FOGL agrees Falklands rig-share

Offshore staff

LONDON -- Falklands Oil & Gas Ltd (FOGL) has signed a heads of agreement with Borders & Southern Petroleum to share a rig for deepwater operations off the Falkland Islands next year.

Exploration should start during 1Q 2012. The rig is expected to arrive in the Falkland Islands during 4Q 2011.
FOGL intends to drill its first well with the rig on Loligo, a Tertiary channel play structure with estimated Pmean reserves of 4.7 Bbbl. The Loligo complex comprises several reservoir objectives along with various underlying reservoir targets.

FOGL is considering taking a second drilling slot, with numerous target options, the choice most likely governed by results from Loligo and from Border & Southern's (B&S) wells.

Should Loligo prove successful, the company may opt to drill an appraisal well or alternatively another prospect within the Tertiary channel play such as Nimrod (Pmean reserves of 1.5 Bbbl) or Vinson (733 MMbbl). If Loligo proves disappointing, the most likely options are within the mid-Cretaceous fan play, headed by the Scotia prospect (Pmean reserves of 1,060 MMbbl).

However, if B&S has success on its Darwin prospect, FOGL may consider drilling the nearby Inflexible structure, where Pmean reserves are estimated at 250 MMbbl.

FOGL continues its farm-out discussions with interested parties, which would allow an additional well to be drilled as part of this campaign.

The company plans to use net proceeds from a conditional shares placement to provide additional options for the 2012 drilling program; to fund long lead equipment for two exploration wells; and to meet its working capital requirements.

04/21/2011

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