Falklands Oil and Gas (FOGL) has executed a farm-out agreement with Edison International under which Edison will farm in and earn a 25 per cent interest in FOGL's northern area licences.
Edison will also farm in a 12.5% interest in FOGL's southern area licence and pay its pro-rata share of certain historical costs incurred by FOGL during 2011 related to the 2012 drilling programme, which are expected to be of the order of $50m.
Edison will contribute its pro-rata share of the costs of the drilling programme, which comprises two exploration wells.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
In addition, Edison will make a separate cash contribution to FOGL of $40m, $20m of which will be made on completion of the agreement, with the remaining $20m in 2013. In order to obtain the option, Edison had already paid a $3m non-refundable fee.
FOGL will retain operatorship of the northern and southern area licences.
The farm out has been approved by the Falkland Islands government.
The share price rose 2.54% yo 90.75p by 15:19.
NR
-
8 of the best houses for sale with annexesThe best houses with annexes – from a period property in the Lake District to a 13th-century house with a two-bedroom annexe in Saltwood, Kent
-
Zelenskyy moves to appease Donald Trump – what happens now?Ukraine’s president Volodymyr Zelenskyy is conceding ground to secure the least-worst deal possible, says Emily Hohler
