FOGL Briefs Interim Results for 1H11

- FOGL Briefs Interim Results for 1H11

Wednesday, September 07, 2011

Falkland O&G Ltd.

FOGL announced its Interim Results for the six months ended June 30, 2011.

Highlights

• Contract signed for the Leiv Eiriksson drilling rig for two firm slots in first half 2012.
• Operatorship and remaining 51% equity in Northern License Area assigned back to FOGL by BHP Billiton together with a significant cash settlement.
• Completed the site survey and 2D seismic program.
• Equity placing raised US $51.8 million before expenses. Cash balance of $110.6 million at period end (2010: $80.4MM).
• Current available funds, including BHPB settlement, of $150.6 million.

Richard Liddell, Chairman of FOGL, said, "We made good progress during the first half of 2011, during which we negotiated the exit of BHPB from our licenses and regained complete control and operatorship of our license areas while also securing a significant cash payment from BHPB. This was an excellent outcome, which has enabled us to drive forward with the most important phase of our exploration program. In addition, we successfully raised $51.8 million through a share placing, which, combined with existing cash resources and BHPB's payment, leaves us in a strong financial position to drill two wells in 2012. We also signed a rig contract and expect drilling to commence with the Loligo well in the first quarter of 2012. In addition, a number of other prospects have been selected and prioritized as possible targets for the second well in the program."

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FOGL Anticipates Falkland Drilling to Commence in 1Q12

- FOGL Anticipates Falkland Drilling to Commence in 1Q12

Wednesday, June 08, 2011
Falkland O&G Ltd.

FOGL provided the following operational update.
Rig contract

On May 19, 2011, FOGL announced that it had entered into an assignment agreement with Borders & Southern Petroleum plc. ("B&S") and Ocean Rig 1 Inc. to contract the Leiv Eiriksson for two firm drilling slots. The rig is currently expected to arrive in the Falkland Islands in the fourth quarter of 2011. FOGL will utilize the third and fourth slots in the combined B&S and FOGL program and expects to commence drilling in the first quarter of 2012.

Operations and drilling management

FOGL has made significant progress in establishing a strong and experienced drilling team managed by Dave MacKay, who has been appointed drilling manager. Dave has over 29 years of international drilling experience and is a specialist in deepwater drilling having worked for the last 12 years for BHP Billiton. Dave also gained crucial Falklands operational experience as part of the drilling management team on the Toroa well in 2010. Mike Thomas has joined as Operations Manager. Mike has over 30 years oil industry experience with Clyde Petroleum, Paladin Resources and most recently was Chief Operating Officer for Dominion Petroleum Ltd. Mike will be responsible for geological aspects, geotechnical well planning and HSE management.

Northern license area approvals

On May 24, 2011, the Executive Council of the Falkland Islands approved the withdrawal of BHP Billiton from the northern license area and transfer of operatorship to FOGL. They also approved a six month extension of Phase 1 of the northern license area from December 15 to June 15, 2012. This extension requires the final approval of the British Foreign and Commonwealth Office, which is expected shortly.

FOGL is required to make a mandatory relinquishment of 20% of the Northern License area at the end of 2011 as required under the existing license terms. The second phase of the Northern license area does not expire until December 15, 2015 and carries the obligation to drill a single exploration well.

FOGL has already entered Phase 2 of the Southern License area and no further relinquishment is required.

Seismic program and site survey

The latest site survey program has now been completed. A total of five site surveys were completed on the following prospects: Inflexible, Vinson, Scotia, Hero and Loligo.

The site survey on Loligo was the fourth site surveyed on this prospect following three previous site surveys conducted in 2009. Having a range of sites on Loligo will enable us to determine the location of the initial exploration well and also, in the event of encouraging results, potential appraisal drilling sites.

Separately, FOGL is planning to acquire some additional focused 2D seismic over the Scotia and Hero prospects. This data will be used to fine tune the location of an exploration well on either of these two prospects.

Farmout

FOGL is currently in early stage discussions with several parties who have expressed an interest in participating in our exploration drilling program. The Company does not however anticipate concluding any farmout agreement until later this year.

Tim Bushell, Chief Executive of FOGL, commented, "Since becoming operator and 100% owner of our licenses on March 31, we have secured a suitable rig, put in place funding for a 2 well program and have established an experienced drilling management team. We have also accelerated all the other required work streams in preparation for our drilling program which is expected to commence in the first quarter of 2012."

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FOGL Secures 2 Drilling Slots Offshore Falklands

- FOGL Secures 2 Drilling Slots Offshore Falklands

Thursday, May 19, 2011
Falkland O&G Ltd.

FOGL has signed an assignment agreement and associated documents with Borders & Southern ("B&S") and Ocean Rig to contract the Leiv Eiriksson for two firm drilling slots. The rig is currently expected to arrive in the Falkland Islands in the fourth quarter of 2011. FOGL expects to access the rig for the third and fourth slots in the combined B&S and FOGL program and to commence drilling in the first quarter of 2012.

As announced on April 19, 2011 the Company is currently funded for a deep well on Loligo, a prospect within the Tertiary Channel play which has estimated Pmean reserves of 4,700 mmbbls. The well will have an estimated duration of 50 days. Based on its latest cost estimates and assumptions, the Company also has sufficient funds for a second well on either Loligo (as an appraisal well), or on one of the other high ranked prospects such as Nimrod, Vinson or Inflexible.

As an alternative, FOGL is also considering options to drill the second well on one of the deeper Mid Cretaceous prospects such as Scotia (Pmean reserves of 1,060 mmbbls). Such a well would involve additional cost due to its greater total depth and the Company continues to explore options to provide additional financial flexibility around its drilling options. In particular, the Company would look to fund this additional cost principally via a farmout and it is currently in discussion with several parties who have expressed an interest in participating in our exploration drilling program.

Further to the announcement on April 19, 2011 and, as a result of the signing of the Rig Contracts, the Placing and the RAB Arrangements have become unconditional other than in respect of admission to trading on AIM. Application has been made for admission to trading on AIM of 45,714,281 Placing Shares and 15,103,978 RAB Shares ("Admission"). Admission of the Placing Shares and the RAB Shares is expected to become effective in on around May 24, 2011, following which the Company will have 207,235,325 Ordinary Shares in issue.

Tim Bushell, Chief Executive of FOGL, commented, "We are delighted to have secured the Leiv Eiriksson which, together with the successful completion of the Placing, positions us to drill two wells commencing in 1Q 2012."

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FOGL Signs Heads of Agreement for Falklands Deepwater Drilling Program

FOGL Signs Heads of Agreement for Falklands Deepwater Drilling Program

Tuesday, April 19, 2011
Falkland O&G Ltd.

FOGL has signed heads of agreement with Borders & Southern Petroleum plc ("B&S") ("B&S Heads of Agreement") to share a rig to drill in the first half of 2012 (the "Rig Contract").

Deepwater exploration program expected to commence in first quarter 2012

FOGL has signed the B&S Heads of Agreement outlining the key terms relating to the sharing of a rig to commence drilling the Loligo prospect in the first quarter of 2012. FOGL is also considering taking up the second option slot in the drilling contract in the event that it is able to secure either a farminee and/or additional funding. The rig is currently expected to arrive in the Falkland Islands in the fourth quarter of 2011. FOGL expects to access the rig for the third well slot in the combined B&S and FOGL program and commence drilling in the first quarter of 2012.

FOGL intends to drill its next well on the Loligo complex (a prospect within the Tertiary Channel play which has estimated Pmean reserves of 4,700 mmbbls). The Loligo complex comprises several reservoir objectives which have previously been referred to as the Loligo prospect, together with a number of additional underlying reservoir targets.

FOGL is considering a second drilling slot and, should it do so, there are a number of options for the second well, depending principally on the results from Loligo itself and from B&S's wells. If Loligo proves successful, FOGL could drill an appraisal well on Loligo, or alternatively another prospect within the Tertiary Channel play such as Nimrod (Pmean reserves of 1,500mmbbls) or Vinson (Pmean reserves of 733 mmbbls). If the Loligo results are disappointing, the most likely drilling candidates are within the Mid Cretaceous fan play, with the Scotia prospect (Pmean reserves of 1,060 mmbbls) being FOGL's preferred option. In the event of success for B&S on its Darwin prospect, FOGL may consider drilling the nearby Inflexible prospect (Pmean reserves of 250 mmbbls). A summary of all of the FOGL prospects which are potential drilling options and on which site surveys have now been acquired are given in Appendix 1.

FOGL is also continuing its farm-out discussions with interested parties. FOGL believes that a suitable farminee would further strengthen its financial position and allow an additional well to be drilled as part of this campaign.

Tim Bushell, Chief Executive of FOGL, said,"I am delighted to have entered into a heads of agreement for a rig contract to enable us to commence our deepwater exploration program. The successful fund raising puts us in a strong position to fully evaluate the Loligo prospect and also provides us with the financial strength to develop additional drilling options.

"We are also excited by the results of our recent technical work which has identified two new prospects within the Hersilia complex. Seismic amplitude analysis (AVO), together with the encouraging reservoir results from the Toroa well, has substantially reduced the risk on Scotia and Hero, which each have over 1 billion barrels of potential prospective resources. Site surveys have been completed over these two prospects and we are about to acquire new 2D seismic data over the area to aid final prospect selection."

BHP Billiton Hands Reins to FOGL Offshore Falklands

BHP Billiton Hands Reins to FOGL Offshore Falklands

Thursday, March 31, 2011
Falkland O&G Ltd.
by  SubseaIQ

FOG announced further progress on its rig contract negotiations and certain changes to its license arrangements.

Changes to license arrangements

On March 30, 2011 FOGL signed a binding Heads of Agreement with its joint venture partner, BHP Billiton, that provides for the exit of BHP Billiton from the Northern license area once certain conditions have been satisfied, including approval of the Falkland Islands Government to both the assignment of BHP Billiton's 51% interest and transfer of operatorship to FOGL.

In relation to this withdrawal BHP Billiton will contribute towards the costs of drilling the Loligo well, by placing funds in an escrow account. The funds are to be drawn by FOGL against the costs of drilling the Loligo well. In the event that the Loligo well encounters hydrocarbons, BHP Billiton will have the option to back in to the Loligo development area only, for a maximum 40% non-operating interest in the discovery, in return for making a cash contribution to FOGL's future exploration and appraisal costs. Such a reassignment of interests will also be subject to approval by the Falkland Islands Government.

The settlement with BHP Billiton will, together with other funds available to FOGL, provide FOGL with total cash resources of US $110 million. These cash resources will be sufficient to fund the Loligo well, other exploration expenditures and allow the Company to fulfill the Phase 1 work commitment of the Northern license area.

Operations

Further to its announcement on March 15, the company is close to finalizing a rig contract for its deep water exploration program.

FOGL is also considering additional drilling options. The site survey program is progressing well, with surveys already completed on three locations. FOGL is considering the most appropriate means of financing and advancing these options and is in discussion with several parties that are interested in farming in to its licenses.

Tim Bushell, Chief Executive of FOGL, said, "We are pleased to have made good progress in our rig contract negotiations and to have reached an amicable agreement with our joint venture partner that gives FOGL control over its deepwater exploration program, commencing with the drilling of the Loligo prospect."