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Why You Should Buy Falkland Island Oil Shares.
I don't claim to be an expert on the stock market, nor am I a stockbroker, but even I can see that a very good investment right now would be to buy as many Falkland Island Oil & Gas shares as you can afford. My parents have both recently invested in some Falkland Island Oil & Gas shares, and already the shares have gone up by a significant amount. This hub is to explain to you why buying these shares is likely to be a very profitable investment, especially if you do so before February 2010, at which point there is an excellent chance the share prices will shoot through the roof.
20 years ago, geologists confirmed that an oil field the size of the North Sea lies off the coast of Falklands. Scientists believe there is an estimated 60 billion barrels of oil under the Falkland Islands coastal waters. The estimated amount of oil has already led to the British financial sector pouring around £327 million into the off shore projects.
Testing a well drilled by Shell ten years earlier, British firm Rockhopper Exploration (LSE: RKH) discovered a vast natural gas deposit – one that may even be as big as 7.9 trillion cubic feet. And with oil majors looking to return to the Falklands now that oil is no longer only $10 a barrel, this remote region is suddenly a hotspot for oil exploration again.
Oil companies had last drilled in the Falklands in 1998, but stopped when wells were not seen as financially viable because of low oil prices. That situation has changed and drilling for oil in the Falklands now makes economic sense because of the current highoil prices.
David Hudd, chairman of Falkland Islands Holdings and vice-chairman of Falkland Oil and Gas, told The Sun Newspaper: "The benefits are potentially huge for the companies involved, the Falkland Islands and for Britain ."
Currently the world's biggest oilfield is Ghawar in Saudi Arabia. Ghawar is thought to contain 80 billion barrels. The largest oilfield in the North Sea is Forties , which has five billion barrels.
Falkland Island Oil and Gas Share Prices from 01 March 2009 to 01 January 2010.
Falklands Oil and Gas has secured the backing of resource giant BHP Billiton. Initial drilling is now planned in the North Basin for the first quarter of 2010. With an already affluent population of about 3,000, Falklanders are now anticipating a windfall that could make them one of the richest populations on the planet.
Two wells were drilled on Rockhopper licences during 1998 by Shell, who held the licences at that time. One recovered live oil, the other encountered significant quantities of gas. Rockhopper raised £50 million by way of an equity placing during late 2009 and will now participate in 5 wells during a drilling campaign in 2010 using the Ocean Guardian.
Heated talk in private investor chatrooms is that the Falklands will prove to be one of the last great frontier oil provinces of the world, a region so rich in hydrocarbons that it might eclipse the UK's North Sea oil and gas bonanza.
Falkland Islands Map
This is a petroleum province in its infancy;
There are several under-explored and undrilled basins;
The Falklands have a world-class source rock;
Several working petroleum systems have been proven;
Only 6 wells – all in very small area – all tested same play;
Live oil has been recovered to surface;
There are numerous undrilled targets > 200 MM bbls;
The Falklands have top quartile fiscal terms;
New licences and farm-ins are available;
The Falklands promote easy data access;
There are benign drilling conditions.
Information courtesy of www.bgs.ac.uk/falklands-oil
Falkland Oil share prices doubled in 2009 as the prepararations began to start drilling in the East Falklands Basin during the first half of 2010.
The company Desire Petroleum (DES) is expected to embark on a drilling programme in the Falklands in early February 2010 after announcing the departure of its Ocean Guardian rig from the Cromarty Firth in Scotland in early December. So far it has agreed a deal with its exploration partner Rockhopper Exploration to sell on two option wells in the region. Explorers such as Borders & Southern, Rockhopper and Falkland Oil and Gas (which is up around 45% since tipped by moneyweek.com in July 2009) are raising money to fund drilling programmes expected to start in February 2010.
Early in February 2010 the towering frame of the Ocean Guardian drilling rig is due to arrive. An anchor-handling tug and a platform supply vessel are on their way. Due to dock in Port Stanley in the next few days are two cargo ships carrying 14,000 tonnes of equipment.
A storage yard is under construction, modular office buildings are being assembled, helicopters are arriving to ferry rig personnel to and fro, and the helicopter re-fuelling facility at Cape Dolphin – last used during the previous round of oil drilling in 1998 – is being restored.
There is a sharp sense of anticipation and excitement in the Falkland Islands. Within a few short months their future could be transformed. It all depends upon whether that oil, so often speculated about, can now be found.
That this could be one of the biggest investment stories of the year is no secret. Bold investors have been placing their chips on the table for the last two years.
Falkland Oil & Gas Prices Nov 2009 to Jan 2010
About the Falkland Islands.
The Falkland Islands comprise some 340 islands, located approximately 480km from the nearest point in South America. The two largest islands are East and West Falkland. Stanley, the capital, lies on the eastern shore of East Falkland. The total land area covers approximately 12,000 sq km.
The islands have no indigenous population and the current population of approximately 3,000 is predominantly of British descent, some 2,000 of whom live in Stanley, the only town.Government
The Falkland Islands are an oversea territory of the UK. Her Majesty Queen Elizabeth II is the Head of State and is represented by the Governor who presides over the Government of the Falkland Islands and is advised in the exercise of his functions by an Executive Council of three of the eight elected Legislative Councillors and two ex-officio members (the Chief Executive and the Financial Secretary).
The democratically elected Legislative Council has legislative powers, but responsibility for defence and foreign affairs rests with the British Government.
The Big Four Falklands Oil Shares
Desire Petroleum (LSE:DES): Desire holds licences in the shallow waters of the North Falklands Basin. It has contracted the Ocean Guardian drilling rig. It expects to drill four wells, starting in February. Evaluation of its top ten prospects has indicated prospective recoverable resources of over three billion barrels (boe).
Rockhopper (LSE:RKH): Rockhopper is the largest licence holder in the North Falkland Basin. It has indicated a possible 4.3bn boe in its licence area. The Ocean Guardian will drill two wells on its wholly-owned blocks.
Borders & Southern (LSE:BOR): Borders & Southern holds a 100% interest in five production licences in the South Falkland Basin. It has been cagey about how much oil could be here, referring only to “multiple targets”. The biggest of these could contain over 1bn boe. It has also alluded to the contiguous Malvinas and Magallanes Basins to the west where discoveries of six billion boe have been reported.
In November Borders & Southern raised £113m, enough to finance the drilling of three wells. It may yet bring in a partner and it has also hinted at “sharing with other operators in the region”. This is likely to mean Falkland Oil & Gas. This is partly because Borders & Southern‘s licences are in the deep waters to the south, but also because Desire and Rockhopper have already secured their rig.
Falklands Oil & Gas (LSE:FOGL): Having brought in BHP Billiton as a partner, FOGL has an interest of only 49% in its licence areas. But these areas cover an expanse the size of 223 North Sea blocks – more extensive than all the other licences put together. The joint venture plans to use the Ocean Guardian to drill one well at one of the shallower points of its acreage. But the licence areas are predominantly deep water. To drill here it needs to hire a dynamically positioned drillship or semi-submersible, which it hopes to do later this year.
The real attraction of FOGL is that it claims to have much more oil than the others – a total of 60 billion boe, with its top 20 prospects holding over 30bn boe. For that reason FOGL is perhaps the share with the greatest potential.
The important point for investors is that if any of the wells to be drilled this year strike oil, the impact is sure to be felt on the share prices of all the four quoted explorers.
Additional Research Sources Used.
- Falkland Oil and Gas Ltd
- An Update on the Falklands Oil Prospect
The Falklands Oil story: In the wake of the arrival of the huge Ocean Guardian drilling rig, former fund manager, Tom Bulford, talks about which companies are likely to prosper from the oil deposits.
- Falkland Islands oil reserves \'to help British economy\' - Telegraph
The Falkland Islands could help boost Britain's economy thanks to plentiful oil reserves, according to reports.
I visited Port Stanley in the Falkland Islands last year, and during our tour talking to the locals it became very apparent that they are truly excited about the oil they have within their waters. These islands may well hold the potential to make a great number of people very rich indeed, but of course, the best time to invest is now, before they start drilling and the oil is pumping, at which point the share prices will no doubt go sky high very fast.