Falkland Oil and Gas sounded its ambitions for after launching a bid for rival operator Desire petroleum and striking a farm-in deal for its Atlantic licences.
The move will see Falkland make a £61million takeover of Desire as it looks to strengthen its position in the South Atlantic.
At the same time, the newly combined companies have agreed to farm out Desire’s two North Falklands Basin licences to Premier Oil and Rockhopper, the companies who are working on the giant Sea Lion field off the islands.
“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,” said Falkland chief executive Tim Bushell.
“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.”
The farm-in reduces the combined Falkland/Desire share of the licences to 40% on both sites, with Premier taking 36% and Rockhopper the remaining 24%.
As part of the farm-in agreement, Rockhopper and Premier will take on the costs of exploring the Isobel/Elaine prospect and Jayne East prospect – which could contain more than 1billion barrels of oil gross between them.
“We are delighted to increase our equity interests within these two licences which we believe have the potential to add significant value to our existing interests in the Falkland Islands,” said Premier Oil chief executive Simon Lockett.
“The revised equity interests and cost sharing agreements will ensure that these licences can be included in the next phase of the planned Falkland Islands exploration programme.”
The two licences sit south of the Sea Lion oil field, which is expected to contain around 400million barrels of oil. Production on the field has been delayed, with a final decision expected to be made next year.