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All we can be sure is that the cost of this delay to FOGL is "peanuts".

Noble are paying 60% of Scotia costs for their farm in, and Edison paying 25% - so FOGL only pay 15%.

Even if the overrun cost 7m US$, that would equate to just 1m US$ as FOGL 15% share.

Given the quickness in finishing Loligo this might mean FOGL's cash balance at finishing Scotia could be 119m US$ and not the 120m US$ I expected post Loligo drill finishing quick.

And so it all begins.......

Location for a new "deepwater" port is decided and so the reality of oil and gas development on the Falklands begins.

I remember some not very bright people saying way back that the "Falklands will never develop oil or gas as they have no deepwater port and need Argentinean ports.....".

The same people also said that "Commercial oil will never be found in the Falklands....."

The same people today say "Gas and condensate will never be commercial in the Falklands............."

Amazing how wrong these people can be, yet they still act as ignorant as before spouting their nonsense which ends up being wrong, again and again.......


http://www.penguin-news.com/index.php?option=com_flexicontent&view=items&id=453%3Aport-william-is-site-for-new-port



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Chart view :

http://www.tradingresearchpoint.co.uk/2012/10/26/trading-trigger-alert-falklands-oil-gas-fogl-above-55p-targets-75p/

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Falklands Oil & Gas’ (LON:FOGL) drilling has been delayed because of malfunctioning equipment related to a blow out preventer.

The company had been drilling the Scotia well – its second and final well of the programme – for about a month, and it said that it was slightly ahead of schedule prior to the delay.

“The recent malfunction is related to a part that had been used without problems during the drilling of the Loligo well and had been successfully tested earlier on the Scotia well,” the company said in a statement.

The repairs are expected to take two weeks. FOGL says the rig will be on a ‘zero day rate’ while this is taking place, however it will still incur others costs.

That info was posted 24 hours ago! C'mon, try and keep up!!! ;o)

25% to 26% is about right, after claiming back via tax breaks the exploration and other costs involved.

http://en.mercopress.com/2012/10/26/falklands-estimates-oil-earnings-at-25-of-gross-value-of-the-resource-extracted

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http://paper.li/Mulder1981/1332851831

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http://www.reuters.com/article/2012/10/31/uk-hedge-funds-falklands-idUSLNE89U01M20121031

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China to triple natural gas use by 2020 - thats a lot of LNG demand.

Maybe they want to buy themselves a Loligo or two.


http://www.reuters.com/article/2012/10/31/china-gas-policy-idUSL3E8LV5DN20121031


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Yes Proselenes IF the price is right... LOL!

"Maybe they want to buy themselves a Loligo or two."

Gulf Keystone has a net of 4.3% of their oil (WI/PSC/KRG special tax). Taking into account a 25% recovery factor (high for the location) and taking their 13 billion barrels OIP figure this gives :

13 billion barrels OIP with 25% recovery factor = 3.25 billion and then times 4.3% = 140 million barrels is the net barrels to GKP.

GKP market cap is say 1.7 billion pounds (now at 188p a share) and net take is 140 million barrels of oil. So presently they are valued at 12.14 pounds per barrel (excluding corporate tax on profits)

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Scotia P50, if it strikes oil, the big if, would be net FOGL of 400 million barrels of oil (from OIP of 1.212 billion barrels. Royalty is 9% so that would reduce this down to 364 million barrels (excluding corporate tax on profits).

It becomes apparent immediately that GKP have 140 million barrels net and FOGL could have 364 million barrels net using the same metrics (work in and royalties/special tax).

FOGL also has far bigger follow on leads than GKP has, 30 billion OIP in follow on leads if Scotia is good.

If you were to value each FOGL barrel on the same basis as the "present" value of a GKP barrel that would be 364,000,000 x 12 pounds = 4.368 billion pound market cap for FOGL if Scotia comes in and is appraised.

So taking a whopping 50% discount for FOGL on the GKP present valuation per barrel (appraising would have to be done), you get a 2 billion market cap for FOGL, or 10 times the current price, just for Scotia.

That would also equate the same way utilising a standard 8 US$ x 400 million barrels = 2 billion pounds market cap.


RKH achieved a price of US$4.69 per 2C barrel of oil for Sea Lion. This was considered a low ball offer by many, the reasons could be :

1/ Oil is waxy, sub 30 API.
2/ Thin and layered sands in many places at Sea Lion makes Enhanced Oil Recovery (EOR) more difficult.
3/ High water saturation is some areas again will make EOR difficult.
4/ RKH had no farm in partners and no funds to develop - backs against the wall stuff.


For FOGL.

1/ Any oil is expected to be circa 30 to 32 API at this location.
2/ Based on Toroa and Darwin the mid-Cretaceous sands appear to be thick and of good quality, singular sandstone bodies, not layered like the Tertiary (Loligo and Stebbing).
3/ FOGL have farm in partners in place, both multi-billion market cap (EDF and Noble).


The 4.69 US$ value is not applicable to FOGL, imo, owing to the prevalent conditions that forced what I call a low ball offer from PMO for Sea Lion.

Some people would argue that 8US$ in the ground is too high, I think not given the follow on leads and the major partners in bed already - the follow ons from Scotia is literally 30 billion barrels OIP and likely more once 3D is done and more prospects found and firmed up.


Its all speculation and fantasy stuff until the Scotia result is in. The chance of success is obviously less than the chance of failure. However, should the drill come in with oil then there will be a serious rerating of the share price.

Noble has already intimated that if Scotia strikes oil they will divert one rig down to the Falklands and commence (drilling to start Q4 2013) a multi-year non stop appraise and explore campaign, 365 days a year, multi year non stop drilling. With over 10 billion barrels of oil recoverable in follow on "Scotia type" leads (30 billion OIP) and possibly even more when 3D is done and processed - you can see why.

It could be a duster, but for those who wish to dream a little, there is no better prospect on the market for big time re-rating in the months ahead, if you are willing to take high risk you might get a big reward, with the downside protection being cash leftover of 40p a share if its a duster).

Price strength suggests either some kind of news is coming, or the BOP is fixed/soon to be fixed and drilling is to start again soon, imo

Today was shift change I believe for the LE rig, its encouraging perhaps that lots of buying (lumps) is happening today of the O trade kind.

Could be an intriguing sign......... what has been encountered so far ? Oil traces higher up would be a good sign (in that there is oil) but also might be a sign of seal leak (however at this location the seal risk is, I think, lateral, not vertical).

What price strength today?

+4% for no reason Shortie

With a massive share turnover of 550,000. zzzzzzzzzzzzzzzzzzzzzzzzzzz

On a general market theme, lots of positive data around, could be a strong bull run Nov/Dec now, getting interesting.

http://boards.fool.co.uk/up-down-flying-around-12672338.aspx

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We see ups and downs on the basis of nothing all the time P. If anything shows the sp is volatile not strong.

Big oil is going to the Arctic because its just so easy to drill there (for a few weeks a year before it ices over) and so close to markets and so easy to do everything and cheap to develop and its so easy to get to.

But of course the Falklands are too remote (according to the kermits) and have only 365 days a year drilling potential.

http://www.reuters.com/article/2012/11/01/us-bigoil-results-idUSBRE8A00WB20121101

;)

Will test the Argies resolve now.

After pissing off Europe with the YPF scandal - will they now upset the USA to help their Ecuadorean friends ?

I mean, a "united South America" is going to be tested here, if the Argies do not help in getting those Chevron assets seized then their reputation will be in tatters......... Surely Chavez (who is the supporter and backer of CFK) will want to piss off the USA if he can, surely CFK is not going to help the USA over her "South American" friends ?


http://www.washingtonpost.com/business/ecuadoreans-seeking-chevrons-argentine-assets-to-enforce-19-billion-oil-spills-judgment/2012/11/01/14074326-2437-11e2-92f8-7f9c4daf276a_story.html

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