Falkland Oil & Gas

I keep the interview with Philip Richards of RAB Special Situations Fund by Moneyweek (10.06.2005) as a reminder of why I continue to hold FOGL:

Philip Richards:

I think this (FOGL) is the only stock I have in the portfolio that I think in the longer term could still make people a return along the lines of 60, 70, 80 times their money. I think you might make three times your money if you bought Asia Energy now, but that’s not the same. The latest reports from Falkland suggest that there might be recoverable reserves of 8-24 billion barrels. With oil at about $40, the net present value of a barrel of oil is about $8. At $25 it’s about $2 and at $50 it’s about $10. This means that the oil is worth $80bn to $240bn. Yet right now the company has a market value of about $120m. So the upside is huge, more than enough to justify the downside risk.

Of course things have progressed since then so FOGL is even more attractive now.

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