FOGL, Borders lining up deepwater Falklands wells

Falklands Oil & Gas Ltd. (FOGL) is looking to raise funds to cover its share of a series of wells planned next year off the Falkland Islands.

Offshore staff

LONDON -- Falklands Oil & Gas Ltd. (FOGL) is looking to raise funds to cover its share of a series of wells planned next year off the Falkland Islands.

The London-based company and its joint venture partner BHP Billiton are in discussions with Desire Petroleum, which has contracted the semisub Ocean Guardian on a long-term basis for programs on Desire/Rockhopper-operated acreage in the North Falkland basin, starting in February.

FOGL/BHP are interested in taking one of the rig’s slots for a well on their Toroa prospect in the East Falklands Basin during the first half of 2010. Toroa is in deeper water - depths range from 550-730 m (1,804-2,395 ft) - which would necessitate some modifications to the rig. FOGL estimates its net costs for these alterations at £12 million ($19.8 million), which would be paid for out of its proposed £50 million ($82.7 million) share-placement offering.

Toroa, around 140 km (90 mi) south of Port Stanley, is a large prospect identified in the Cretaceous Springhill play, with recoverable hydrocarbons estimated in the range 380 MMbbl to 2.9 Bbbl. The well at the planned drilling location is in water depth of around 600 m (1,968 ft), and would be drilled to a sub-surface depth of around 2,700 m (8,858 ft).

Ocean Guardian is a moored semisubmersible. The partnership has other prospects in water depths greater than 1,000 m (3,281 ft) – Endeavour, Loligo, Nimrod – which they feel would be better served by a dynamically positioned semisubmersible or drillship. They are looking to contract such a rig later in 2010 to complete their minimum work commitment of two wells and possibly other `discretionary’ wells.

Another independent operator in the South Faklands basin, Borders & Southern petroleum, has conditionally raised $188 million via a share placement for its maiden exploration program. The company has identified multiple play fairways and potentially large prospects on its acreage following a series of 2D and 3D seismic surveys. It intends to drill up to three wells, its priorities being the Darwin and Stebbing structures. Darwin is a Lower Cretaceous tilted fault block, and Stebbing is a Tertiary/Upper Cretaceous simple fold. Both structures are said to have geophysical amplitude anomalies associated with the main reservoir intervals.

Neither are the largest of the structures in the company’s line-up, but they are thought to present the lowest risk. If drilling proves successful in either case, Borders may drill a third well on a look-alike structure or as an appraisal exercise. Borders says its new funds will allow it to cover the entire costs of the three deepwater wells, although it may save money if it can share mobilization costs with other operators in the region.

AGR Peak Well Management is scouting for suitable rigs on the company’s behalf, and has advised of potential availability late in 2010 to early 2011. On formal completion of the share placement, Borders intends to start negotiations with rig owners/contractors, assisted by a drilling project management group, with a view to initiating exploration drilling as soon as is practicable.

11/30/2009

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