Some people may recall the Falklands War which was between Britain and Argentina in 1982. One doesn't hear anything about it now but it actually got pretty heated with troops landing and Argentina firing off cruise missiles at British warships. I'm not sure but I think they actually sank one, if not, pretty close. One news piece remarked that US battleships would have been more durable since they weren't made out of aluminum like the British one that was hit. The USS New Jersey was being recommisioned around that time, also, I believe.
Anyway, I got to thinking, why all the fuss over a couple of obscure islands in the South Atlantic? The climate is poor. All they have is some sheep (as depicted on their flag coat-of-arms <g>) and a few fish. The terrain is mostly unfarmable rock and squishy bogs.
Well, what does most armed conflict seem to revolve around these days? Could it be oil? Is it possible that somebody back then was aware that there might be some black stuff hiding under those shallow nearby sea beds?
According to the survey data, it looks like there might be quite a bit, possibly comparable to the recent find in the Gulf of Mexico. The nice thing here is that, though it's colder, the potential oil would be nowhere near as deep. (theoretically a lot more accessable to extract using conventional off-shore drilling technology). Compare that to the Jack GOM reserves which are going to require billions and new tech to try to drill miles down to get at. On the other hand the presense of oil in GOM find is confirmed. Here, we just have good "indications". Of course, confirmation of estimates would likely provide a big boost to the share price, imo.
Researching the history a bit more reveals that there has always been some conflict historically over ownership, so it's hard to say what may have really triggered the major conflict, the official reason points to Argentinian political chestpounding and the need to distract the public away from local issues by the (now defunct) ruling military junta at the time.
In any event, Britain basically won and contimues to administer the area. Argentina promised to forego the use of force, but still voices a claim. But for all intents and purposes it remains firmly under British protection.
In regard to foriegn resource companies, there is an element of political risk to consider. There still might be a tiny bit here, but pretty insignificant compared to say, Nigeria.
Share price dipped after Nov. '06 when they did some financing. then recovered and started following oil up in the beginning of the year, then followed oil down lately.
This price area could be considered attractive if you believe oil will rebound. They are also slated to actually do some drilling over the next year or so. So there is also the need to weigh the odds of them actually making an early hit.
The company strikes me as being frugal about spending, for example shopping around for a rig, rather than acting like a kid in a candy store like some (reckless) small outfits when they finally get some cash. So that is also something to like about this co. (appears to have pretty good management).
