FOGL.L Share News (FOGL)

Mining giant BHP Billiton is to bail out of the Falklands oil game and sell its interests in the area to its joint venture partner Falkland Oil and Gas (FOGL), though it is retaining the right to buy back in if FOGL strikes it lucky.FOGL will buy up BHP's 51% stake in the Northern licence area and take over operation duties in the area.BHP Billiton will contribute towards the costs of drilling the Loligo well in the Falklands by placing funds in an escrow account. Should FOGL find oil or gas in the Loligo development area then BHP will have the option to buy back in to the discovery, subject to a maximum 40% non-operating interest in return for making a cash contribution to FOGL's future exploration and appraisal costs.The settlement with BHP Billiton will, together with other funds available to FOGL, provide FOGL with total cash resources of $110m. These cash resources will be sufficient to fund the Loligo well, other exploration expenditures and allow the company to fulfil the Phase 1 work commitment of the Northern licence area.In other news, the company said it is close to finalising a rig contract for its deep water exploration programme. ---jh