LONDON -- 2012 has been a busy year for Falkland Oil & Gas
At the end of June, Falkland Oil & Gas said it had $220 million in cash on its books. More important, when its current drilling program is completed, and assuming there are no material overruns, it expects to have around $200 million (approximately 125 million pounds) remaining.
While that may sound like oodles of cash, FOGL's prospects lie mainly in deep water, which is typically much more expensive to drill in than shallower prospects, such as Rockhopper Exploration's Sea Lion discovery, which lies just north of the Falklands.
The first well being drilled, which spudded at the start of this month, is targeting FOGL's largest prospect, Loligo. This well is expected to take some 60 days, and FOGL's stake in this area is 75%, with the remainder held by Edison International, a subsidiary of the French energy giant EDF.
Financial results at this stage of an oil explorer's development are often just academic, and this is pretty much the case here with Falkland Oil & Gas. The loss for the last six months came to just 160,000 pounds as operating expenses of 2.6 million pounds were nearly all offset by interest receivable on the company's cash pile.
Revenues were nil and will be for some time, of course. Even if FOGL strikes black gold with its current drilling program, commercial development of the area will take a number of years.
Commenting on the results, Richard Liddell, chairman of FOGL, said: "FOGL is in the enviable position of having a very strong balance sheet, leading industry partners and the potential to realize value across our large acreage position in the Falkland Islands."
With little in the way of new information in these results, FOGL shares were broadly unchanged this morning, up just 1% to 89 pence. But they have been on a good run recently, and are up 60% over the last year. At the current share price, the company is valued at 285 million pounds.
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