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Falklands Oil & Gas (LSE:FOGL) is seen as the leveraged play on the low risk Zebedee well at 40% interest which could be very rewarding, combined with two different drilling areas in the Falkland Basins. Investors and Hedge Funds are taking notice of this fact.
Rockhopper Exploration (LSE:RKH) is a safer option (click on my author names and read more) however (LSE:FOGL) Falkland Oil has the potential to be a ten bagger plus, if and only if every well came in with an oil strike in both basins, even in this low oil price environment. However low risk Zebedee has a value on successful discovery 75p realistic target.
The first multi stacked well called Zebedee in the North Basin with a 52% chance of success is basically an extension of the Sea Lion complex. I note from my brief interview article with CEO Tim Bushell written in August 2014 for Shareprophets Falklands Oil & Gas class it as a very low risk exploration well at 40% interest. Whats more 50% of Sea Lion extension could be in the companies own acerage if successful.
On a success case the company reserve would be increased from 85mmboe to 114.5mmboe and perhaps over 200mboe net just from Zebedee N.Basin. That would transform the farm in potential of phase three Sea Lion southern development area and potential sale value of FOGL in its own right.
Remember post Desire Petroleum merger with FOGL, Premier Oil (LSE:PMO) offered a further deal for PL04b but the company saw the data had excellent potential. In geo terms well 14/15 discovery had limited oil water contact which means the oil extends in Zebedee through the oil rich proven sands of Casper and Sea Lion Complex which onlaps Zebedee. You can find more about this technical information on PMO presentations or FOGL own website. Given FOGL has the largest interest in Zebedee out of the Falklands Players and the companies low market cap, shows this is the leveraged way to play the Falklands through exploration.
Onto the South Basin Noble Energy FOGL farm in partner seems very positve in this new price oil enviroment stating in the Penguin News “we all hope we will have a real celebration on multiple exciting prospects”. If these real exploration plays come off its like a new North Sea region.
In the South Basin Humpback prospect 52.5% interest is 510m recoverable P50 ready to be drilled mid 2015. This prospect has good AVO , 3D and updip seal mapped by Noble Energy based on existing wells in the past campaigns data, proving up the oil window majoring around central Humpback area.
The second prospect Scarnhorst North 52.5% interest 188m P50 recoverable is near to (LSE:BOR) Borders & Southern discovery Darwin. However the prospect is in the shallower depth so should be oil rather than condensate.
No chance of success figures have been given on the South Basin yet but during the last campaign had a 20% cos which proved the S.Basin had two working hydrocarbon discoveries. So i assume with 3d not 2d infill like last time and calibrated well data this time around a vastly higher success can be achieved.
Please remember the Falklands campaign is not about burnt out traders hoping for one oil company to the next. The range of investors include hedge funds waiting to position, investors from the media which will begin once the rig leaves, Ivory Coast, ex forces and the Falkland Islanders population.
Most importantly remember this if nothing else if we go back into history 1998 oil was $10 a barrel and in early 2009 $45 a barrel yet in both occasions the Falkland companies went up multiple times per spud to TD justified or not and third time round will be no difference starting on rig mobilisation.
Furthermore the long term oil forcast is still $75 a barrel but we all know due to the fiscal regime breakeven is $35 a barrel results in fields being commercial at $50 a barrel with further successful drilling bringing the capex down to $40 around Sea Lion. North Sea developments all in costs are 62% compared to 26% in the Falklands.
Another share moving event soon before the rig arrives in the Falklands is 3D results from Hersilla 40% interest, expect an upward moving catalyst like last years 3D prospect upgrade results.
However the main reason to invest in Falkland Oil & Gas is the confirmed low risk well and high leveraged postion the company will benefit from and its shareholders. I would add FOGL is fully carried and financed.
For more information you can relisten to my discussion about (LSE:FOGL) Falkland Oil & Gas 25th Nov 2014 on ADVFN Podcast show with Justin Waite.
Also listen into a Doc Holiday Chrisoil Falklands special podcast Jan 29th 2015 on http://www.chrisoil.blogspot.co.uk
If you are interested in the Falklands oil campaign its not to late to register with advfn to get access to excellent data and bulletin information by registering below.
Until the next time more ramblings from the castle can be seen @chrisoil
