http://uk.advfn.com/news/UKREG/2012/article/53468900It failed to reach target depth - high pressure encountered. Rig now released to FOGL.Not looking good for Falklands investors.BOR down below 20p - 70% decline.cheersJohn
Not looking good for Falklands investors.Not if you own shares in Borders and Southern. However, those holding in FOGL and who want to increase their shareholding have been given a '~7% off' deal this morning. Other than investor sentiment BOR's result has little bearing on FOGL. Carcosa
Help Pro what do I do - I bet my entire pension on BOR and Stebbing hasn't performed :-) Seriously though this looks worrying for BOR because if it turns out that there was only mainly gas previously (and they have been a bit shy about telling us how the analysis went) then I don't see them with having very much that is commercial. FOGL only down 7% presumably because folk think that there isn't much read across to Logilo. I'm not sure I concur with that though! I think I'd want to see a bigger discount in FOGL before buying any to be honest.Log
Log,FOGL only down 7% presumably because folk think that there isn't much read across to Logilo. I'm not sure I concur with that though! I think I'd want to see a bigger discount in FOGL before buying any to be honest.The recent farm-out valued FOGL at about 67p so it's getting there. Looking at Rockhopper, which trades at a significant discount to farm-out value, along with many O&G companies out there, I'd still be miles away from investing in FOGL though.BOR now looks half decent value. I've bought a chunk at 18p to trade with since I can't see it going much below that.WShak
How are you going to ramp this one Pro? I'm sure there will still be an angle.
BOR now looks half decent value. I've bought a chunk at 18p to trade with since I can't see it going much belowBut if Dawin is mainly gas or put another way not enough condensate to justify development they won't have anything commercial at all right? I realise you have taken a trading position so maybe just looking for a bounce but with a lot of leveraged retail positions on here I can see it going a bit lower no?I guess if FOGL get a major result Dawin will get developed regardless but there is quite a bit of doubt now and raising more money for further drilling is going to be painful.Log
Anyone any idea how much cash they have? I'm guessing about £50M versus the current £88M market cap. They have no drills coming up so Id think positive Darwin results may be required to make money out of this dog.
Not holding, just looking on with interest........Looks like they under estimated the pressures & therefore went in with the completely wrong well design - they even used up their 'contingency' and still couldn't progress.Well integrity is not something to mess with post Macondo. Good decision to stop.Strong gas shows continued below the upper target. However, progress was slow due to lost circulation and well flows which occurred in consecutive hole sections. Several of these flows contained gas. On each occasion the well was successfully controlled but it became necessary to set additional strings of casing, using the contingency casing considered in the well design. In the final 6" hole section, the fluid pressures continued to rise giving further well flows and it became impossible to continue drilling whilst maintaining well integrity. A decision was therefore made to cease drilling. The great unknown now being what was the driving force - oil, gas, condi, water or mix?Did they gain enough knowledge to 'sell' it to have another go?I bet they are keen to get the results of the gas/condi ratio DarwinFluid samples from the Darwin discovery are undergoing analysis in the lab and the results are on track to meet the previously reported 10 week timeframe.
Drilling in a very unexplored territory with not much money is at the high risk end of what is a very risky business. To come through that in tact needs both skill and luck. In the meantime most of the bigger players stand back and wait to pick up the licenses for next to nothing when the companies fail.Even those that make the grade disappoint their holders. Witness the reaction to The PMO/RKH deal. If PMO were the only biddder in that process it just shows how risky the Falklands oilers are even with a good run of luck/successs behind them.Factor in the political and financing risks and that makes it too much for even someone like me, who is not averse to losing money on high risk /reward bets. There is always an opportunity to trade the bad news and good luck to those who try to do so.repo
The recent farm-out valued FOGL at about 67p so it's getting there.No, it didn't. The farm out valued FOGL's acreage at more than $240m (4 x [$17m + $40m + $3m]). Adding in FOGL's cash of $184m (13 April 2012) gives a valuation of $424m or £270m = 84p.
Stemis3 we debated t his before on another thread. Was took a very conservative approach and came in with a lower number. Others were less conservative and get more like the number you have. RHK is trading at a discount of nearly 70% to their farm out value anyway so I guess on that basis FOGL have a bit of a way to fall.Log
Hello Fools,New here but have been scanning for a number of years, nice to find a place broadly free of ramping and associated nonsense. I hold BOR and added more today at c.18p. My basis for this is based on a analogue.When WZR had the KA-1 blowout.... oops, well control issues.... I bought lots at low prices. You simply dont get wild well's when there is nothing there. It seems pretty clear to me that the lower zones at Stebbings contain something significant besides which Darwin is interesting on it's own. I bought into BOR after seeing the link to the AGM presentation here, and seeing the "condensate"..... interesting yellowish tinge.I think the BOR story has a lot further to go so I am in Long here.My current holdings are SQZ, BOR, WZR, VST, LFD and SLG... maybe that illustrates some element of my "profile".... slightly mad!ATB - GeoChem
The recent farm-out valued FOGL at about 67p so it's getting there. Looking at Rockhopper, which trades at a significant discount to farm-out value, along with many O&G companies out there, I'd still be miles away from investing in FOGL though.BOR now looks half decent value. I've bought a chunk at 18p to trade with since I can't see it going much below that.Current FOGL price is 75p versus approx 48p(?) cash Current BOR price 19p versus cash 11p(?)After the upcoming 2 drills FOGL should have approx 20p cash, enough for another drill next year?FOGL looks far better to me at this point. I think BOR would drop to 10p if bad results at Darwin. FOGL will drop to 20p if the next 2 drills fail but at least there is a chance of £5-£10 if one (or both) are a success. I think there is far less upside at BOR even if the Darwin results are good.
"You simply dont get wild well's when there is nothing there."True but Geo-pressure is due to Undercompaction, the reservoir fluid is supporting the Overburden.Often, maybe more often than not?? That reservoir fluid is water??I still think BOR are deliberately stalling, maybe they were hoping for a good result here.I didnt sell at the beginning of the month, I wont be buying now, just wait and see if it is gas or condensate, good news may produce a recovery in SP, I am not betting "Hard Earned" on that.
Was took a very conservative approach and came in with a lower number. Others were less conservative and get more like the number you have.The difference between the valuations seems to be that WShak did not take account of the payment of historic costs amounting to $17m and the option fee of $3m. RHK is trading at a discount of nearly 70% to their farm out value anyway so I guess on that basis FOGL have a bit of a way to fall.Except that the fall in the share price hasn't been caused by the valuation ascribed by the farm-out but by 'read over' from drilling results of BOR's Stebbing well.
ISTM that FOGL is not really subject to 'normal' valuation techniques because it doesn't really matter what the current value is: the company will either be worth a lot more - or a lot less - in a few months time. The main question is: does the risk:reward balance on Loligo et al justify a small gambling punt using money that one can afford to lose?The tragedy of Stebbing is that it has collapsed BOR's SP - and so there is no money to be cashed in and placed on FOGL. If Stebbing had 'come in', FOGL's SP would have shot very, very much higher.Never mind. I have added a tiny few more FOGL this morning, in the hope I might be able to sell them into strength as Loligo gets going....AA
hello casanare,I think the RNS itself says enough here:"Strong gas shows continued below the upper target. However, progress was slow due to lost circulation and well flows which occurred in consecutive hole sections. Several of these flows contained gas. On each occasion the well was successfully controlled but it became necessary to set additional strings of casing, using the contingency casing considered in the well design. In the final 6" hole section, the fluid pressures continued to rise giving further well flows and it became impossible to continue drilling whilst maintaining well integrity. A decision was therefore made to cease drilling."Accepted that formation waters can contain some dissolved methane and other "light-ends", however my sniff on the report is that there was mostly hydrocarbons, of type unknown. They may even have nipped a water leg associated with a more interesting zone. Clearly, at the end of the day, it comes down to whether you believe there to be active hydrocarbon systems in this area or not. All share investments involve a certain component of risk and I would entirely accept that this area incorporates a quite elevated level of risk. Having said that, Darwin de-risks hydrocarbon presence and circa 2.5TCF [even based on MDT which I don't especially like] gives a fairly hefty underpinning of confidence for me.It's too early to say on BOR what the two results really mean, but I take the view for myself that taking a position at a low entry point gives a higher potential gain and reduced downside risk than wait-and-see. In my case, taking that position with WZR and buying at c.32cent turned out to be a quite good decision, wheras my switch into VST turned out very badly.... that's the nature of the game. I don't accept your assertion that overpressure = water, try telling that to operators of central graben HP/HT fields....Thanks for your comment, regards to all - GeoChem
How are you going to ramp this one Pro? I'm sure there will still be an angle.Bit if a stupid comment really, do you not think.I do not own BOR, have said I am long FOGL only.Last week on ADVFN I was accused of being short BOR and a big BOR deramper...........LOL, I wish I was short BOR but in fact had no holding at all, as I tried in vain to tell people there last week, but no, I was a shorter.The only read across for FOGL from this is confirmation again that the source rock is good and producing hydrocarbons.BOR went drilling in the Fold Belt - for sure its unstable there, and they paid the price for targeting small accumulations in the Fold Belt.FOGL have gone for big more conventional targets - and that is why I have lots of FOGL and no BOR :)
Geochem,In short - in laymans terms - it sounds as though there were indications of hydrocarbons, but the drilling failed for technical reasons, rather than the absence of hydrocarbons?If so, I'm not sure this influences drilling in the region at all.
@FrankJohnstoneI have a similar view on FOGL, not clear in BOR though. If they are funded for another drilling, the upside must still be significant though I'd be concerned at their technical capability for success; the chances of success in the second would theoretically be unchanged, so 19p is theoretically undervalued.
BOR always had the dodgy licenses imo.Centre of the basin, fold belt unstable area and highly likely to be gas. Look at the pic in the link below :http://img809.imageshack.us/img809/3679/targets.pngDarwin was prime gas, Stebbing borderline prime gas on this "guesstimate" old estimate of the areas. BOR's licenses are outlined in yellow. FOGL has nearly all the north east of that that is "Mature for oil"FOGL has the best license area's, massive, and potentially OIP of over 300 billion barrels in all their leads.Loligo is prime oil window as is their 2nd target of Scotia.Its why FKL (being Falkland Islanders) have millions of FOGL shares imo, but no BOR shares. What do they know ? Looking kind of clever at the moment are FKL. Follow the locals I have done, and I have lots of FOGL.
Its why FKL (being Falkland Islanders) have millions of FOGL shares imo, but no BOR shares. What do they know ? Looking kind of clever at the moment are FKL. Follow the locals I have done, and I have lots of FOGL.You missed out the LOL. :-/Of all the reasons I have heard to invest in a company, that has to be one of the weakest. I say that as a holder of a small stake in FOGL and as a friend to a couple of Falkland Islanders.I almost took a stake in FKL way back in 2004 because of a weak connection with the company. That was the time FKL (and also GBP) took a significant stake in FOGL. I remember it well because FKL also bought over a ferry company and I started to doubt their sanity. Then the FKL share price exceeded my 180p target and I started to doubt the Market's sanity.Yes, FOGL still looks like an interesting punt, an exciting punt even, but with the paucity of data in the Loligo area we have no way to know with any certainty what is going to happen after the well is spudded. Unless we have the second sight. I doubt many Falklanders claim to have paranormal abilities. Haoma
I doubt many Falklanders claim to have paranormal abilities. Give Pro a chance, he's been quiet for the last few weeks - he probably needs a little while to warm up. I'm sure we can look forward to much better material (& plenty of it!) in the coming weeks ;-#((
I've also known a Falkland Islander and a very attractive girl she was too;-)I wouldn't trust the judgement of 3140 people too much on this either, but each to their own.http://en.wikipedia.org/wiki/Falkland_IslandsI also wonder how they are going to deliver the technical response to the oil and gas industry. All through the UK I would presume?repo
I wouldn't trust the judgement of 3140 people too much on this either, but each to their own.http://en.wikipedia.org/wiki/Falkland_IslandsI think Proselenes was talking about Falkland Islanders in general. I assume this includes large numbers of sheep. Quite appropriate really.
tinp0t,Thanks for your response. Your analysis is predominantly correct though I don't really think that anything can be taken from here and translated elsewhere to the SFB. I always view well's where the operator cannot handle the pressure regime and geology very well as a good sign. There are very few operations these days that don't have a lot of capable consulting bodies operating behind the facade. A wildcat in Virgin territory is a pretty stern test but well rehearsed in this area [N.S.].... so things getting out of hand is in my view a very good sign.Nice to see WZR doing well though dropping-off at the end of the day... just as always. Lot's of newsflow soon to be hoped. Partner, money, Sarquala and KA-2 DST...... nice.ATB - GeoChem
....so things getting out of hand is in my view a very good sign. [geochem]Even Confucious may have trouble in explaining that one. ;-) I'd be surprised if BOR shareholders preferred to see a c.70% share price drop in one day rather than a multi-bagger in one day.......
I've changed my mind on my trading position for BOR and have sold for the loss of dealing costs.Cash is apparently less than I had hoped and so I'm not as optimistic for a bounce as I was.Merchant Securities cash calculations below look plausible:Estimated cash position: The company had a net cash position of $176.7Mn atyear-end 2011, which was supplemented by an equity raise of circa $72.0Mn. Thecompany estimated that it would cost $150Mn to drill two wells based on anexpectation that both wells could be drilled in 90 days (with some contingency).Based on the pre-drill guidance, the company would have a current cash balanceof circa $99Mn (excluding overhead and administrative costs). However, Borders& Southern has been utilising the rig for 167 days since the spudding of Darwin(31 January 2012). If we assume that 15 days of contingency had beenincorporated into the $150Mn budget and that the incremental daily costs ofutilising the rig amount to only one half of the total expected cost per day then weestimate that additional costs due to delays would amount to $44Mn. This wouldleave the company with circa $55Mn net cash. We believe that downside revisionsto the this estimate are more likely than upside revisions given that additionalmaterials are likely to have been used in drilling the well and that the rig has stillnot been released.WShak
FWIW (not much) I think avoiding BOR at this stage is wise because they also messed about before the initial spud with the rig on Darwin. Whatever cash is left in the company can't be relied upon in my view because it is very very unlikely to find its way back to current shareholders. I really can't see them able to do much else without raising any money and in this market that means current share holders are pretty much bottom of the pile.I'm no expert but from what I can gleam the cost and complications of drilling with HPHT kit in the south Falklands would be very very expensive indeed. How much more money to be spent before they got something commercial? It could be though that Darwin is brimming with valuable condensate but I have my doubts and wonder why it has taken so long for the company to analyse the samples? For me anyway a risky sector in a very risky part of the world (due to its remoteness and weather not so much political) in a company with no money and now dubious assets - have to say its an avoid for me! If the results on Dawin were very clearly positive (no spin) then I'd look at it again. Rockhopper is taking a beating as well - I guess leveraged investors in here or people think that the development by PMO is going to be more difficult without another find in the south falklands. Come on FOGL - we need a good result.Not invested in any falklands companies but v. interested.Log
Numis value them at 36p and a buy based on their existing results having some commercial value.Thoughts?(I don't hold BOR)
I'd be more in the FD camp with a target of 16p .http://www.uploadlibrary.com/foxdavies/SFBUPDATE160712.pdf
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