2.6mn shares traded in london trading

Just to let you know really!

There's been a line of stock coming out of Australia in recent days, which presumably got taken out.

If one takes the written-down value for Malta and Kenya at face value from the accounts [and its probably light, if anything, given two free-carried wells] then I'd say that the shares are trading at a discount of about 30% to where they ought to be......

.....and they're even at a 20% discount to the FOGL stake plus current assets.

KBC Peel Hunt in London said today:

This is undoubtedly the most important event in the past decade for oil and gas exploration off the Falkland Islands: BHP Billiton Petroleum has agreed with FOGL to farm in to the company’s entire licence portfolio, initially taking a 40% interest, but with a one month option, which seems likely to be exercised, to increase to 65%. In either case, BHPBP will be paying 1.33 times its participating share of the costs of a forward exploration programme which will include the first two wells on the licences. In addition, BHPBP is making a cash contribution of $10m to FOGL in payment of past costs.

We consider the entry of a major oil company to be an endorsement of the viability and scale of the resource potential of the south and east Falkland Basins. Critically, the promoted funding and the cash payment to FOGL will enable the company to continue its short term exploration activities without recourse to further funding, and when it comes to funding the exploration drilling, FOGL will need to pay only for 14% of the costs, while retaining a 35% working interest – assuming that BHPBP exercises its option to increase. Clearly, if necessary, further farm outs may be contemplated in due course.

Over 12 months ago, a cross section of mapped leads and prospects were assessed as having gross unrisked prospective resources of over 10 billion barrels of recoverable hydrocarbons and the geological probability of success assessed at approximately 10%. Since then, FOGL has acquired significantly more seismic data and had OHM conduct an extensive controlled source electromagnetic (“CSEM”) survey over a selection of the prospective targets. A key aim of this work was to refine prospect mapping and to reduce the uncertainties associated with exploration drilling in a frontier basin.

The present market capitalisation of FOGL represents a valuation of $0.85 per barrel of net risked prospective resources (assuming the old assessment remains valid) and on the basis of a 35% retained working interest.