FINN (COM) DAILY RECORD: TUESDAY, 03 MAY 2005
Compiled by J. Brock (FINN)
Section 1: Important News
Section 2: Tristan da Cunha Breaking News
Section 3: Relevant Internet News
Section 4: Announcements
Section 5: FIBS News Direct
Section 1:
Important News
Falkland Islands Holdings PLC
03 May 2005
Tuesday 3rd May 2005
Falkland Islands Holdings plc
Falkland Oil and Gas Limited made the following announcement this morning. Falkland Islands Holdings owns 18% of Falkland Oil and Gas Limited.
Falkland Oil and Gas Limited
('FOGL' or 'the company')
Significant increase in number of identified leads
Enhanced possibility of a new petroleum province in the South and East Falkland Basins
FOGL announces that it has completed its current 9,450 km 2D seismic data acquisition programme over most of its licence area. The initial interpretation of the preliminary processed records from the survey has proved encouraging and greatly exceeds the Company's initial expectations.
The programme has indicated a larger and more diverse project than originally anticipated and has identified numerous possible drill targets, with indications that some could potentially be of significant size.
FOGL has now identified approximately 130 leads, (1) far in excess of the eight (8) leads identified at the time of its AIM IPO in October 2004. Given the positive results of the survey, FOGL now plans to increase the scope of its exploration programme far beyond that envisaged at the time of the IPO.
Key points:
- Approximately 130 leads identified, a number of which appear capable of containing recoverable reserves in excess of 200 million barrels
- FOGL now represents a larger and more diverse project than originally anticipated
- Encouraging signs that oil and gas could be present
- Further work is planned targeting defining 20 drillable prospects by about mid-2006
- FOGL is targeting drilling of the first well in 2007
- Already an enhanced possibility of project success
- Licences cover area equivalent to the North Sea Southern Gas Basin and Central Graben
- Cash position of £10.9 million as at 31 March 2005. FOGL is evaluating its funding requirements and the source of funds for the increased exploration programme
John Armstrong, Executive Chairman of FOGL, said:
'In my opinion, this is the most exciting project I've seen for many years. The results of the 2D seismic are encouraging; the number of leads identified has far exceeded our most optimistic estimates and we believe it has greatly enhanced FOGL's prospects. It is clear that the scope of work needed to maximise the potential of our acreages has increased significantly.
'It is important to remember that, while the leads identified to date each have seismic expression which indicates the possible presence of a drillable prospect, when fully mapped, and with the benefit of further data, such leads may not have all the characteristics necessary to become drillable prospects. Nevertheless, the large number of leads distributed across several play-types suggests that a number of the leads could become technically sound and potentially economically viable drill prospects. It is the Company's goal to identify and define 20 such prospects in the immediate future so that they can be considered for drilling in 2007.
'We have made a lot of progress in the six months since our AIM IPO and the results to date have been remarkable. Although there is a long way to go, it now seems quite possible that the Falkland Islands could become a new petroleum province by the end of the decade.'
Hydrocarbon Indicators
Initial interpretation of the new data gives considerable cause for optimism. The preliminary results of the survey identify numerous Direct Hydrocarbon Indicators (DHI's) pointing to the presence of working petroleum systems. The DHI's include gas chimneys, amplitudes and possibly gas hydrates. The leads are large and diverse, with some leads possibly covering areas of 300 to 500 sq km, sufficient to hold large reserves of oil or gas. There is also a wide range of play types with several different styles identified.
Exploration Programme & Funding Arrangements
FOGL plans to conduct further seismic surveys targeting all the leads but with particular emphasis on the approximately 50 most promising. The aim will be to develop 20 high quality, technically sound and potentially economically viable drilling prospects. The Company then intends to develop a multi-well drilling programme, which may be able to begin in 2007.
Full details of the exploration programme are still to be finalised but given the increased number of identified leads the company expects to expand significantly the scope of the exploration programme.
Although FOGL had net cash of £10.9 million as at 31 March 2005, the increased scope of the programme will require additional funding and the Board is currently considering its options. A further statement on the funding arrangements and the full details of the programme will be announced soon.
Potential Resources
The extent and depth of the basin suggests that, if it exists, the hydrocarbon resource could be of a major scale. According to estimates by MBA Petroleum Consultants, an independent consultant, 1,250 billion barrels of oil / oil equivalent could have been generated in and in the vicinity of FOGL's licences.
Scott Pickford, petroleum engineers, made an independent assessment of the initial eight (8) leads and concluded that each had the potential to contain between 200 million and 600 million barrels of recoverable oil (2). It is expected that Scott Pickford will be contracted to repeat the process and make an independent judgment on the potential resources indicated by the new data. Its findings will be announced on completion of the processing and interpretation, which is expected to be in the third quarter of this year.
An overview presentation will be posted on the FOGL website giving a summary of the results announced here. Technical information including maps and seismic lines will be posted on the Company's website in the near future.
(1) A 'lead' is a feature that requires further technical appraisal prior to a decision to drill
(2) P50 recoverable oil as estimated by Scott Pickford, a consultancy specialising in geology, petroleum engineering and economic analyses, in 2004 (IPO Prospectus)
Falkland Oil and Gas Limited ('FOGL') is an oil and gas exploration company focused exclusively on opportunities offshore of the Falkland Islands. It was admitted to London's Alternative Investment Market ('AIM') on 14 October 2004 at an issue price of 40p. The current major shareholders of FOGL are: Falkland Islands Holdings plc (18%), Global Petroleum (16%) and RAB Capital plc (31%). At the time of the admission to AIM, FOGL held a 77.5% interest in seven offshore production licences covering approximately 33,700 sq km to the south and east of the Falkland Islands. FOGL holds these licences in a joint venture with Hardman Resources. In December 2004, FOGL was awarded a 100% licence over an additional 50,000 sq kms adjacent to its existing licence areas. The 83,700 sq km area held by FOGL is equivalent to 380 North Sea blocks: as large as the Southern Gas Basin and the Central Graben combined.
www.fogl.co.uk
Enquiries:
FOGL
John Armstrong, Executive Chairman + 61 (0) 7 3211 1122 (+9 hrs GMT)
David Hudd, Deputy Chairman 07771 893 267
College Hill 020 7457 2020
Ben Brewerton
This information is provided by RNS
The company news service from the London Stock Exchange
Executive Council - 28 April 2005
It was quite a long ExCo this month - nearly 40 items on the agenda. A lot of them were related to the upcoming budget so I can’t go into details on what Councillors decided as their recommendations were all submitted to the Budget Committee for further discussion, but I hope to give listeners a flavour of what was discussed and some of the issues that concerned Councillors.
We started off the meeting with the Director of Fisheries and all Councillors (except one) present to discuss the early closure of the illex season and issue of whether refunds should be made to licensed jiggers. Councillors were naturally very concerned about the failure of the stock again and discussed the future prospects for the fishery. They considered the need to reward past loyalty and to ensure future interest in the fishery but also the current financial situation of the Islands and the need to make savings. The Director of Fisheries was able to provide some useful clarification of a number of points, which Councillors raised, and it was very valuable to have him attend in person.
Some important new legislation was also considered and agreed at this month’s meeting. The Sexual Offences Bill, which enacts the provisions of the UK’s Sexual Offences Act, was approved for submission to Legislative Council. This is significant because it increases the amount of protection for vulnerable people in society - in particular for children. An amendment was approved for the Media Trust Bill to take account of the fact that the Media Trust is to take over the running of the Falkland Islands Broadcasting Station. This is a move that has been discussed for some time and has been discussed with all the staff that is aware of the implications. Other pieces of legislation to look out for in the Gazette are the Planning (Amendment) Bill and the Finance Bill.
A number of issues relating to Education came up. There was substantial discussion on the issue of who should be entitled to funding from the FIG for further and higher education. At the moment this is available to all Status holders, regardless of how long they had been in the Islands, or whether or not they were likely to return. The issue will be discussed further by a small group of officials who are to prepare a further paper for Councillors. Councillors were very conscious of the need to be fair and not to discriminate against some people, but also of the importance of ensuring that the Islands have the possibility of benefiting from what can be a significant expense.
Also on education, Councillors took a paper on ways to deal with persistent unauthorised absences from school and agreed to make amendments to the legislation to enable stronger measures to be taken in the case of persistent offenders. ExCo takes a very strong view of unauthorised absences, although Councillors were keen to stress that they recognised there were occasions when it was not appropriate to take strong action. For example, many families took holidays rarely and when they did go away it was for a considerable period of time. Provided that this was not a regular occurrence and that a child did not miss a vital part of his or her schooling, Councillors would not be in favour of action being taken. However persistent absences, in particular during important years such as preparing for GCSE, should be discouraged and Councillors agreed to amend the existing legislation to give the Attorney General powers to prosecute parents who allowed their children to miss school regularly. Also on the subject of further education Councillors confirmed that applications for Government Housing from returning students should be considered on their merits and not given automatic priority. This will be made clear in the Government’s Housing Allocation Policy Statement.
On oil, Councillors agreed that in future work plans made by companies as part of their licensing agreement would be made public. This will enable other companies who are interested in applying for a licence see the kind of work which FIG expects them to commit to - although obviously each company will have a different work plan.
Probably one of the most emotive and controversial issues, which have arisen over the last few months, has been the route of the Murrell Road. As the public know, the route was initially chose on purely engineering grounds but when it was announced there were a number of objections on the grounds that this route would have a significant negative impact on the area which is a local beauty spot and very popular with fishermen. There has been a long period of consultation on this and expert advice has been sought from Fisheries Dept on the fishing aspects and from the Environmental Department on other issue. Councillors needed to take a decision at this meeting of ExCo because although road building will not start again until next summer some preparation will be needed over the winter months. After considering all the options Councillors decided that the route originally planned across Mastins Point should stand, but that work should not begin until a satisfactory Management plan for the site had been drawn up in outline. The plan’s aims will be to detail how best to protect the natural environment and in particular the fish stocks and it should address not only the effect of building the road but also any potential effects of increased access. They asked for the Plan to be submitted to the September ExCo.
An issue on which Councillors would welcome further views from the public is the future of the Government Jetty, which is currently in a very ramshackle state. A range of options was put to Councillors but they asked for further consultation with people who use the Jetty. However Councillors did decide the fate of the Camber House, which is to be put for sale by public tender. A notice inviting bids has already been issued and further information is available from the Secretariat.
And finally … some new commemorative coins will be produced which collectors and souvenir hunters can buy. One is a gold coin to mark the wedding of the Prince of Wales to Mrs Parker-Bowles and shows a bouquet of flowers, including four sprays of Pale Maiden. Another is a coin to commemorate the 60th anniversary of the end of the Second World War showing a family waving flags and surrounded by bunting and then a set of four coins to commemorate the anniversary of the death of Sir Winston Churchill which show him in four different aspects - as a young soldier, an artist, a writer and in his most famous role broadcasting to the nation during World War II.
The next ExCo will be a budget ExCo on Monday 23 May.
STANLEY SERVICES LIMITED
A new shareholder, the Lavinia Corporation, has joined the Board of Stanley Services Limited. This has prompted a number of questions over the past couple of weeks so we asked FIG Chief Executive, Chris Simpkins to respond.
Why has the Government sold some of its shares?
"Prior to completion of this re-structure, FIG was the majority shareholder in Stanley Services because in acquired the shares of a former shareholder, Hogg Robinson, when that company went out of business in 2001. FIG felt that this was an unhealthy position to be in and has had a long held ambition to remove itself completely as a shareholder in Stanley Services. Equally as part of the agreement to acquire the HR shares, the other shareholder, S & JDR, insisted that he did not wish to be a minority shareholder in a two party business with FIG, and that the HR shares should in due course be sold on to a third party. This deal reduces FIG's shares back to the level of its original shareholding, and provides the vehicle by which its remaining shares will be offered for sale to Falkland Islanders."
Will Falkland Islanders be able to buy unlimited amounts of FIG's shares when they're offered for sale?
"No. Shares will be made available to Falklands residents or companies under the control of residents and based in the Islands. Whilst subject to further detailed discussion, the maximum shareholding currently envisaged is 5%."
Why was the Lavinia Corporation chosen to become a shareholder?
“In December 2001 ExCo considered a paper on the future direction of SSL and agreed the proposal from SSL that the introduction of a new shareholder would be good for the development of the business and the economy of the Islands and, of course, would reduce the government’s shareholding. Lavinia have been the exclusive bunkering contractor for Stanley Services for almost 20 years, and the opportunity to bring bunkering into the activities of SSL, to provide better control and increase business opportunities made Lavinia the obvious choice. It also provides the opportunity for additional tax revenue since the new joint venture company, Stanley Bunkering Limited, will be based in the Falkland Islands and pay tax here.”
Why weren't Falkland Islanders given the opportunity to buy shares?
“The sale of FIG shares to local people or companies has always been one of the objectives of the transaction and that will happen. However, initially, the objective was to bring in a new major shareholder with business interests and skills that would help SSL to grow and enable greater control to be exercised over offshore bunkering activities. S & JDR would not have agreed the sale of this Tranche of shares to Falkland Islanders, but as part of the overall agreement has agreed that the balance of FIG shares can be sold to Falkland Islanders free of his right to pre-emption.”
When did negotiations begin and who authorised them?
"Approval to begin negotiations was given by ExCo on 24th January 2002. This is a very complicated transaction, which re-structures the company. At times, the negotiations have been very difficult indeed and nearly broke down altogether towards the end of last year. I don't think anyone thought the process would take so long to complete."
When was the deal completed and who approved the terms?
“There have been numerous reports to ExCo on the progress of negotiations, particularly over the last 18 months. Authority to continue negotiations, and approve the outcome, has been given at each stage. Final approval was given by ExCo on 24th November 2004 when, with the exception of Cllr. Roger Edwards, all councillors were present. The legal formalities were completed on 30th March 2005."
How much did FIG receive for the shares it sold?
"£1.26m from the Lavinia Corporation. This is in addition to a net surplus of £569,348 made by FIG in 2001 from an extraordinary dividend from SSL and ACT, less the cost of share purchase."
What will this money be used for?
"The money has been placed in FIG's financial reserves."
How much was spent on legal fees by FIG?
“FIG’s legal costs total £350,600. This does not include the cost of time spent on the transaction by officials and is somewhat larger than expected due to the very protracted nature of the negotiations.”
So who now owns the company?
"FIG owns 44.9%, S & JD Robertson own 30% and Lavinia own 25.1%."
Does Stanley Services still have a monopoly for the supply of fuels and, if so, for how long?
“Stanley Services have been granted a new exclusive 10 year licence for the supply of fuels including offshore bunkering.”
What protection do consumers have against excessive increases in fuel prices?
“The Fuel Supply Agreement contains a detailed formula which controls the retail price of fuel to civilian, ie non-military, consumers and enables FIG to audit how prices are fixed to ensure that the operating costs of the company are reasonable and excessive profits are not made. This now applies equally to onshore domestic fuel and offshore bunkering”
Are Stanley Services able to compete with other companies active in the Islands in other areas of the economy?
