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Falkland Oil & Gas Limited (LSE:FOGL) has signed in a new partner in its exploration in the Falkland Islands in a contract that is estimated to be worth between US$180 and $230 million in the next three years, the company said today.
Noble Energy Falklands Limited, an affiliate of NYSE-listed Noble Energy, Inc. (NYSE:NBL), entered a farm-in agreement to earn 35% interest to the north and south licences held by FOGL and will become the operator of the licences by 2013 and 2014, respectively.
This new farm-out deal was executed more than a month after FOGL announced a similar contract with Edison International S.P.A., which earned 25% and 12.5% in the said licences worth about US$93 million in aggregate value.
Significant Partner
Following the execution of the farm-in agreement, subject to Falkland Islands Government’s approval, Noble Energy will pay $25 million in 2013 to cover historical costs of explorations made by FOGL. The company will also cover 60% of the costs in drilling the Scotia well, as well as those incurred in 2011.
FOGL plans to drill the Scotia prospect in the fourth quarter of 2012, right after it finishes drilling the Loligo well, which commenced drilling last Friday, 3rd August 2012, expected to be completed in 60 days.
Noble Energy will also shoulder 60% of the costs for a commitment well in the southern area licences and 45% of a discretionary well, should Noble elect to participate.
“This farm-out brings in another significant industry partner for FOGL,” the company, whose stake in the north and south licences will be reduced to 40% and 52.5%, respectively, following the farm-in, said in a statement.
Excluded from the contract are the Loligo and Nimrod-Garrodia complexes, where FOGL retains operatorship and 75% stake, with Edison International holding the remaining 25%.
“We have now brought in two highly respected international exploration and production companies and with this strong partnership in place, we have the financial and technical resources to help realise the potential from our large acreage position in the Falkland Islands,” commented FOGL Chief Executive Officer Tim Bushell, referring to Edison and Noble.
His counterpart, Chairman and CEO Charles Davidson said the venture with FOGL is in line with Noble Energy’s strategy of acquiring material resource that increases its global leasehold by 70%, identifying about 6 billion barrels of oil in the newly acquired stakes.
“Noble Energy is looking forward to working with FOGL and Edison in this new exploration joint venture,” Mr. Davidson stated.
Company Spotlight
Falkland Oil & Gas Limited is an oil and gas exploration company focussing on the highly prospective offshore basins surrounding the Falkland Islands. The company was incorporated in 2004 and was admitted to the Alternative Investment Market in the same year.
Shares of the company were 10.3% to 82.75 pence by 1:30 PM GMT, after reaching 87.31 pence in early morning trading following the news.
