LONDON--Falkland Oil and Gas Ltd. (FOGL.LN), an oil and gas
exploration company focused on its extensive license areas to the
South and East of the Falkland Islands, confirms Tuesday that the
farm out agreement announced on March 20 is with Edison
International S.p.a.
MAIN FACTS:
-On March 20, Falkland Oil and Gas, or FOGL, announced that it
had granted an option to enter into a farm out agreement to an
industry counterparty; that counterparty was Edison which was
unable to conclude the farm out agreement at that time as it was
undertaking a corporate reorganization which led to EDF becoming a
controlling shareholder.
-Under the farm out agreement:
* Edison will farm in and earn a 25% interest in FOGL's northern
area licenses; Edison will contribute its pro-rata share of the
costs of the 2012 drilling program, comprising two exploration
wells.
* Edison will farm in and earn a 12.5% interest in FOGL's
southern area licenses and will contribute its pro-rata share of
the 2012 work program.
* Edison will also pay its pro-rata share of certain historical
costs incurred by FOGL during 2011 related to the 2012 drilling
program.
* Edison's share of historical expenditures, together with their
share of the 2012 drilling program costs, are expected to be of the
order of $50 million.
* In addition Edison will make a separate cash contribution to
FOGL of 40 million dollars; $20 million on completion of the FOA
and a further $20 million in 2013.
* In order to obtain the option, Edison had already paid a $3
million non-refundable fee.
* FOGL will retain operatorship of the northern and southern
area licenses.
-FOGL will now consider acquiring a 3D seismic survey over a
portion of the southern area licenses in order to evaluate possible
future drilling targets.
-FOGL now expects to receive the Leiv Eiriksson rig in July
following completion of the drilling of the Borders & Southern
Petroleum PLC, or B&S, Stebbing well.
-FOGL intends to drill its first well on the Loligo prospect and
the second well will be selected based on the Loligo well
results.
-FOGL shares at 0715 GMT up 1 pence, or 0.85%, at 89.25 pence
valuing the company at 283.2 million pounds.
-Write to Ian Walker at ian.walker@dowjones.com