FOGL to sink US$160mn in search of Falkland oil

Tuesday, March 12, 2013

UK junior Falkland Oil and Gas (AIM: FOGL) over the next two years plans to invest US$160mn in exploration offshore the Falkland Islands.

The company will invest US$60mn to acquire over 10,000km2 3D seismic in the period.

The Southern and Eastern Falkland basin focused group aims to better identify new well locations by calibrating the 3D data it collects, FOGL chief executive Tim Bushell said in a conference call.

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The seismic will be collected over the Diomedia fan complex (taking place now); the Faultblock area to look for deposits similar to that of nearby Borders & Southern's (AIM: BOR) Darwin gas condensate discovery; and the Northern Hersilia-Loligo area.

Starting in 2H14, FOGL partner Noble Energy (NYSE: NBL) will take charge of drilling three to four wells in search of oil, which will be easier to commercialize than the gas discovered up until now. The drilling program is expected to cost US$100mn and will last into 3Q15.

FOGL is evaluating different possibilities to commercialize further gas discoveries including the use of an FPSO, subsea tie-back to shore with subsea separation and compression, a land based two train LNG plant or a floating LNG vessel moored in a deepwater harbor.

Farm-in agreements with Noble Energy and explorer Edison, controlled by French state power company EDF, provided FOGL with capital to fund exploration.

There was no mention of the Falklands referendum in the webcast.