Falkland Oil and Gas Ltd (FOGL.L), which has a farm-in-deal with BHP Billiton, said on Tuesday it expected to be drill ready by the end of the third quarter or early 2010. The announcement was made after having posted a narrower full-year pre-tax loss.
The AIM-listed oil and gas explorer said the availability of a suitable rig would determine the timing of drilling although it expected the drilling programme to start in late 2009 or early 2010.
Any drilling success will have a transformational impact on Falkland Oil. Given the size of the prospects being targeted the rewards could be very substantial, the company said in statement.
The company said it identified four initial prospects for drilling, with combined potential mean reserves of over 8 billion barrels.
For the year ended Dec. 31, 2008, Falkland Oil posted a pre-tax loss of 1.25 million US dollars, compared with a loss of 3.76 million a year ago. The latest results included foreign exchange gains of 2.58 million. However the company revealed that it had a cash balance of 18.8 million US dollars as at Dec. 31, 2008, compared with 24.9 million at end 2007.
Richard Liddell, Chairman of FOGL, said that the focus for FOGL in 2008 has been on the preparatory work for the forthcoming drilling program. BHP Billiton is actively seeking a suitable drilling rig and the deep water rig market is improving.
The farm-in deal with BHP Billiton was transformational for FOGL at the time. rs. FOGL retained a material 49% interest in its licences, whilst at the same time BHP Billiton is funding more than two thirds of the committed two wells program.
Through the farm-in, FOGL has secured a partnership with a major Exploration and Production company with substantial resources, an excellent deep-water exploration track-record, good contacts in the rig market and the determination to move the project forward in a timely manner.
FOGL is funded through a proportion of the near term exploration program as a result of the BHP Billiton farm-in.
The Board is currently pursuing a number of financing options to provide the balance of the funding for the exploration drilling programme. These options include a second farm-out and/or the raising of new capital via an equity issue.
In the past year, FOGL has been approached by a number of companies potentially interested in farming-in to its licence area and a formal process has now been initiated.