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Investment in FOGL
FOGL

Falkland Oil and Gas Limited

8.2% shareholding; 12 million shares

www.fogl.com

 On 1 March 2010 FOGL, the oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands announced its Final Results for the twelve months ended 31 December 2009.

Highlights
  • FOGL is now poised to drill the Company's first exploration well
  • Toroa prospect selected as first drilling target with mean, gross, unrisked prospective resources (recoverable hydrocarbons) of 1.7 billion barrels
  • Placings raised a total of £57.6 million ($94.7 million) gross before expenses
  • Environmental Impact Study submitted in January 2010 with full regulatory approval for drilling expected imminently
  • Ocean Guardian rig secured to drill the first ever exploration well in the East Falklands Basin
  • BHP Billiton is seeking a suitable drilling rig in order to commence a deepwater drilling campaign
  • Cash balance of $93.5 million as at 31 December 2009 (2008: $18.8 million)
Richard Liddell, Chairman of FOGL, said:
"2010 will be a momentous year for FOGL. It will see the culmination of the work undertaken since the Company was founded in 2004, with the commencement of exploration drilling in our licences."

Any oil and gas exploration production would be likely to have a dramatic impact both on the Islands' population, currently some 3,000 people and on the economy. Already there is much activity in the region with a number of other companies in addition to FOGL exploring for oil and gas around the Falkland Islands. They include three other AIM quoted companies, Desire Petroleum, Borders and Southern and Rockhopper Exploration and any discovery by FOGL or any of these companies would provide a major boost to the value of FIC's business operations and assets in the Islands.

FOGL was admitted to AIM in October 2004.

In November 2006 independent consultants TRACS International completed a review of what it considers to be FOGL's top ten prospects and reported that FOGL had net prospective resources in excess of 10 billion barrels. The existence of commercial quantities of oil or gas can only be determined by drilling, and since its flotation the company has made good progress in advancing its exploration programme.

In October 2007 FOGL announced a farm in-deal with BHP Billiton to fund a drilling programme in the South Atlantic. The BHP Billiton farm-in deal adds credibility to the exploration assets and includes a commitment to drill a minimum of two exploration wells. BHP Billiton acquired a 51% interest in and operatorship of FOGL's licences for US$12.75m and will pay 68% of the costs of the first two wells in the drilling programme.

Following the Farm-in, FOGL retains a 49% interest in a licence area totalling 48,853 sq km, equivalent to 220 North Sea blocks.

On 26 November 2009 FOGL announced that £50 million, before expenses, had been raised by the placing of 43.7 million shares at 115p to finance the company’s share of costs for its two licence commitment wells, possible other discretionary wells and working capital requirements through 2011. Following these announcements the FIH Board determined that it would be prudent to diversify the risk profile of the Group and therefore on 30 November 2009 sold 3 million FOGL shares, reducing the Group's shareholding to 12 million shares (8.2%). The sale generated net proceeds of £3.6 million and a profit after tax of £3.1 million. The proceeds of sale will be used to reduce borrowings and provide the Group with the financial flexibility to take advantage of investment opportunities in operating activities. The Board has no current intention of selling any further shares in FOGL and has given a specific undertaking in this regard that no further share sales will be made in advance of completion of the drilling of the Toroa prospect.

Following the placing and share sale in November 2009, FIH retains a shareholding of 12,000,000 shares in FOGL, representing 8.2% of FOGL's current issued share capital, which at 31 December 2009 had a market value of £15.4 million (FOGL share price 129p).