Falkland Oil and Gas Completes Convertible Loan

Falkland Oil and Gas Limited reports that on December 22, 2006, final terms and conditions were agreed with RAB Special Situations (Master) Fund Limited ("RAB SSMF") for RAB SSMF to invest £8 million by way of convertible loan notes in the Company.

RAB SSMF has immediately subscribed for £2 million of Notes, and will subscribe for a further £2 million of Notes on each of February 23rd, April 30th and September 24, 2007.

These funds will provide the Company with additional cash resources to fund its ongoing exploration program in its licenses located to the South and East of the Falklands. In particular it will be used to fund the costs of the Controlled Source Electro Magnetic Survey ("CSEM") to be conducted by OHM Limited and a seabed coring program.

FOGL is embarking on an exciting program over the next few months. The 2D seismic infill survey has already started and the CSEM program is planned to commence early in 2007. This program is aimed at the larger prospects and it is believed that the data gained will enable the selection of the best targets for drilling and also, provide potential farminees with further confidence in FOGL's project