By OGJ editors
HOUSTON, Mar. 31 – Falkland Oil & Gas Ltd., London, said it is close to finalizing a rig contract for its deepwater exploration program in the Falkland Islands in the South Atlantic.
FOGL signed a binding heads of agreement with BHP Billiton Petroleum, its joint venture partner, for BHP’s exit from FOGL’s northern license area once certain conditions are met. The conditions include Falkland Islands government approval of the assignment of BHP’s 51% interest and operatorship to FOGL (OGJ Online, Nov. 1, 2010)..
BHP will contribute towards the costs to drill the Loligo well by placing funds in an escrow account to be drawn by FOGL to drill the well.
The Loligo location is 210 km east northeast of Stanley and 275 kn northeast of FOGL’s Toroa F61/5-1 exploratory well, abandoned at a total depth of 2,476 m. The first well in the frontier East Falkland basin, it cut more than 30 m of net sand with 18-32% porosity in Cretaceous Springhill and didn’t condemn the Springhill play in the basin, the company said.
If Loligo encounters hydrocarbons, BHP will have the option to back in to the development area for a maximum 40% nonoperating interest in the discovery in return for making a cash contribution to FOGL’s future exploration and appraisal costs. Such a reassignment of interests will also be subject to government approval.
The settlement with BHP Billiton will, together with other funds available to FOGL, provide FOGL with total cash resources of $110 million. This will be enough to fund the Loligo well, other exploration expenditures, and allow the company to fulfill the Phase 1 work commitment of the Northern license area.
FOGL is considering more drilling options. The site survey program is progressing well, with surveys already completed on three locations. FOGL is considering the most appropriate means of financing and advancing these options and is in discussion with several parties that are interested in farming in to our licenses.
