.

i didn't say i wasn't happy; i just wonder whether this is genuinely good news - apart from cash injection, though presumably for loss of equity

Hi Cynic,

I did jump the gun a bit with the 'not happy' comment, but you must admit, you do live up to your name.
Not that, that is a bad thing.
Cynicism is always good to keep things on a sensible, level keel.
But to answer your questions, I feel the deal is very good for Fogl and EDF, as the loss of equity V shared risk, plus cash injections = probable reward is excellent.

I think it may be because I seem to remember that he sold most of his FOGL holding the other day, which is very unlucky timing. I wasn't even aware that they were looking for a farm in partner, but have kept hold of my FOGL stock, which is also just luck.

As expected, straight back into auction.

I think this shows FOGL is not very confident on its own.

yes i did, but i never do "sour grapes" ..... for all that, initial reaction is very muted indeed, so perhaps i'm not so silly

http://www.proactiveinvestors.co.uk/companies/news/44627/falkland-oil-gas-reveals-tie-up-with-french-utility-edf--44627.html

Falkland Oil & Gas reveals tie-up with French utility EDF

8:23 am FOGL says it expects to receive the Leiv Eiriksson rig in July, once fellow Falkland explorer Borders & Southern has completed the Stebbing well FOGL says it expects to receive the Leiv Eiriksson rig in July, once fellow Falkland explorer Borders & Southern has completed the Stebbing well

AIM quoted Falkland Oil & Gas (LON:FOGL) today confirmed that it has sealed a farm-out deal ahead of its upcoming drill programme.

The deal sees French utility firm EDF enter the Falklands.

Via Edison International – a company in which it owns a controlling stake – EDF will pay FOGL’s back-costs in the region of US$50 million and it will pay its own share of the costs for the upcoming drill programme. A US$3 million option fee had already been paid to FOGL.

Edison will own a 12.5 per cent stake in FOGL’s southern licences, which hosts six prospects, and it will own 25 per cent of the northern area licences, where there are five prospects.

Also Edison will pay FOGL an additional US$40 million in cash – with US$20 million being paid on completion of the farm-out and US$20 million due next year.

"We are delighted to have agreed favourable farm out terms with Edison. Edison is an experienced international exploration and production company, now owned by a major European energy company,” said FOGL chief executive Tim Bushell.

“The discussions we have held with Edison over the past few months augur well for a successful relationship.

“This farm out provides further industry validation of the potential of our licences and gives us greater financial flexibility for our future exploration programme."

FOGL says it expects to receive the Leiv Eiriksson rig in July, once fellow Falkland explorer Borders & Southern has completed the Stebbing well – which spudded in early May.

The first well of the programme will be on the Loligo prospect in the Northern licence area. And FOGL says the location of the second well will depend on the results of the first well.

If Loligo is a success FOGL says it will drill either a Loligo follow up well or it will drill the Nimrod Complex. Alternatively it will drill the Scotia prospect. Each of these prospects are located in the Northern licence area.

Meanwhile FOGL says that Borders and Southern’s Darwin gas condensate discovery is positive for its prospects in the Southern licence area. That is because it has demonstrated the presence of mature source rocks and a working hydrocarbon system, it said.

And it says the result has reduced the risks associated with at least six of FOGL’s prospects in the Southern licence area that have similar characteristics to the discovery. These prospects are located around 10 to 50 kilometres from the Darwin discovery, FOGL added.

The company said that further drilling in the current campaign will depend on well results and rig availability.

Lots of words. Lots of oil?

so far, no oil or even gas; just hot air :-)

Still, lots of opportunities to make a few bob pre-spud & pre-TD news. Am out of BOR, but happy to hold FOGL for now.
Clearly EDF don't seem too concerned about the Argentine threat.

Major point here is that FOGL will now end their 2 well drilling with enough cash to drill a 3rd well, if the option can still be taken (depending on when the 2 wells complete) and also have enough money for a full 3D seismic campaign in late 2012/early 2013.

No need to raise money for 12 to 18 months if they so wish.

Which leaves them in a very strong position and allows the share price to rise without fear of any discounted panic placings.

:)

If they hit oil they will have to raise huge amounts of money to appraise the well maybe 800 mill depending on what they hit.

I will be out of the share by then.
If they don’t hit oil they are pooped so I will stay on board for the first well only at this present time.

I have seen the problems RKH have had after hitting oil so far as cynic says they have hit nothing apart from coal.

Happy to hold for now.

People banging on about political issues with Argentina...there are no issues to be had. Anyone with a brain can see Argentina have nothing to stand on.

This will certainly not affect any company in the Falklands area.

http://www.sharecast.com/cgi-bin/sharecast/story.cgi?story_id=20186084


Falkland Oil & Gas:

Jefferies keeps buy rating and 195p target;

Merchant Securities increases target to 400p, buy rating kept.

Interview to listen to :

http://www.proactiveinvestors.co.uk/companies/stocktube/1211/canaccord-says-the-falkland-oil-gas-farm-out-deal-is-overall-good-for-investors-1211.html


And FT comment :

http://blogs.ft.com/beyond-brics/2012/06/26/falkland-islands-geopolitical-footballs-going-home/

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Edison International Spa (majority owned by EDF) are very much into natural gas, not something that should be ignored given the likely gas condensate in the southern licenses - and the potential of oil and gas at Loligo.

Gas at Loligo is commercial, being many many Tcf potential - no surprise to see a gas development/production/storage orientated farm in partner.

http://www.edison.it/en/company/who-we-are/group-structure.shtml

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Could we expect a decent upside if gas is discovered?

have the french stopped selling exorcets to the argies?

PS - Absolutely. Loligo is sooooo big that gas, or condensate or oil or any mixture of them will all be commercial.

T1 (the first target of the 5 in Loligo) is expected to be gas, the lower targets of the first drill more likely oil.

Some interesting comments from TB in this write up :

http://www.usanews.biz/2012/06/falkland-oil-and-gas-sells-exploration.html

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