LONDON – Falkland Oil and Gas Ltd. (FOGL) has concluded a farm-out agreement offshore the Fakland Islands with Edison International.
Edison will earn 25% interest in FOGL’s northern area licenses to the south and east of the islands, and will contribute its share of the costs of two exploration wells FOGL plans to drill this year.
Additionally, Edison will farm into 12.5% interest of FOGL’s southern area licenses, contributing its share of the 2012 work program, and pay a share of historical costs incurred by FOGL last year related to the drilling campaign. FOGL estimates Edison’s total costs to date at $50 million, with a further $40-million payment to follow later this year and in 2013.
FOGL will retain operatorship of the northern and southern area licenses.
If the two exploration wells are drilled within budget, FOGL expects to have a cash balance of at least $100 million for further exploration work, which could include more wells or acquisition of 3D seismic data.
Edison is controlled by EDF, which is looking to use the company to expand its position in upstream oil and gas projects.