Falkland Oil widens loss as humpback delay revealed

Falkland Oil and Gas posted a bigger loss in the first six months of the year and said it incurred delays at its humpback exploration well in the Falklands basin.

The AIM-listed company whose portfolio spans the north, south and east Falkland basins does not yet produce revenues.

Falkland posted a loss before tax of $1.95m in the first half of this year, bigger than the $1.3m loss it posted in 2014.

The company had a cash balance of $40.1m at the end of the six months.

Falkland said a “series of unforeseen equipment and operational issues” delayed completion of its humpback well, and now the results of that well would be available in September 2015. The duration of was expected to take 65 days, but would now was likely take approximately 100, the company said.

Falkland said some of the costs of the delay would be borne by Noble Energy under an arrangement which was being negotiated.

During the year Falkland had made two discoveries in the North Falkland basin, announced back in April and May.

"With two successes under our belt already and two more wells to complete, the Board looks to the future with confidence," chairman John Martin said.

Westhouse Securities, which held a ‘neutral’ rating on the stock, said the market would be anxious to see some progress on commercialisation on Falkland’s assets.

“While the two successful discoveries are good news, Falkland needs to monetise even a small part of these successes to give comfort to investors on ongoing funding,” analyst Mark Henderson said.

Shares in Falkland were up by 3.61% to 21.50 by 1620 BST.