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Falklands Oil and Gas (FOGL) (FOGL)     

Proselenes - 13 Aug 2011 04:53

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Proselenes - 06 Aug 2012 10:48 - 1172 of 2393

Final Version :

Luckily FOGL have retained 75% of Loligo, otherwise I would have had to re-work this.

A very rough guide on what success, IF ANY, has in terms of monetary value. Given this mornings Noble farm in I would suspect Noble will farm into Loligo as well, but only after drilling results and any success - allowing FOGL to monetise success very quickly.



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.

.


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.

As FOGL are drilling well away from the high pressure/temperature area of the Southern South Falklands, they are drilling in the Northern South Falklands, there are no undue concerns about high pressure as was seen by BOR who were drilling in the high pressure Fold Belt area of the Southern South Falklands.


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.

--------------------------------------

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.


----------------------------------


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.

Obviously if they have a duster then its a duster and none of the above matters, but it should act as some sort of rough guide with which to value success on a reservoir target by reservoir target basis, be it gas or oil.



Drill hole / casing of the Loligo Well below :

loligodrilling.gif


Drilling depths (below mud line - actual drilling depths) rough comparison between RKH Sea Lion well and FOGL Loligo below :

sllol.gif


As Loligo has 4 independent potential "company making" targets (putting Trigg/Trigg Deep together as one) I fully expect them to make multiple RNS announcements of progress during drilling, and not just a single one at the end. Had there been a main target and some small secondary ones then yes, maybe one RNS, but with 4 potential company making finds on the way down, I expect updates to come as drilling progresses. The first 2 targets, T1 and T1 deep are under half the actual drilling depth from sea bed/mud line that the Sea Lion main fan was for the RKH drill, so I expect some news fairly soon, perhaps in 3 weeks or so.

The values for oil in the ground and gas in the ground are low, imo, but its worth starting there at low points to please the bears a little.



As ever, all is IMO, NAG, DYOR !! etc..
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required field - 06 Aug 2012 11:05 - 1173 of 2393

Edison belongs to whom ?...ENI or EDF...

required field - 06 Aug 2012 11:07 - 1174 of 2393

EDF....I think...

Proselenes - 06 Aug 2012 11:15 - 1175 of 2393

http://www.sparkstrader.com/merchant-securities-research-note-buy-falklands-oil-gas-fogl


Merchant Securities research note: Buy Falklands Oil & Gas (FOGL)

Falkland Oil & Gas (FOGL.L)

Farm out to US based Noble Energy - BUY

Price 75.0p

Target price under review

* Falkland Oil & Gas announced that US based Noble Energy (NYSE, market cap circa $15bn) has farmed into 35% of the company's license areas in the South and East Falkland Basin, excluding certain areas including the Loligo prospect, but including the Scotia Prospect.

* In addition to a $25Mn cash contribution, Noble will fund 60% of the well costs for the Scotia prospect (a two for one carry) and 60% of the well costs for the commitment well in the Southern License area. Operatorship of the relevant areas will be transferred to Noble in early 2013.

* Falkland Oil & Gas also announced that the Loligo exploration well commenced drilling on Friday 3 August 2012 and that drilling operations will take around 60 days.

* We will update our target price (previously 402p per share) to reflect the news flow.

* A two for one carry is generally considered to be attractive for the farm-out of exploration acreage and suggests that Noble is quite keen to participate in the Scotia prospect in addition to other exploration wells.

* Falkland Oil & Gas will be proposing that the Scotia prospect will be drilled immediately following the Loligo well. This is a positive development as we are particularly attracted to the Scotia prospect and the second well of the forthcoming campaign had not been finalised.

* The involvement of a large American oil & gas company in the Falkland Islands is positive from a political perspective and this read-across extends to all the companies operating in the area.

* Falkland Oil & Gas will now hold a 40% interest in the Scotia prospect (down from 75%) and a 75% interest in Loligo (unchanged).

greekman - 06 Aug 2012 13:52 - 1176 of 2393

I think the Argentine president Cristina Fernandez should send a strongly worded letter to Noble Energy and the US President warning them of the possible consequences of this disgraceful partnership, in what is clearly Argentinian territory.

I bet that would put the wind up them!

HARRYCAT - 06 Aug 2012 14:08 - 1177 of 2393

A strongly worded letter saying what? Unless........ If you don't.......... Failure to comply will result in.......?
She's been huffin' & puffin' for ages now to no effect.

greekman - 06 Aug 2012 14:12 - 1178 of 2393

Hi Harrycat,

As you have asked (I presume you did not take my last post seriously).

Failure to comply will result in court action, with the threat of military action as a last resort.

Note.........The USA have 11 fleets in total, with a battle fleet tonnage that is greater than that of the next 13 largest navies combined.

The Argentinians have a total of 17 ships (many obsolete) not counting patrol boats and a couple of tugs.

Perhaps its time we all sold, before things really get serious!



Proselenes - 06 Aug 2012 15:25 - 1179 of 2393

New presentation on the farm out :

http://www.fogl.com/fogl/uploads/companypresentations/FOGL_NobleFarmoutPresentation_Aug2012.pdf


And an interview with Tim Bushell of FOGL :

Link Here


Dow Jones and Company, Inc. 08/06/2012 9:43 AM ET

INTERVIEW: Falkland Oil & Gas Funded to 2015 with Noble Deal

07/31/2012 8:20 AM ET

LONDON--Falkland Oil & Gas Ltd. (FOGL.LN) has brought Noble Energy Inc. (NBL) onboard as its second Falkland Islands oil exploration partner, due to an aligned focus, its track record of quickly developing assets, its technical experience, and additional financing--which will see FOGL funded through its next drilling program and into 2015, CEO Tim Bushell Dow said Monday.

The deal will see Noble earn a 35% operating interest in Falkland's acreage, though excluding the large Loligo and Nimrod prospects, in return for spending between $180 million and $230 million over the next three years on exploration, including a $25 million cash payment.

"We just thought the deal was very strong in terms of giving us a future whereby we're funded really for the next three years," Mr. Bushell told Dow Jones Newswires Monday.

The additional funding from Noble wasn't essential as in June, FOGL signed a deal worth about $90 million with Italian oil company Edison S.p.A. (EDN.MI) to earn a 25% interest in FOGL's northern licenses and a 12.5% interest in its southern licenses.

The Edison deal funded FOGL's two-well 2012 drilling program, primarily aimed at making a discovery in the large Loligo prospect, estimated to hold about 4.7 billion barrels of oil.

"It was marginal that we bought Noble in. We were pretty happy with the Edison deal, but we felt Noble's offer is a good one and down the road, we don't expect to operate this forever. It's a very competent deepwater operator with lots of experience in the Gulf of Mexico and West Africa, so it was the kind of company we wanted to bring in at some point anyway," Mr. Bushell said.

He noted that Noble missed the boat, somewhat, in terms of getting a stake in Loligo and Nimrod. "We felt that we were fully funded for Loligo, we'd worked on it pretty hard and it was rather last minute to let someone in on that one, so we carved that out."

Mr. Bushell also dismissed the view that a U.S. partner was needed to alleviate political concerns regarding Argentinian claims over the disputed territory. "Our view is we're bringing in a partner for technical reasons not for political reasons," he said, adding: "We think that political element is particularly overplayed."

Oil exploration in the Falklands was initiated by five U.K.-listed companies, but continues to be frustrated by Argentine sovereignty claims and legal threats over the archipelago.

Nevertheless, analysts still read the addition of a large U.S. company as a politically positive event for companies exploring for oil in the region.

Amongst the benefits of partnering with Noble, Mr. Bushell is hopeful that it will facilitate the sourcing of a rig for the next drilling program in 2014. "We hope that with Noble on board, they probably may have better access to those rigs than perhaps we do on our own," he said.

Once the two-well 2012 drilling program is done, FOGL will undertake a seismic survey program to locate new drilling targets. The plan is to get back to drilling in the second half of 2014, the CEO said, adding he expects to drill between two and four wells.

"One of the things we liked about Noble, is that that was almost their schedule. They were driving that as much as we are," he said.

"In West Africa, they've done very well in terms of taking discoveries through to development and being on stream very quickly."

At 1315 GMT, shares were up 8.25 pence, or 11.0% at 83.25 pence, in a slightly higher AIM index, up 0.3%.

Write to Iain Packham at iain.packham@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires 08-06-12 0943ET Copyright (c) 2012 Dow Jones & Company, Inc.

required field - 06 Aug 2012 20:51 - 1180 of 2393

Nice increase.....a lot...lot more to come I would think.....this is so promising......the targets look the best in years...since Sealion....

Proselenes - 07 Aug 2012 01:42 - 1181 of 2393

Worth a watch - Lex on Falklands/Noble deal.

http://video.ft.com/v/1773416535001/Falklands-oil-bubbling-up-

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Proselenes - 07 Aug 2012 08:05 - 1182 of 2393

Bit of mis-reporting in the media saying results in 2 months (they seem to forget well operations include 14 days allocated to P&A - as was the case with Darwin and Stebbing - 14 days is P&A duration).

Based on normal operational timing and without there being any significant delays the below should be the timescales for final RNS and move to Scotia well location - how many RNS come during drilling operations, nobody knows, could be two before a final RNS about TD and Three Bears lowest target.


Spud Friday 3rd August - KNOWN

Well operations (inclusive of P&A) to be 60 days - KNOWN

Total drilling/casing/testing time circa 45 days - KNOWN DRILLING OPS TIME FROM EIS

RNS after completing casing and any testing of T1/T1 deep ???? - UNKNOWN

RNS after extra casing run and testing on any Triggs find ???? - UNKNOWN

TD reached/wireline run on Three Bears for final RNS 17th September - SHOULD BE

P&A of Loligo 14 days from 17th Sept - TWO WEEKS OF P&A OPS PART OF WELL OPS

P&A complete on Loligo 3rd October 2012 - END OF 60 DAY WELL OPS AS PER RNS

Move to Scotia well location and set up 3 days - NORMAL

Scotia Spud date 6th October 2012 - ESTIMATED BASED ON ABOVE


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

............is pleased to announce the Loligo exploration well 42/07-01 was spudded on Friday 3 August 2012..............

...........It is anticipated that the well operations will be around 60 days.....................

And no mention of when updates will be made, unlike BOR............. leaving the door open to multiple RNS during the operations period, as was intimated during the AGM.


EIS says 45 days to 50 days drilling time giving overall well operations of 60 to 65 days.

eisfogl.gifloligodrilling.gif

greekman - 07 Aug 2012 09:05 - 1183 of 2393

Proselenes,

I know posters knock you for your volume of posts, but yesterday I put about 2 hours into research similar to your last post contents.
On reading your last post, I saw that it had more in depth figures than my research, so I scrapped mine.
Good nice clear graph!
It goes to show what work you put in, whether others agree with your posts or not.

Regards Geek.

Proselenes - 07 Aug 2012 09:15 - 1184 of 2393

greek, a lot of the flack people give me is because I put actual data into the grasp of those who might find it difficult to do so, be it due to time or due to knowledge of where to get it all.

If I put this information out there it means those who want to be disruptive and talk nonsense are limited in doing so, as the facts and links and info is readily available.

Its why a few people really get annoyed I make such information available for all to "Do Their Own Research" but one must remember, bulletin boards are the playground for short term traders and their emotions.

greekman - 07 Aug 2012 09:20 - 1185 of 2393

Could not agree more.

Also like you, I might answer a poster no matter how obvious his ramp or de-ramp is, but only once or twice.
I can never understand why some posters continually 'bite' back, as all it does is clutter the thread, even if you have the offending original poster on Squelch.

markymar - 07 Aug 2012 09:38 - 1186 of 2393

That’s the problem if Pro kept to the facts but he mixes it with up with all the other little voices telling him what to say in his head.

Like condensed gas is worth more than oil as he was holding BOR at the time…..classic!!

greekman - 07 Aug 2012 09:56 - 1187 of 2393

Hi Markymar,

From memory (could be wrong) I can't remember him saying gas was worth more than oil, but that the gas find could be worth producing.
Time will obviously tell on that issue.
As in my previous posts, I have stated that I never take what anyone says as true without checking for myself, unless its obvious of course.
I was only attempting to point out that some posters do nothing but knock what others post without backing up what they are saying.

Note that I do not include you in this.

I accept that we can all get carried away on waves of rich rewards, so tend to push any positives whilst shunning the negatives.

Proselenes - 07 Aug 2012 10:02 - 1188 of 2393

Greekman, I take it markymar has said something (I have him squelched).

I guess he is talking about BOR ?

Condensate often sells for a higher price than oil. - This is FACT.

Gas sells for a lower price than oil - This is FACT.

http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/9402475/Borders-and-Southern-Petroleum-shares-plunge-70pc-after-Falkland-Islands-well-disappoints.html

.....................Borders & Southern's disappointment follows the company's initial success when its first well, also drilled south of the islands, found gas condensate, a liquid which often trades at a premium to crude oil.

Oil exploration by British companies off the.............


I guess the squelched poster is trying to say I said gas is more valuable than oil ? An idiot if that is true. Condensate is more valuable than oil, but not dry gas or wet gas, only condensate discoveries.

markymar - 07 Aug 2012 10:46 - 1189 of 2393

Of course you have me squelched as i don’t let you get away with your ramping and lies.

After nearly a year of ramping BOR you realised it was a lost course and sold out and this was your last de-ramp post.

Proselenes - 16 Jul 2012 15:04 - 1022 of 1044
200 million barrels of condensate on its own is not commercial as you have to deal with the gas produced as well. Its theoretically commercial, but practically not, not until lots of other finds are made near to it.

It’s too small as a standalone and I do not think anyone is going to be putting money into BOR to drill again. Darwin will be a stranded discovery that nobody will be interested in for many many years - perhaps not until the BOR license expires if they are unable to raise funds to drill again and comply with the license requirements.



I sold out of BOR ages ago at a profit when the rig had mechanical problems which I pointed out on the thread.

I hold many FOGL shares but also aware of the small 15% COS it has but i believe it will spike at some point as people chase rainbows.
I may also keep a few as the drill bit comes to an end as if successful it will be many pounds above share price at moment if they strike lucky if not they have a further 2 drills for the share price to recover so this risk reward has got to be one of the best around.
I hope FOGL do strike oil.

markymar - 07 Aug 2012 11:06 - 1190 of 2393

They you go Greek Pro still holding his BOR shares trying to justify that gas is worth more than oil.....he ranted on how good the find was then he sold later on hence his last post above on BOR thread........he is the biggest fake of all boards

Proselenes - 23 Apr 2012 07:27 - 543 of 1044
Lovely - a condensate discovery and massive one as well, no wonder BOR are pleased to announce it !


Condensate sells for a premium to Brent Crude.

A billion barrels of condensate - well ........... worth even more than a billion barrels of API32 crude.

The Times was half right, The Sun was half right.

DFGO - 07 Aug 2012 11:11 - 1191 of 2393

markymar

15% COS
I suggest you inprove your Research.
FOGL 20% COS and only 2 Drill slots not enough time to drill 3rd now Rig already contracted for mid Jan 2013.
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