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Drilling commences in Q4 2012, making now the time for the early birds to get while the price is low and sit and wait for the hordes to rush in end of summer.

When you consider BOR will spud in Q4 2011 and have a result in early Q1 2012, with around 1500% upside, it makes taking an early position very much worthwile as by the time the masses arrive in Q4 the price should be nearly double what it is now.

For the upside potential have a read of the Goldman Sachs May 2011 summary.

http://www.mediafire.com/?2kdabr40ck5qkl6

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Got some more last week at circa 47p.

First the good news - no regional support for the Argies.

http://www.aljazeera.com/news/americas/2012/04/201241517107911574.html

Great news that BOR got their placing away with ease it seems, and at a good price.

http://www.investegate.co.uk/Article.aspx?id=201204260700240965C

There are a number of things to consider here. Firstly that the South Falklands is now going to come into everyones radar as a potential "final massive frontier".

Before the Toroa drill (a 3.7% CoS well) it was not believed by many that thick high quality sandstones were present in the South, as fabled by BOR and FOGL and many geo's. It seemed to good to be true that huge thick sandstones were down there and so there were many billion and multi-billion recoverable size prospects there.

Well, the huge thick sandstones got proven beyond a doubt with Darwin. Tick that box.

The bigger point of the skeptics was that there was no proven working hydrocarbon system there in the south - Toroa a 3.7% CoS well drilled in what would be the edge swampy area helped their case - ignoring the small CoS this well had and it was the only one possible to drill with the shallow water Ocean Guardian rig back then.

Well, the proven hydrocarbon system was proven beyond a doubt with Darwin. Tick that box.

With proven huge sandstone reservoirs with good porosity and with a proven working hydrocarbon system there its easy to see why BOR got the placing done with ease, and its easy to see going forward that those that once dismissed it as all fantasy are now going to appreciate that the South Falklands is potentially an area with many "world class" size prospects there.


The downside of the placing, for some, will be that it highlights the lack of interest in the North Falklands Basin. ARG and DES have been unable to raise funds and yet BOR do so with ease. FOGL has raised money in 2012, but DES and ARG have not seen the interest.

A major thing to consider here is, taking for example Liz and Sea Lion - what you see in the North Falklands is lots of thin stacked sands. If you look into the net pay figure of Sea Lion you will see lots of 1m, 3m, 6m, 2m, 4m, 1m sands that together make the net pay figure, but in reality are lots and lots of thin sands. The problem with that is that it makes development much more expensive, firstly as you have to drill a lot more wells to capture all the thin sands in their best places - so wells to be drilled goes upwards - and secondly it make EOR (Enhanced Oil Recovery) much more difficult - if you can imagine trying to inject each of these thin sands with water and trying not to make them leak into each other and all over the place. Compare that to the South where you have hugely thick sandstone - which makes production drilling very simple and as well as EOR.

RKH should secure their farm out, but I think DES and ARG will have to sit back and just wait until at some time their potential might become attractive - but it could be a long time away - or they have to offer it and cut price levels to get someone else interested.

The world will soon wake up and smell the coffee with regards to the South Falklands Basin potential - and expect BOR and FOGL to become very hot sought after things.

Enjoy :) !!

Page 11

http://www.tradewinds.no/multimedia/archive/00125/OceanRig_UDW_125737a.pdf


...In April 2011, the Leiv Eiriksson commenced a contract with a term of approximately six months with Cairn Energy plc, or Cairn, for drilling operations in Greenland at a maximum operating dayrate of $560,000 and a mobilization fee of $7.0 million plus fuel costs. The contract period is scheduled to expire on October 31, 2011, subject to our customers option to extend the contract period through November 30, 2011.

Following the expiration of its contract with Cairn, the Leiv Eiriksson is scheduled to commence a contract with Borders & Southern for drilling operations offshore the Falkland Islands at a maximum operating dayrate of $530,000 and a $3.0 million fee payable upon commencement of mobilization as well as mobilization and demobilization fees, including fuel costs, of $15.4 million and $12.6 million, respectively. The contract was originally a two-well program at a maximum dayrate of $540,000; however, on May 19, 2011, Borders & Southern exercised its option to extend the contract to drill an additional two wells, which it assigned to Falkland Oil and Gas Limited, or Falkland Oil and Gas, and the maximum dayrate decreased to $530,000. Borders & Southern has the option to further extend this contract to drill an additional fifth well, in which case the dayrate would increase to $540,000.

The estimated duration for the four-well contract, including mobilization / demobilization periods, is approximately 230 days, and we estimate that the optional period to drill the additional fifth well would extend the contract term by approximately 45 days........

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Worth remembering the potential upside with BOR and FOGL.



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Upside from activity in Q4-2011 and Q1-2012

Three companies stick out in the biggest way (and do not forget Aminex).



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June 2011 AGM Presentation : http://www.bordersandsouthern.com/media/pdf/AGM%202011%20June21.pdf

Stebbing prospect has P50 recoverable barrels potential of 1.2 Billion barrels.

Darwin prospect has P50 recoverable barrels potential of 760 Million barrels.



Quick math.


RKH has P50 over circa 200 Million barrels and a circa 600 Million market cap.


So :

If BOR strike at Stebbing then market cap should increase by times 3 and then by times 6.

Like 50p x 3 = 150p then times 6 = 900p.

Allow for 50% dilution for appraisal and you get 450p for Stebbing.


Darwin would be times 3 and then times 3.5.

Like 50p x 3 = 150p then times 3.5 = 525p.

Allow for 50% dilution for appraisal and you get 262.5p for Darwin.


Not bad target prices for each prospect allowing for 50% dilution as well, and that is based on what the market is valuing RKH at in these current conditions - so plenty of upside potential on top for those BOR target prices.

The billion-barrel oil hunters

Created: 22 July 2011 Written by: Martin Li

http://www.investorschronicle.co.uk/



Borders & Southern (BOR)/Falkland Oil & Gas (FOGL)

The Falklands oil story continues to fascinate, even though last year's drilling campaign in the North Falkland basin returned just a solitary discovery for Rockhopper Exploration, leaving fellow explorer Desire Petroleum close to ruin.

While Rockhopper continues to appraise its Sea Lion strike recent confirmation of commercial flow rates is encouraging attention is turning to the largely unexplored South Falkland basin. The prospect sizes here are an order of magnitude larger than those in the north, although the targets are more remote, water depths are greater and the lack of previous drilling heightens geological risk. After years of trying to contract a suitable rig, Borders & Southern secured use of the Leiv Eriksson, an ultra-deep water, harsh-environment rig of which there are only around a dozen in the world. This will sail for the South Atlantic once it has completed drilling in Greenland this summer for Cairn Energy. Borders expects to drill the first of two exploration wells in late December, after which Falkland Oil & Gas (FOGL) will drill two exploration wells next year.

Borders chief executive Howard Obee highlights several factors that mitigate the otherwise significant risks of exploring a 'wildcat' frontier. Geophysical signatures provide strong indications of hydrocarbons while three-dimensional (3D) seismic surveys help pinpoint optimum drilling locations along a trend that stretches west from Borders' acreage to a basin that has produced 6bn barrels of oil.

Borders will first drill the Darwin prospect, which has an estimated size of 300m-760m barrels of oil recoverable, and then the Stebbing prospect, which is estimated at 710m-1,280m barrels recoverable. Between them, these two wells will target nearly $20bn of value.

Following the two Borders wells, FOGL will drill its Loligo prospect and then a second well still to be decided. To give an idea of prospect scale, FOGLs chief executive, Tim Bushell, says the Loligo structure covers an area the size of Greater London. Loligo has estimated mean prospective resources of 4.7bn barrels, although recoverable oil, for comparison with the Borders prospects, will be lower.

The chief executives caution that any discoveries will need to be at least 100m barrels of oil (and any gas discoveries will need to be multiple trillions of cubic feet) to stand any chance of being commercial. Mr Obee adds that each discovery will need to be commercial on a standalone basis since each is likely to be developed using a floating production and storage vessel rather than through a platform that could be shared. Nevertheless, these four wells could open up a new petroleum province with multi-billion barrel potential and investor interest will inevitably heighten through the autumn.

http://www.bgs.ac.uk/falklands-oil/downloads/newsletters/news.pdf

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www.gulfkeystone.com/uploads/investorschronicle-22july2011.pdf

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O&G Price Monitor.

http://www.mediafire.com/?m2j17nh6m33gu8k

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http://www.proactiveinvestors.co.uk/companies/news/32206/rockhopper-exploration-sea-lion-commerciality-not-significantly-impacted-by-argentinabrazil-shipping-ban-says-rbs--32206.html

Rockhopper Exploration: Sea Lion commerciality not significantly impacted by Argentina/Brazil shipping ban, says RBS

12:52 pm by Jamie Ashcroft

This morning Rockhopper announced the spudding of its latest well to test the Sea Lion discovery.

The commerciality of Rockhopper Explorations (LON:RKH) Sea Lion oilfield development shouldnt be significantly impacted by logistical problems arising from Argentinas claim over the sovereignty of the Falkland Islands, according to analysts at the Royal Bank of Scotland.

Just a week after Rockhopper confirmed that the Sea Lion oil discovery, in the waters surrounding the Falkland Islands, is big enough to support commercial production it seems that political issues may come into focus for investors.

According to a report in yesterdays Sunday Times, Brazil has fallen into line with Argentina by barring vessels from docking in its ports if they are flying the flag of the Falkland Islands and this could have negative implications for any development of the discovery.

Looking at the potential problems in a note to clients today, RBS analyst Phil Corbett said: To date, there has been no significant impact on the timing or logistics of exploration and appraisal drilling operations in the North Falklands Basin from Argentina's stance on the sovereignty of the Falklands.

While it may make a development more complex and costly (i.e. we would imagine a significant contingency in terms of equipment and people may have to be stationed in the Falklands given long supply lines) it shouldn't significantly impact the commerciality of the project in our view.

The analyst points out that his valuation, which informs his buy recommendation and 380 price target for the share, assumes a 250 million barrel development and it also incorporates a conservative view of both capital and operating expenditure.

The RBS analyst added: If ongoing work continues to support the potential of Sea Lion (current mid-case of 325mmbbls recoverable) and the exploration upside on the licence then we simply don't believe that it will lie dormant because of political and/or development risk when attractive upstream opportunities are growing scarcer.

This morning Rockhopper announced the spudding of its latest well to test the Sea Lion discovery.

It began drilling the 14/10-7 exploration well in the early hours of this morning. The well location is around 3.3 kilometres away from the original Sea Lion discovery and it is designed to investigate reservoir and hydrocarbon presence towards the northern limit of the currently mapped extent of the Sea Lion Main Complex.

Rockhopper expects that the well will take 32 days to drill.

On August 15, Rockhopper revealed that by its own estimate - based on the latest 3D seismic data and its recent drilling success - the Sea Lion oil discovery contains between 608 million and 1.279 billion barrels of in-place oil. The company believes that it can achieve recovery rates between 30 and 40 per cent, therefore it estimates that the Sea Lion contains around 325 434 million barrels of recoverable oil.

Importantly it said that the seismic results show that the Sea Lion Main Complex (SLMC) extends the south, and that the new high case area extends over 90 square kilometres. The seismic results have also identified two new fan prospects, Casper and Kermit.

Rockhopper is committed to drill another three wells including the 14/10-7 exploration well - using the Ocean Guardian rig and it is in talks over the possibility of drilling additional wells under an assignment agreement.

Meanwhile it also confirmed that the rest of the newly acquired 3D seismic data is still being processed and Rockhopper expects to have the interpreted results by the end of 2011. Rockhopper said it has now mapped fan prospects - SLMC, the Lower Fan, Chatham, Casper and Kermit.

http://en.mercopress.com/2011/08/22/falklands-government-readies-for-a-decision-on-a-new-deep-sea-port

Hotting up today

Decided to join you here....and am now in all "Foilkies" except DES....