FOGL, the oil and gas exploration company focused on its extensive license areas to the South and East of the Falkland Islands, announced the execution of an option to enter into a farmout agreement which, if exercised, would provide FOGL with greater financial flexibility in respect of its current and forward programs.
On January 13, 2012, the Board of FOGL announced that it was continuing to progress discussions in relation to a potential farmout. The Board is pleased to announce that it has granted an industry counter-party an option (the Option) to enter into a Farm Out Agreement (FOA) and an associated Joint Operating Agreement (JOA). The counter-party has completed all technical and commercial due diligence and the FOA and JOA have been fully agreed. For corporate reasons unconnected with the proposed farmout, the counter-party is unable to execute the FOA/JOA at this time, but expects to be able to do so within the next two months and prior to the commencement of FOGL's drilling program.
Summary terms of the FOA
Terms of Option
The Board of FOGL notes the announcement on March 16, 2012 by Borders & Southern Petroleum plc (B&S) that rig issues which had previously stalled progress on drilling the Darwin prospect had now been addressed and that the company expects another four to five weeks of activity on that well. As a consequence, FOGL now expects to receive the rig around early June following completion of the drilling of B&S's Darwin and Stebbing. This delay has no impact on the contractual arrangement that FOGL has with Ocean Rig to drill two exploration wells, following the completion of the B&S drilling program.
"We are delighted to have agreed favorable farm-out terms which we assess as a two for one promote on the first two wells. This farmout provides further external industry confirmation of the technical case and gives us greater flexibility with respect to our drilling plans," said Tim Bushell, chief executive of FOGL.
"We look forward to progressing our drilling campaign in the next few months."
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