FALKLAND OIL & GAS (FOGL) Put company on your watch list for entry 25p region
Chris Oil feature article (HAS LONG TERM HOLDING)
Where is the bottom? Following my bearish views on RKH I wanted to do an alternative for die hard Falkland Investors. I would point out from the start, this is not a Buy at the present time but a watch list stock, presently it’s toppy in its high trading range due to low volume summer months and a 25p entry point is advisable for ten months wait till drilling or more than three months wait for 3d results.
Falkland Oil & Gas has acreage in the North and South basin, more wells drilling than any other company in the area come early 2015. I call it the back door entry with all the hype going to Rockhopper, the smart investors have been buying FOGL at low entry points which has pushed the price up and at the present time it’s toppy.
The company is fully funded through some smart deals bringing in partners such as Noble to reduce costs but at the same time leaves potential. In the south basin FOGL has 52.5% net while the top part Hersila area is 40% net. Although it’s too early for cos, the last campaign had an average of 20% cos. This campaign has data on proven tight gas discoveries and condensate discoveries (Borders & Southern south part) with well calibration on where the oil windows and oil seeps are today, combined with 3d new mapping. Remember on the last campaign FOGL used 2d infill and an odd tech csem which only really works on proven discoveries for appraisal. All in all there could be billions recoverable based on new P50 3d it’s too early to tell.
Now we move onto the low risk element the 52% cos Zebedee in the North basin. As we know in a success case 50% of Sea Lion Oil Discovery is in the old Desire Petroleum’s acreage, NOT Rockhopper’s old acreage, a company which merged with FOGL in Dec 2013. So maybe Dr Colin Phipps was right after all? I would highlight FOGL has the biggest 40% interest while RKH only has a small percentage verses its market cap, so really the campaign in 2015 is all about FOGL rather than RKH.
More to the point the company is well funded for 5 wells and any new funds will be placed on well success only quoted by Tim Bushell CEO at the recent AGM, and yes I was there.
FOGL already has contingent which would increase to 114.4m net on Zebedee success so this is not a pure play exploration company, it already has booked discoveries in the North and one could debate a tight gas field in the south. However it’s a 10 month wait so please don’t rush to the phones to buy like punters are doing at the moment in the summer with limited volume you will get burnt, wait for reasonable volume at a low entry of 25p. It’s a long ten month wait for a rig and three months away based on normal delays.
Until the next time more ramblings at the castle can be seen @chrisoil