FOGL Uncovers 10 Billion Barrel Potential in Falklands

Falkland Oil and Gas Limited (FOGL) reveals encouraging results from the controlled source electromagnetic (CSEM) survey with positive CSEM anomalies indicating the possible presence of trapped hydrocarbons in excess of 10 billion barrels equivalent (mean, unrisked).

The CSEM survey was carried out on behalf of FOGL by Offshore Hydrocarbon Mapping and was completed in August 2007. Over 750 km of CSEM data were acquired along seven lines, over a total of 12 prospects. This program exceeded FOGL's licence commitment to the Falkland Islands Government.

The most encouraging CSEM anomalies have been identified over the following seven prospects: Loligo, Garrodia, Nimrod, Caird, Toroa, Lutra and Undine. These prospects also benefit from seismically derived direct hydrocarbon indications. All of these features could contain large amounts of oil and gas, with individual prospects containing potential recoverable volumes (mean, unrisked resources) ranging up to 3.5 million barrels.

FOGL has focussed its work during the last year on a shortlist of ten prospects, which promise to offer the lowest exploration risk and largest resource volumes. This prospect inventory has the potential to hold, on a cumulative basis, in excess of 10 billion barrels oil equivalent (mean, unrisked resources). In addition, FOGL has identified over 90 other leads, which are not included in this estimate.

"We are delighted with the results of our 2007 exploration program," said FOGL CEO Tim Bushell. "We have now identified a number of prospects that are seismically well defined and also have positive CSEM evidence for the presence of trapped hydrocarbons. Furthermore, all of these prospects have substantial reserve potential.

"The results of the CSEM and 2D seismic infill surveys have reduced exploration risk and have considerably improved the chances of finding commercial quantities of oil and gas within our licences."

The results of the CSEM survey will be fully integrated with our existing work and with the recent 2D infill seismic to produce, a short list of the best prospects for drilling. This work will now be carried out in conjunction with our farm-in partner, BHP Billiton, who will take over operatorship of the licences from Jan. 1, 2008. Seabed coring and site surveys are expected to be carried out in 2008. BHP Billiton is currently reviewing a number of potential rig options and an update on this will be provided at a future point.