Falklands Oil to delay drilling as oil prices slide
OIL PRICE volatility has taken its toll on Falkland Oil and Gas, which was forced to defer exploration and drilling in offshore fields around the disputed islands, it emerged yesterday.
The fledgling firm said the decision to delay drilling a second well could translate into lower costs in future, adding the company would be “in a stronger financial position at the end of the current drilling programme”.
The decision to defer any further drilling was made with the firms partners in the venture, Noble Energy and Edison International.
The partners agreed to hold off on any further exploration of the South and East Falkland basin and instead focusss their efforts on the North Falklands Basin.
Falkland Oil and Gas said it remained committed to resuming exploration to the south of the islands and said the latest development would have no impact on its current operations or its existing agreements with its partners.
The announcement by Falkland Oil and Gas comes at a time when many companies involved in the oil industry are reevaluating their investment plans.
Goldman Sachs has estimated the falling price of oil and gas, partly resulting from the US shale boom and high Opec production, could put $1 trillion of projects at risk. The price of oil has plunged dramatically during the past year, with Brent crude trading around $58 a barrel yesterday, down from $115 in June last year.
Falkland Oil and Gas was founded in May 2004 and listed on the Alternative Investment Market later the same year. The company has often found its activities drawing severe criticism from the Argentine government, which disputes the UK’s claims to the islands it calls the Malvinas.
Shares closed flat yesterday.