MercoPress. South Atlantic News Agency

Falklands Oil & Gas complete farm-out deal with US Noble Energy; drilling delay

M/V Ramform Sterling will begin 3D surveying for FOGL and Noble in November

Falkland Oil and Gas Ltd., (FOGL), announced completion of the farm-out agreement with Noble Energy Falklands Limited, an affiliate of Houston based Noble Energy, Inc. and the signing of agreements with Petroleum Geo-Services (PGS) for the acquisition and processing of two new 3D seismic surveys.

In a Thursday release FOGL also provided an update on the Scotia well drilling which has been delayed for two weeks because of the malfunction of a blow-out preventor.

The completion of the farm-out agreement follows the formal approval of the deal by the Falkland Islands government, which was first anticipated last August.

FOFL has also entered two separate agreements with PGS to acquire and process 3D seismic data over the joint venture's licences. The first survey will be located within the northern area licences and will cover a minimum area of 4,000 square kilometers.

PGS will use the survey vessel M/V Ramform Sterling and the survey is expected to commence in late November 2012. This survey will be operated by Noble.

The second survey will utilize the survey vessel M/V Ramform Challenger within the southern area licences and will cover1.000 square kilometers. This survey is expected to commence in the first quarter of 2013 and will be operated by FOGL.

The surveys will require the consent of the Falkland Islands Government and the granting of an exploration licence to PGS to undertake this work. The precise locations of both 3D surveys are currently being finalized and a further update will be provided once the acquisition program has commenced.

As a result of committing to these 3D seismic surveys the Falkland Islands Government has agreed in principle to extend Phase 2 of the northern area licences by two years to 15 December 2018 and the southern area licences by one year to 3 December 2016.

Regarding drilling of the Scotia well, a routine test on the blow-out preventer (BOP) revealed an equipment malfunction. The BOP has now been brought to surface in order to replace the failed component. In the light of problems encountered by a previous operator, FOGL had commissioned an extensive and independent examination of the BOP prior to the commencement of drilling.

The recent malfunction is related to a part that had been used without problems during the drilling of the Loligo well and had been successfully tested earlier on the Scotia well.

FOFL says the rig will be on a zero day rate whilst the repairs are being undertaken and expects the repair work to take approximately 2 weeks to complete and as a result, there is likely to be “a commensurate delay in reaching the total depth of the Scotia well”.