Oil and gas exploration around the Falkland Islands has been rather disappointing to date. After a decade or so of drilling, the only good news from that area has come from the discovery of Rockhopper's Sea Lion reserves, miles away north of the Falkland Islands and to be developed with $1bn (£633m) from cash-rich Premier Oil. But investors should also concentrate on Falkland Oil and Gas (FOGL).
A few weeks ago, FOGL spudded a two-month well on its 75 per cent-owned Loligo prospect 200km east of the islands. It also received welcome news from near neighbour Borders & Southern (B&S). In July, B&S share price tanked when it abandoned its Stebbing well far south of the Islands. Yet, on the day of FOGL's latest results, B&S reported much more encouraging reservoir news from its Darwin field, slightly north of Stebbing. That's important because at its May annual meeting, FOGL identified at least six Darwin "look-a-likes" on its adjacent licence area.
Of course, another guide to what's going on in any exploration area is who is prepared to step in (like Premier Oil) and fund initial or potential discoveries. And that's where FOGL is ahead of the game with two new partners ensuring the company is fully funded to drill five wells this year and next. End-2012 cash balances "will not be less than $200m".
FALKLAND OIL & GAS (FOGL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 88.25p | MARKET VALUE: | £282m | |
| TOUCH: | 88-88.5p | 12-MONTH HIGH: | 98.75p | LOW: 44.25p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 81¢ | NET CASH: | $221m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | nil | -3.54 | -2.23 | nil |
| 2012 | nil | -0.16 | -0.05 | nil |
| % change | - | - | - | - |
Aim: Oil and gas exploration and production. £1 = $1.5804 | ||||
