MercoPress. South Atlantic News Agency

FOGL and BHP Billiton planning two exploratory wells in Falklands’ waters

Falkland Oil & Gas Ltd., a United Kingdom based explorer in the South Atlantic, plans to start drilling a well southeast of the Falkland Islands in April reports Bloomberg.

The company and partner BHP Billiton Ltd expect to drill on the Toroa prospect using the “Ocean Guardian” rig, which they plan to lease from Desire Petroleum Plc, Chief Executive Officer Tim Bushell said in a Jan. 29 interview in London.

“Hopefully it will be confirmed in the next few weeks,” Bushell said.

Toroa is in about 600 meters of water, “the limit of that rig,” Bushell said. If the first well succeeds, Falkland Oil may use the rig to drill a second, he said.

The explorer is also looking at ways of bringing a deep- water rig, designed for drilling in depths of 1,000 meters or more, to the Falklands. It’s considering sharing with another operator in the area, Bushell said.

Other operators exploring the Falklands are Rockhopper Exploration Plc, Borders & Southern Petroleum Plc and Desire Petroleum.

Falkland rose 6.5 pence, or 4.3%, to close at 157 pence in Alternative Investment Market trading in London Monday. The shares have more than doubled in the last year, valuing the company at 230 million pounds (approximately 366 million USD).

Falkland Oil may drill on the Loligo prospect as soon as the fourth quarter, Bushell said. A rig would need to be arranged in the first half of the year, he said.

BHP Billiton is funding almost 70% of the costs for Falkland Oil’s first two wells, Bushnell said. Falkland Oil sold about 50 million pounds of shares in November 2009, enough to fund at least three wells, he said in the interview.

An average well in the Falklands for the company costs about 35 million US dollars, excluding transportation of the rig, Bushell said.

The deep-water drilling market “is still quite tight, but it’s better and the cost has come down quite a bit” from six months ago, Bushell said.

BHP Billiton is a global leader in the resources industry, a merger of BHP and Billiton. Its business includes aluminum, base metals, iron ore, diamonds, metallurgical coal, petroleum, manganese, energy coal and stainless steel.