northerly extent of the late Cretaceous source rock F3 age unproven, for Rhea/Poseidon to work the source rock needs to be mature in the Berriasian and Hertogovinian rather than Barremian.
3) The area is significantly faulted and therefore the trap sizes are small, a double edged sword as it should mean that many traps will be sealed, but also could be a hindrance to migration.

The good news is that RKH are keen to explore this play type in their acreage (George and Chatham) which could give ARG a reasonable guide as to where to start looking.

Argos also have large targets (Helios) in the western graben…low COS but might be of interest to someone..(my view is that there are larger and higher COS targets in the SFB, so Helios wouldn’t be high up the list of priorities)…remember Jacinta!

I think ARG need to drill before 2015, so need a partner to assist in their exploration. I would favour RKH/PMO as tie-back of multiple “smallish” north south channels would suit a top-up scenario to the FPSO 1. But, we will see who offers the best deal.




BORders and Southern

Borders sourced a rig, took it down to the Falklands, proved a mature source rock, proved reservoir quality sands, made a large rich gas condensate discovery, opened up a late Cretaceous fairway…AND LOST 75% of their market cap…it’s a strange world.

The “truth” is that just as a £600m mcap for Desire was crazy during Rachel, the £600m mcap of BOR during Darwin was equally daft. BB rumours and parrots, Barmen and the like…and of course a BUY rec in ShareHUB…

Stebbing was unlucky…what if they farm out 50%, go back and Stebbing deep is oil…they are the cruel breaks in life!

It looks as though the late Cretaceous fairway is open for gas and condensate..is it open for oil?
What does a condensate production scenario look like?
What does a gas recycling plan look like?
What share of Covington and Chaffers will a farm-in partner want?
How far up the Noble priorities are Thulla and Inflexible? They have committed to an SFB well in the next campaign..this will help BOR should it be positive.

Borders certainly look cheap at their current mcap, given the discovery that they have made and the fairway they have opened up. However, it is a harsh world and it remains to be seen what terms a farm-in partner will want.

Borders have added value to the acreage, they have proven a working hydrocarbon system with their shareholders money. They have a duty to ensure that any farm-out deal reflects that.

They have to take part in the next campaign, they have to find oil or prove a commercial quantity of condensate, otherwise life will become very difficult, as dilution/farm-out will return ever decreasing % share of discoveries.





Falkland Oil and Gas

I think that FOGl have played the most sensible game of all the FI explorers. They haven’t left themselves open to shittte or bust, by getting excellent farm-in partners BEFORE the exploration results kick-in. It might have marginally limited the upside, but I believe has set a platform that it will be difficult to fall through based on one or two bad results.

The Darwin result is good for FOGl, they have lookalike prospects in Thulla, Inflexible and Cornwall. The Toroa well proved reservoir quality sands in the Springhill and Mid cretaceous aged sands, and Loligo proved a working hydrocarbon system in the Tertiary. All good stuff.

Of course the missing word is OIL. Maybe Scotia will oblige.

The good news for FOGL is that their cash base after Scotia is $200m and their farm-in partners have committed to another campaign…what would DES, ARG or BOR give to be in that position right now?

It is difficult to fully evaluate FOGL prior to the Scotia result:
1) Very strong cash position
2) 2 very strong industry partners
3) Multiple lookalikes to a large gas condensate discovery
4) Potentially an enormous gas discovery in Loligo
5) Commitment to a multi-well campaign in 2014-15
BUT NO OIL!!

Loligo appears to be an exciting gas discovery. I hope that someone with the necessary cash agrees.

Can the South and East Falklands basins thrive on Gas and gas condensate discoveries, there would appear to be many of these. Will anybody dip their hands into their deep pockets and decide that this is the best way to spend $20billion? It’s an unknown, there are examples of smaller and more expensive developments, and other examples of large fields left dormant. We can but wait and see…or at least those of us around in the 2020s can!
Oh for an oil discovery, or at least the compelling evidence of oil maturity. I would imagine that the Scotia well will drill into the Aptian source rock and add valuable data to the maturity model, irrespective of the Scotia result.

In summary…What a couple of years…

The Sealion result was misleadingly good…perhaps the subsequent good results at 15/4 and Darwin have been undervalued. Overall, we have a commercial oilfield development in the NFB and undoubtedly further upside to come.

We also have gas, wet gas, gas condensate…pretty much every time you stick a drill in the ground…it seems harder to find oil than we’d like.

So, the first priority of commercial development is ticked off, the Falkland Islands will be self-sufficient and prosperous for generations, I couldn’t be happier for them.

Whether any of the five pioneering explorers will share in a new province and make their way from AIM to FTSE100..who knows, RKH are on a path, FOGL have protected themselves…the other three need partners, and what those partners want for their support will be a big question.

To the top for Proselenes,

chart looks like the FOGL chart now

Doe's anybody know why there is activity with this share today?

I know that Goldman Sachs have tipped them at 50p+?

Big...ish buys gone through!


Gerponville18

Sorry.......Tipped at 41p