Desire enhances Falklands oil and gas opportunities with new agreement
MIDLANDS-registered oil and gas exploration firm Desire Petroleum is to combine with a fellow prospector to maximise its chances of exploiting hydrocarbon deposits in the waters off the Falkland Islands.
The boards of Malvern-registered Desire and Falkland Oil and Gas Ltd (FOGL) are recommending a deal which will see the latter acquire the entire issued and to be issued share capital of Desire in exchange for FOGL Consideration Shares.
The deal suits Desire as it has been seeking ways of raising investment in order to capitalise on the prospects for the region.
“The boards of FOGL and Desire believe that the combination will diversify the activities of the two companies, resulting in a balanced portfolio with enhanced long-term prospects, a strong balance sheet and improved financing options,” said the firms in a joint statement.
FOGL has also signed heads of agreement with exploration firms Premier and Rockhopper in respect to a farm-out of licences in the North Falkland Basin region.
“The combination and the farm-out together will enable the execution of an enhanced drilling programme of five wells in the next drilling campaign,” said FOGL.
These include two wells in the South Falkland Basin, partnered with Noble Energy and Edison International and three wells in the North Falkland Basin, one of which will target the Zebedee prospect.
The next drilling campaign is expected to be fully funded from existing cash reserves, the new farm-out agreement and other previously completed farm-out agreements.
Commenting on the combination agreement, Tim Bushell, Chief Executive of FOGL, said: “This combination is a compelling opportunity to consolidate the portfolios of FOGL and Desire, diversifying the risk profile for both companies’ shareholders and enabling the combined group to move forward with an active, long-term programme for growth in the Falkland Islands. Specifically, this transaction provides FOGL with access to Desire’s interests in the North Falkland Basin (including the Sea Lion area) which we believe are highly complementary to our existing exploration portfolio in the South.”
Stephen Phipps, chairman of Desire, added: “We have for a number of months been seeking additional investment into our North Falkland Basin licences and are pleased that this process has concluded with the combination with FOGL.
“Not only do Desire shareholders retain material interests in Desire’s highly prospective exploration acreage, but we also benefit from the farm-out with Premier and Rockhopper, exposure to FOGL’s upcoming programme in the South Falkland Basin, a strong balance sheet and expert partners.
“We are entering an extremely exciting period in the Falklands with shareholders in the combined group now having fully funded, material exposure to five wells across three basins, testing three different play types.”
