Less Ads, More Data, More Tools Register for FREE

Pin to quick picksFOGL.L Regulatory News (FOGL)

  • There is currently no data for FOGL

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

Farmout Option Agreement and rig update

20 Mar 2012 07:00

RNS Number : 6704Z
Falkland Oil and Gas Limited
20 March 2012
 



20 March 2012

 

Falkland Oil and Gas Limited

 

("FOGL" or "the Company")

 

Farmout Option Agreement and rig update

 

 

FOGL, the oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands, is pleased to announce the execution of an option to enter into a farmout agreement which, if exercised, would provide FOGL with greater financial flexibility in respect of its current and forward programmes.

 

On 13 January 2012, the Board of FOGL announced that it was continuing to progress discussions in relation to a potential farmout. The Board is pleased to announce that it has granted an industry counterparty an option (the Option) to enter into a Farm Out Agreement (FOA) and an associated Joint Operating Agreement (JOA). The counterparty has completed all technical and commercial due diligence and the FOA and JOA have been fully agreed. For corporate reasons unconnected with the proposed farmout, the counterparty is unable to execute the FOA/JOA at this time, but expects to be able to do so within the next two months and prior to the commencement of FOGL's drilling programme.

 

Summary terms of the FOA

 

The counterparty would farm-in to 25% of the FOGL licence areas and would contribute its pro-rata share of the 2012 drilling programme, comprising two exploration wells

The counterparty would also pay its pro-rata share of certain historical costs incurred during 2011 related to preparation for drilling this year. The costs incurred are estimated to be $68 million gross

In addition the counterparty would make a cash contribution of $40 million; $20 million on completion (expected to be prior to the spudding of the Loligo well) and $20 million in 2013.

FOGL will retain licence operatorship

 

 

Terms of Option

 

As consideration for the grant of the Option, FOGL will receive an option fee of $6 million which FOGL will retain if the counterparty does not exercise the option before the spudding of the Loligo well (currently expected to be June 2012).

If the Option is exercised, $3 million of the option fee will be offset against the first $20 million of cash consideration referred to above, whilst FOGL will retain $3 million.

In the event that the counterparty has not exercised the option prior to an announcement by Borders and Southern on the results of either the Darwin or Stebbing wells and such announcement results in a significant increase in FOGL's share price, then an adjustment mechanism will apply:

o FOGL will have the right to reduce the counterparty's interest to 12.5% in the Southern Licence Area, but with the counterparty paying the same $40 million cash consideration

o The counterparty may elect to remove the Southern Licence Area from the FOA and reduce the overal cash consideration by $10m; or

o The counterparty may elect to pay an additional $10m to increase its interest in the Southern Licence Area back to 25%

 

 

 

 

 

 

 

Rig update

 

The Board of FOGL notes the announcement on 16 March 2012 by Borders & Southern Petroleum plc (B&S) that rig issues which had previously stalled progress on drilling the Darwin prospect had now been addressed and that the company expects another four to five weeks of activity on that well. As a consequence, FOGL now expects to receive the rig around early June following completion of the drilling of B&S's Darwin and Stebbing. This delay has no impact on the contractual arrangement that FOGL has with Ocean Rig to drill two exploration wells, following the completion of the B&S drilling programme.

 

 

 

Tim Bushell, Chief Executive of FOGL, said:

 

"We are delighted to have agreed favourable farm-out terms which we assess as a two for one promote on the first two wells. This farmout provides further external industry confirmation of the technical case and gives us greater flexibility with respect to our drilling plans

 

"We look forward to progressing our drilling campaign in the next few months."

 

 

- Ends -

 

There will be a conference call at 11.45 this morning to discuss the farmout option and rig update. The dial in number is:+44 (0) 1452 569 393.

 

 

Enquiries:

 

 

Falkland Oil and Gas

 +44 (0) 207 563 1260

 

Tim Bushell, Chief Executive

 

 

 

Oriel (Nominated Advisor and Joint Broker)

 +44 (0) 207 710 7600

 

David Arch / Gareth Price / Ashton Clanfield

 

 

 

Jefferies Hoare Govett (Joint Broker)

 +44 (0) 207 029 8000

 

Alex Grant / Chris Zeal / Graham Hertrich

 

 

 

FTI Consulting

 +44 (0) 207 831 3113

 

Ben Brewerton / Ed Westropp

 

 

 

This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
MSCEAKDEALDAEEF
Date   Source Headline
2nd Jan 20138:37 amRNSLONG TERM INCENTIVE PLAN & SHARE OPTION SCHEME
12th Dec 20127:00 amRNS3D Seismic Survey Commences
6th Dec 20127:00 amRNSOperations Update
27th Nov 20127:00 amRNSScotia (FI31/12-01) Well Results
7th Nov 201211:00 amRNSOperations Update
25th Oct 201210:00 amRNSOperations Update
25th Sep 20127:00 amRNSScotia well spudded
17th Sep 20127:00 amRNSLoligo (42/07-01) Well Results - Gas Discovery
11th Sep 20122:05 pmRNSHolding(s) in Company
10th Sep 20121:08 pmRNSDrilling Update
5th Sep 20122:06 pmRNSHolding(s) in Company
23rd Aug 20127:00 amRNSInterim Results
14th Aug 20121:39 pmRNSHolding(s) in Company
6th Aug 20123:09 pmRNSHolding(s) in Company
6th Aug 20127:00 amRNSFarm-out agreement with Noble Energy
6th Aug 20127:00 amRNSCommencement of Loligo well operations
31st Jul 20127:54 amRNSLeiv Eiriksson Rig on Contract
2nd Jul 20127:00 amRNSSale of FOGL shares
29th Jun 20125:42 pmRNSDirector/PDMR Shareholding
28th Jun 20122:42 pmRNSHolding(s) in Company
26th Jun 20127:00 amRNSCompletion of Farm Out Agreement
22nd May 20122:38 pmRNSResult of AGM
27th Apr 20127:00 amRNSAnnual Financial Report
20th Apr 20123:21 pmRNSHolding(s) in Company
13th Apr 20127:00 amRNSFinal Results
2nd Apr 20121:59 pmRNSHolding(s) in Company
20th Mar 20127:00 amRNSFarmout Option Agreement and rig update
27th Feb 20123:03 pmRNSHolding(s) in Company
9th Feb 20129:35 amRNSDirector/PDMR Shareholding
31st Jan 20121:31 pmRNSTotal Voting Rights
24th Jan 201212:00 pmRNSHoldings in Company - Replacement
24th Jan 20129:20 amRNSHolding(s) in Company
23rd Jan 20123:39 pmRNSHolding(s) in Company
20th Jan 20124:32 pmRNSHolding(s) in Company
19th Jan 20122:49 pmRNSHolding(s) in Company
19th Jan 20122:33 pmRNSHolding(s) in Company
18th Jan 20125:59 pmRNSTotal Voting Rights
18th Jan 20125:53 pmRNSHolding(s) in Company
17th Jan 20126:04 pmRNSHolding(s) in Company
13th Jan 201212:52 pmRNSRe: Falkland Oil and Gas Placing
13th Jan 20127:06 amRNSPurchase of Falkland Oil and Gas Limited Shares
13th Jan 20127:00 amRNSPlacing of new ordinary shares
30th Dec 20117:00 amRNSLong term incentive plan & share option scheme
2nd Dec 20112:30 pmRNSRig update
21st Nov 20117:00 amRNSOperational Update & Investor Presentation
3rd Oct 20119:58 amRNSHolding(s) in Company
29th Sep 201111:39 amRNSHolding(s) in Company
22nd Sep 20117:00 amRNSAppointment of Joint Broker
20th Sep 20114:39 pmRNSHolding(s) in Company
7th Sep 201111:27 amRNSInterim Results

Due to London Stock Exchange licensing terms, we stipulate that you must be a private investor. We apologise for the inconvenience.

To access our Live RNS you must confirm you are a private investor by using the button below.

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.