STRATEGY

•FOGL seeks to add shareholder value by pursuing an aggressive exploration programme in its licences to the south and east of the Falkland Islands. Exploration drilling will continue in the deep water areas of FOGL’s licences in the first half of 2012. If successful, this drilling could lead to the development of a new hydrocarbon province in the South Atlantic.

Next Phase of drilling

In the first half of 2012 FOGL is planning to drill two wells in the deep water area of its licences.
FOGL has contracted the Leiv Eiriksson rig to undertake this drilling programme. The rig is due to arrive in the Falklands in early 2012 when it will initially drill two wells for Borders and Southern Plc (B&S), before commencing the FOGL drilling programme. The B&S wells are to be drilled on the Darwin and Stebbing prospects. The results of these wells will be of interest to FOGL, because we have similar plays and prospects within the southern part of our licence area.

The first well to be drilled in the FOGL programme will be on the Loligo prospect. A number of options exist for the second well, including potentially a well on Scotia, a prospect within the Mid Cretaceous Fan Play. The final decision on which prospect will be targeted by the second well will be guided by the results from Loligo.

Funding

As at 7 September 2011 FOGL's available funds, including the BHP Billiton settlement, were $150.8 million. The Company is debt free.


2012 Drilling Programme

The Leiv Eiriksson a harsh environment rig has been drilling wells offshore Greenland for Cairn Energy. That campaign is expected to finish by the end of November 2011 after which the rig will head south to the Falkland Islands. The rig will first drill two wells (about 90 days drilling) for Borders and Southern Plc (B&S) before moving on to the FOGL programme. The transit time from Greenland is expected to be approximately 60 days.

A great deal of work has gone into the planning of the FOGL drilling campaign and over the preceding years a large amount of data has had to be collected to so that the drilling can take place.

Seismic data was acquired from 2004 to 2007 and again in 2011, CSEM in 2007, site surveys in 2009 and 2011 and metocean data, from permanent current meters, in 2009/10. Well planning essentially started in 2009 with the drilling of three, 200m deep, geotechnical boreholes. This data helped with the planning of the shallow section of the Toroa well (FI 61/05-1) and has been extensively used in the planning of the deep water programme.

The first well in the FOGL programme will be on the giant Loligo prospect. A second well will also be drilled by FOGL using the Leiv Eiriksson and site surveys have been acquired over the following prospects: The Nimrod Complex and the Vinson prospect in the Tertiary Channel Play, the Scotia or Hero prospects in the Mid Cretaceous Fan Play and the Inflexible or Endeavour prospect in the Springhill Sandstone Play. Options that are currently being considered depend upon the results of the first well on Loligo. The final play in the FOGL acreage is in the Fold Belt in the south west of the FOGL acreage. This play is being tested by B&S at their Stebbing prospect. Similar features exist within the FOGL acreage and the results of the well will be closely monitored. In addition the B&S, Darwin well is targeting a tilted fault block which again shows great similarities with several prospects in the FOGL portfolio (Inflexible, Thulla etc.). Depending on the results of Darwin FOGL may consider a well on Inflexible as the second well in the programme.

FOGL’s main focus is on the two younger plays, the Tertiary Channel and the Mid Cretaceous Fan play. FOGL has been working on the Mid Cretaceous play for some time but it was only in late 2009, when the seismic data had been fully reprocessed, that it became clear that this major new play was viable. The play is analogous to the ones being successfully targeted in West Africa (the Tullow Jubilee field in Ghana and other discoveries along that margin) and the general geology, depositional setting and even the AVO response (Class II response over Scotia and Hero) are remarkably similar. The two main prospects, Scotia and Hero, both contain prospective resources in excess of 1 billion bbls. One of the key features that makes this play so attractive is that the reservoir sands sit directly above the mature Aptian oil source rocks which were sampled in the DSDP wells to the East of the FOGL acreage.

2012 DRLLING TARGET LOLIGO

The shallowest target alone covers an area of over 600sqkm. The Loligo prospect was first mapped in 2006 and has been re-mapped and re analysed several times since then. It is a large stratigraphic trap which is supported by a very consistent Class III AVO response on the seismic data. It is an ‘easy to map’ anomaly which stands out clearly above the background seismic responses when compared to the entire basin. In addition, it sits directly above an old high which used to separate the Southern basin (Fitzroy sub-basin) from the Northern basin (Volunteer sub-basin). This old high seems to be acting as a focus for hydrocarbon migration from deeply buried source rocks in each of the sub basins.

Beneath the southern part of Loligo several other prospects within the Tertiary Channel play, overlap and may be penetrated by one carefully located well. The deeper prospects (each covering an area similar to Loligo) have been called Trigg and the Three Bears. Together these prospects are called the Loligo Complex. The prospective resources (recoverable oil) associated with the Loligo complex, are in excess of 4 billion bbls of oil or over 25tcf of gas.




FOGL is focused exclusively on offshore oil and gas exploration in the Falkland Islands.

We are pursuing an aggressive exploration programme that could lead to the development of a new petroleum province in the South Atlantic. The joint venture operations have now moved into the drilling phase.
•
Most prospects in 2,000 – 4,500 feet water depth (610 – 1372m)

•
Target horizons: 6,000 – 13,000 feet below sea bed lever (1829 – 3962m)

•
Falklands weather is similar to West of Shetland

•
Remote location but there were no major issues during 1998 drilling campaign

•
Anchored semi-submersible or drillship for exploration drilling

•
Tried and tested technology for developments



Falkland Oil and Gas Limited Licence area.




FINANCIAL SUMMARY http://www.fogl.com/fogl/en/Investors/performance

FOGL HOME http://www.fogl.com/fogl/en/home

http://www.stockopedia.co.uk/content/falkland-oil-and-gas-2012-its-time-63024/

Congratulations Smiler, looks like FOGL have come good for you.

the reaction to the news looks surprisingly muted .... perhaps it was already well discounted and sp will now trickle backwards, which is likely anyway now the anticipation has been realised.

Well managed to get 178.50 to sell, may get a a small tic up tomorrow but i would think you will see it tic backwards for sure longer term untill drilling as you say Cynic & should be opportunities to top up then. pleased with this one (still hold some) :) GCM next !!!

not convinced that there is now any hurry to get into this stock .... though it may well have a fine future, that will not be known for 12 and maybe 24 months

Agree Cynic I have held some back just in case you never know ! + what will be the price of oil in 12/24 months ?

Cynic what a " wet blanket" you are.This is great news for FOGL and the people of the Falkland Islands after all they have been through, I wish both of them every success.

how romantic, but what has that rhubarb got to do with the direction that sp will now take?
indeed, there is even an argument for shorting over a brief period as the hot money cashes in

:)

Cynic go and visit the wargraves and you wont find it romantic.

it is a point I always make when going to France, especially of those who fell in 1st World War and those who fell or were executed for the Resistance in 2nd ...... Vimy Ridge, in particular, is most salutary, though I believe Ypres and Cambrai may be similar.

(me to)

It will be Interesting to see how quick BHP WILL get the rigs down there, it is in their interests too, especially if Oil demand hits an high in 08/09 ! still a good long term share me thinks !!

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http://www.energyandcapital.com/aqx_p/2200?gclid=CI_mioeu8I4CFQspFQodBkOJDQ

Cynic is absolutely right, imo. The Falklands will certainly be a good source of oil in the future, but extraction is way off & it is very likely that the FOGL sp will slide. As is usual, once they start drilling then the sp will fluctuate with the flow of good news & bad. Lets hope RKH & DES can benefit from this surge in interest as well.

thanks for the support harry .... to my mind it is a racing certainty that sp will slip, though by how much is anyone's guess .... 25 or 50 dma points are the obvious targets, and if asked which i would favour, i would say 50 dma as that is broadly in line with the bottom of the last dip.

BLT are no mugs they know drilling in the South Atlantic will be very expensive. According to today's RNS BLT has an option to increase its share in the acreage to 65%. If they like what they see then why not buy FOGL which has a market cap of less than 200m which is pocket money to BLT

BLT seem anxious to get in before other majors.

oil there may well be and even in commercial quantities, but it is finding it that is always the problem .... take a look at the strike rates of even the major players, and it is still only about 1:5 .... look at what happened to both VOG and ELP who were both drilling in areas seemingly saturated with the stuff, but all they got was a severe cold

I still have high hopes for fogl & BOR, RKH and think this is just the beginning ! Intresting times ahead

October 3, 2007

BHP Billiton strikes $100m Falklands drilling deal

BHP Billiton is dipping its toe into disputed waters with an agreement to fund a drilling programme offshore in the Falkland Islands.

The Anglo-Australian resources group is joining forces with Falkland Oil and Gas, an AIM-listed company with rights over exploration acreage south of the islands. BHP will fund the majority of a drilling programme of between two and four wells at a cost of $100 million (49 million).

Tim Bushell, chief executive of Falkland Oil and Gas, said: The introduction of a major company as a farm-in partner has been a key strategic objective over the last 18 months.

Floated on AIM three years ago, Falkland Oil and Gas has conducted extensive seismic surveys over offshore acreage that it secured in a 2002 licensing round.

Mr Bushell said that the company had identified large prospects, but added that it needed financial backing to drill in water 3,000ft deep. Its not cheap to drill and, with high oil prices affecting the price of rigs, its even more difficult, he said.

BHP is acquiring 40 per cent of the licences with an option to increase to 65 per cent for an initial payment of $10 million, which will reimburse initial costs incurred by Falklands Oil and Gas.

BHP will not only provide funds but will also take over the operation of the exploration programme and has access to rigs, a key advantage in a market where equipment is in short supply. The first well is likely to be drilled in a years time.

The BHP initiative is the first sign of renewed commitment to Falklands exploration since the disappointing round of investments in the late 1990s when Shell, Amerada Hess and Lasmo acquired offshore licences in territory north of the islands. Six wells were drilled, with some hydrocarbon finds, but none of the discoveries were of a scale to justify investment in production platforms in depths of 1,000ft.

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article2577806.ece

halifax - I guess the FI gov may have a view as to BLT buying 100% of FOGL - after all, its islanders are all looking forward to being worth the GDP of UK each soon.

When it comes to the collection of taxes or payment of licence fees I dont think the government would have a preference.

Falklands Says Exploration `Inevitable' Given Record Prices
By Tom Cahill
Oct. 4 (Bloomberg) -- BHP Billiton Ltd.'s decision to drill
at least two exploration wells in the Falkland Islands was
``inevitable'' as record oil prices reinvigorate interest in one
of the world's least explored oil provinces.
``With the price of oil where it is, it's inevitable that
the oil majors will look at the Falklands,'' Phyl Rendell, the
Falkland government's director of mineral resources, said in a
telephone interview today from Stanley, the islands' capital.
``We need some large companies to make it happen. It's just a
matter of time.''
Only six wells have been drilled in the remote South
Atlantic island, the subject of a 1982 war between the U.K. and
Argentina. Those wells, the only exploration in a region half
the size of Texas, were drilled in 1998, when oil prices on the
New York Mercantile Exchange sank as low as $10.35 a barrel,
compared with $79.66 today.
Rendell dismissed a report yesterday that Argentina will
``formally'' protest BHP's oil exploration permits, as reported
by the state information agency Telam. Argentina earlier this
year forbade companies that explore in the Falklands, which it
calls Islas Malvinas, from investing in Argentina.
``We're fairly used to it,'' said Rendell. ``Nothing has
changed as far as we're concerned. We're a British overseas
territory and nothing has changed overnight.''
BHP, the world's largest mining company, on Oct. 2 said it
agreed to acquire at least 40 percent of two Falkland licenses
with an option to increase to 65 percent. In return, it will
help finance a drilling program for Falkland Oil and Gas Ltd.
BHP said Argentina's concerns wouldn't affect its plans.

High Rates

``We will proceed as per our agreement with Falkland Oil &
Gas,'' Mark Lidiard, a London-based BHP spokesman, said today in
a telephone interview. ``We don't comment on issues of
sovereignty.''
The BHP licenses cover areas south of the islands, an area
that has yet to be drilled.
Exploration by Falkland Oil and Gas and other companies had
been stymied by high drill rig rates compounded by as much as
$30 million to transport a drill rig to the islands, a distance
of more than 8,000 miles (13,100 kilometers) from Aberdeen, the
U.K. center for oil exploration in the North Sea.
Royal Dutch Shell Plc, which led the 1998 drilling and has
since abandoned the region, defrayed costs by forming a sharing
agreement with other oil companies. That strategy may work
again.
``The previous model of sharing a rig worked for
everybody,'' said Rendell. ``Not everyone is ready to drill.
Those that are ready would take advantage.''
By coincidence, the Falkland Islands this week hosted its
first group meeting since 1998 between government and company
officials with prospects in the area, including Desire Petroleum
Plc , Borders & Southern Petroleum Plc and Rockhopper
Exploration Plc.
``We arranged this back in January but the meetings have
been influenced by the announcement,'' said Rendell. ``It's
still pretty early days, but it's much more focused.''