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Pro love's you yeah , yeah , yeah and you no that can't be bad

http://en.mercopress.com/2012/08/04/falkland-islands-assessing-options-for-the-expansion-of-port-facilities

Saturday, August 4th 2012 - 19:24 UTC

Falkland Islands’ assessing options for the expansion of port facilities

Falkland Islands port facilities are under assessment given the prospects of oil industry activities in the near future and two options are being considered by the local government: a new port project, and an interim development of the current facilities at FIPASS.

“Some immediate action is required in terms of survey work, design o............................

.I am going to work on this over the coming weeks, refining it and getting it ready to be posted around by whoever wants as the results of Loligo approach. There will be massive deramping going on I can bet, so this should hopefully provide a realistic valuation of the targets should there be success in finding gas or oil.

If any errors are spotted please point them out.


Draft 1 !




Loligo - Interpreting the results of the drill


Loligo is 75% FOGL and 25% Edison SPA (EDF), as according to the recent farm in deal.

First up one should consider the strategic importance of Edison SPA as the farm in partner. Edison are highly experienced in gas and oil exploration/production/distribution. You can see there latest gas PDF brochure on the below link :

Edison SPA (majority owned by EDF)

15.2 billion cubic meters of available natural gas supply. Edison accounts for 19.60% of Italy’s demand for natural gas, 83 concessions and exploration permits in Italy and abroad, 3 natural gas storage centers, 1 LNG terminal, 49.8 billion cubic meters of hydrocarbon reserves.

http://www.edison.it/media/brochure-edison-gas2012.pdf

As can be seen, Edison is a major part of the Italian energy supply system, and its parent company EDF is majority owned by the French government. This brings both the Italian and French governments in with the UK government as having direct opposition to any Argentinean harassment, add on an upset Spanish government over the nationalization of YPF (stealing it from Repsol) and you are seeing a clear picture of major world powers all becoming aligned against Argentina.

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In the South Falklands Basin the weather/sea conditions are similar to the Norwegian North Sea / West of Shetland. Water depths are not extremely deep (Loligo is around 1400m water depth) and most targets are shallower than 1500m water depth.

However, owing the remote location the criteria for a commercial discovery is higher than it would be elsewhere in the world.

Before proceeding some companies quote OIP or GIP figures (these are Oil in Place or Gas in Place figures and are not the same as "recoverable barrels" or "recoverable gas" which is the Oil or Gas figure after the "recovery factor" is applied. Owing to decent reservoir formations one assumes a 32% oil recovery factory and a 50% gas recovery factor on the OIP/GIP figures)


Oil - a find needs to be at least 200 million barrels recoverable to be commercial as a stand alone project. Smaller sizes that this would only be commercial when tied into a bigger development nearby. In reality to gain maximum value from a discovery it needs to be 400 million recoverable barrels in size - owing to economy of scale, the larger the find you hit a point at which its very attractive to develop, as opposed to being able to develop and make money, you come into being able to develop and make a lot of money.

Gas - a find needs to be at least 5 TCF recoverable to be commercial as a stand alone project. Smaller sizes that this would only be commercial when tied into a bigger development nearby. In reality to gain maximum value from a discovery it needs to be 10 TCF recoverable in size - owing to economy of scale, the larger the find you hit a point at which its very attractive to develop, as opposed to being able to develop and make money, you come into being able to develop and make a lot of money.

Condensate - no idea on this. Condensate is more complicated as there has to be gas re-injection in order to gain the maximum recovery of the oils. If you produce the gas and remove it then very soon the well will stop producing condensate and the total recoverable condensate will be very low. You have to therefore re-inject the gas back into the reservoir to maintain pressures so that gas again lifts the condensate out. Condensate often trades at higher than Brent crude per barrel - but its extraction costs are higher than oil due to the processes needed.


MAKE NO MISTAKE AT THIS POINT - LOLIGO IS A 4.7 BBOE recoverable target - thats 4.7 billion barrels of "oil equivalent" that are recoverable based on P50 estimates. THE UPPER TARGETS WILL LIKELY BE GAS - and owing to their mammoth size very commercial as well (which is why Edison SPA farmed in and Falklands gas via LNG could be a major part of Italys future energy supply) - the lower targets could be oil or could be more gas.


Loligo's 5 targets :


OIL BASIS - This is the LEAST likely end result, IMO.


T1 = 1509 million recoverable barrels - P50

T1 Deep = 644 million recoverable barrels - P50

Trigg and Trigg Deep is 969 million recoverable barrels - P50

Three Bears = 1588 million recoverable barrels - P50


Based on Sea Lion of RKH and therefore using a 4.7US$ per barrel valuation and taking 75% of that for FOGL's share and 320 million shares in issue.

T1 = 1509m*75%*4.7/1.55/320m = £10.72 per FOGL share value if P50 size oil
T1 Deep = 644m*75%*4.7/1.55/320m = £4.57 per FOGL share value if P50 size oil
Triggs = 969m*75%*4.7/1.55/320m = £6.88 per FOGL share value if P50 size oil
3 Bears = 1588m*75%*4.7/1.55/320m = £11.28 per FOGL share value if P50 size oil

If all targets are oil, based on Sea Lion price - potential £33.45 per share.

As FOGL already have a farm in partner and reservoirs are going to be, if there, large massive thick sandstones and simple to develop the price should be higher than Sea Lion's 4.7US$ per barrel, however, I will use that for now to be conservative.

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GAS BASIS - this is a VERY POSSIBLE outcome to the well on success.


T1 = Circa 9 TCF recoverable - P50

T1 Deep = Circa 3.8 TCF recoverable - P50

Trigg and Trigg Deep is circa 5.8 TCF recoverable - P50

Three Bears = Circa 9.5 TCF recoverable - P50


Based on Cove's (COV) sale and therefore using a 513 millions US$ per TCF recoverable and taking 75% of that for FOGL's share and 320 million shares in issue.

T1 = 9*75%*513mUS$/1.55/320m = £6.98 per FOGL share value if P50 size gas
T1 Deep = 3.8*75%*513mUS$/1.55/320m = £2.94 per FOGL share value if P50 size gas
Triggs = 5.8*75%*513mUS$/1.55/320m = £4.49 per FOGL share value if P50 size gas
3 Bears = 9.5*75%*513mUS$/1.55/320m = £7.36 per FOGL share value if P50 size gas

As FOGL already have a farm in partner and reservoirs are going to be, if there, large massive thick sandstones and simple to develop the price should be higher than Sea Lion's 4.7US$ per barrel, however, I will use that for now to be conservative.

If all targets are gas, based on COV price - potential £21.77 per share.


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GAS UPPER, OIL LOWER - This is the MOST LIKELY end result on success, imo.


Most likely outcome, if successful, would be IMO, gas in T1 and T1 deep, gas in Triggs and a bonus API 18+ oil discovery in 3 Bears.

This combo of oil and gas would give as below, if all were successful and P50 size.

T1 = 9*75%*513mUS$/1.55/320m = £6.98 per FOGL share value if P50 size gas
T1 Deep = 3.8*75%*513mUS$/1.55/320m = £2.94 per FOGL share value if P50 size gas
Triggs = 5.8*75%*513mUS$/1.55/320m = £4.49 per FOGL share value if P50 size gas
3 Bears = 1588m*75%*4.7/1.55/320m = £11.28 per FOGL share value if P50 size oil

Total gas upper/oil lower result = Potential £25.69 per share.


The strategic importance of having Edison SPA on board now in the farm in is very clear. Had FOGL discovered gas, as is to be expected in the upper zones, then they would, like RKH and the small and complex Sea Lion, had to probably accept a low ball offer to get the project moving.

With Edison SPA on board and their expertise in gas FLNG, storage, transportation and with them having a market already which needs much more LNG pumped into it, as in the earlier PDF, any gas discovery with over 5 TCF recoverable in size is likely to get developed. If T1 and T1 deep come in as gas as is expected then immediately Loligo is well past the 10 TCF threshold at which it becomes very commercially attractive to develop, meaning we would see pretty quick development of Loligo imo.

The joker in the pack is Three Bears, this will be the last reservoir target to be drilled and could well be the one that contains the oil there - exciting that if T1 and T1 deep are gas, we have a commercial success and then we have the icing on the cake possibly down below that. If T1 and T1 deep fail, there is still the big one down below to save the day.

By defining each of the targets, being gas or oil, on their P50 figures and based on recent examples of takeover values for oil/gas in the ground, should allow people to assign some kind of value as drilling progresses, in case we get for example an RNS after T1/T1 deep are drilled, then an RNS after the Triggs are drilled and then finally an RNS at TD after Three Bears has been drilled.

Below is a very rough (and not to scale, marked up/modifed by me) imo idea of the well bore and where the targets are in relation to planned drill/casing size.



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Well worth a read. An insight into HFT and how it is now distorting markets with sudden falls and rises.

http://www.zerohedge.com/news/interview-high-frequency-trader

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What's this spud RNS going to be based on?? If they'll have only just started drilling, then they'll have nothing to base it on??

I get the impression that Loligo might be more likely to be gas!!!!

As a comparison, for the RKH Sea Lion well.

Sea Lion Main fan was 1884m below the mud line following 3 casing points. (Below mud line means that at the mud line is where drilling commences on the sea bed, so drilling is in meters below the mud line/sea bed).

FOGL first target T1 is circa 800 meters below the mud line following 2 casing points.

FOGL second target T2 is circa 1100m to 1300m below mud line, following 2 casing points.

Third casing point for FOGL Loligo is at 1519 meters below mud line.


I would guess, based on larger drill bit, quicker drilling and the shallower drilling depths below mud line that we could see T1/T1 deep results come out before 20 days from spud, imo. Could see rumours of gas or oil at around 2.5 weeks to 3.5 weeks after spud, with results from T1/T1 deep before 4 weeks, if progress is good and no hiccups and they decide to update at the third casing point before drilling into the Triggs.


Three Bears at the bottom of the Loligo well is 2700 meters below mud line - same depth as Sea Lion Lower fan for RKH which was 2600 meters below mud line.

I have tried, very roughly, to compare the actual drilling depths, below the mud line/sea bed, for the RKH Sea Lion well and the Loligo well of FOGL.


As below. There is a difference in total depth of around 924 meters, as Sea Lion sea bed was 476 meters below sea level, and Loligo sea bed is 1400 meters below sea level. However if you take purely the actual drilling below the mid line, the below is a rough comparison.

Obviously with 1km extra length on the drill sting - operations like casing, changing bit etc... take much longer.

Anyway, interesting to compare.



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There is something else that not many people are aware of : is the fact that the market cap is very low for a fully funded drilling campaign and EDF (Edison) backup.....

i happily admit that i'm not too bright and certainly do no research, but common sense tells me that all these pretty pix and fascinating (to some) analyses of same mean absolutely diddlysquat until such a time as something commercial is found ..... to place more than a pretty nominal % of one's portfolio in such a stock therefore seems to me, using common sense, as total lunacy perhaps influenced by too many magic mushrooms

Added the drilling schedule on as well to the drawing. BOP will be installed once the 20" casing is run to 719 meters below the mud line, all before the drill starts downwards into the T1 upper target.



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Goes well with the Loligo/Sea Lion rough compare of depths of drilling (below mud line/sea bed) to targets.




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Stunning news.

Noble farms in and also Loligo spuds.

Love the terms of the farm in !!!! Well done FOGL.

Roll on Loligo.


Notice - there is no talk about updates in the spud RNS - this now leaves them open to update once, or three times, or five times during the drilling and various target zones.

http://www.investegate.co.uk/Article.aspx?id=201208060700073473J

http://www.investegate.co.uk/Article.aspx?id=201208060700073302J

:)

Big news.

Firstly - FOGL will now have 40p a share left over in cash after drilling Loligo and Scotia. So the downside is now limited to 40p with 2 dusters !!! :)


...........The farm out substantially improves FOGL's financial position. In the event that the Loligo and Scotia exploration wells are drilled within budget, it is estimated that on completion of the wells the Company's cash balances will not be less than $200 million which will provide the Company with significant funds for additional exploration work. .........


Secondly, now have a big US company involved, along with Italian/French Edison (EDF).


........Charles D. Davidson, Noble Energy's Chairman and CEO, said:

"Noble Energy is looking forward to working with FOGL and Edison in this new exploration joint venture. After careful study, we believe this region is very consistent with our new ventures exploration strategy of entering regions that provide prospects that are not only material in size, but also where initial success can de-risk subsequent opportunities. In this particular case we have already identified numerous oil leads on 2D data with an unrisked gross resource potential exceeding 6 billion barrels of oil. Once completed, this transaction will increase our worldwide leasehold by over 70 percent gross and 40 percent net."

Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. The Company has core operations onshore in the U.S., primarily in the DJ Basin and Marcellus Shale, in the deepwater Gulf of Mexico, offshore Eastern Mediterranean, and offshore West Africa. Noble Energy is listed on the New York Stock Exchange and is traded under the ticker symbol NBL. Further information is available at www.nobleenergyinc.com.

Yes the only way they could have achieved a better deal would've been if someone had given them free money;D).

Thats how i read it too Prose regarding to any updates..

I must admit that I also find Cynics continued sniping of Proselenes a tad annoying.
Although I agree that Proselenes's volume of posts can be somewhat overwhelming, he does as has been said, a huge amount of research which you can take or leave.
I always do research and check facts, so I tend to take a higher percentage of his facts, opinions as right with a small minority wrong.
I do find it difficult to put credibility on a poster who only uses common sense, but in their own words, no research.
Whilst common sense is hugely important, how can that alone be sufficient, as without research whilst you can point out many obvious errors or outlandish statements, you can't justifiably pick posts to bit.

So come on Cynic, please back up your comments with facts or/and well argued opinions, (I have seen you do so on other threads) then I am sure others as well as myself will be more likely to give weight to your views.

Of course, when you own shares you tend to ramp them, but as long as you attempt credibility, then I cant see a problem, after all would you expect a holder to take the sp down.

as i have frequently said, i read (some of) the research of others, and then pick and choose while trying to apply at least a reasonable portion of common sense

for my part, i find it a tad annoying that some posters think it is imperative to put at high risk a substantial sum at what they think are basement levels - all too often that basement will fall into an abyss anyway - on the basis of hype and total hypothesis

i have long said that i hold a modest number of FOGL, which 10 days ago was double that

"It is anticipated that the well operations will be around 60 days".....so am expecting the sp to drift sub 60p.

Wrong Harry imo, at least 2 if not 3 drilling updates during that 60 days imo.

We'll see, but august is a poor trading month and the 'splash & dash' punters will move on to other more tradeable stocks until TD approaches, imo.

First target is very shallow, being T1 and second is also shallow. Half the depth of Sea Lion Main in terms of drilling from Sea Bed/Mud Line.


Could be /rumours/news in 2.5 to 3 weeks imo on the first upper targets.



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