FOGL provided the following operational update.
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.
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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