Fih Group Regulatory News (FIH)

31 May 2005 07:02

Falkland Islands Holdings PLC31 May 2005 Tuesday 31st May 2005 Falkland Islands Holdings plc The following announcement was made by Falkland Oil and Gas Limited thismorning. Falkland Islands Holdings owns 18% of Falkland Oil and Gas Limited. Falkland Oil and Gas Limited ("FOGL" or "the Company") Placing of New Ordinary Shares The board of FOGL is pleased to announce the placing by KBC Peel Hunt Ltd of11,764,706 ordinary shares of 0.002p ("New Ordinary Shares") at a price of 85pper share to raise £10,000,000 (approximately £9,700,000 after expenses). The New Ordinary Shares have been placed with certain institutional and otherinvestors, including directors. The board is also pleased to announce that it has entered into a further 2Dseismic contract with Geophysical Services Incorporated of Calgary to acquire aminimum 8,000 km of 2D seismic with an option for the Company to extend thesurvey subject to agreement between FOGL and Hardman. The programme isscheduled to cover areas in both the 2002 and the 2004 licence areas and willconcentrate on areas of interest identified in the initial 9,450 km survey whichhas just been completed. The new 2D seismic programme will use the GSI Admiralboat and is expected to commence in June 2005. Hardman Resources Ltd is also aparty to the new 2D seismic contract. Reasons for the placing FOGL was formed in May 2004 to invest in an offshore oil exploration programmein licence areas south and east of the Falkland Islands. It was admitted to AIMin October 2004, raising £12 million in the process. FOGL then held (andretains) a 77.5% interest in licences covering approximately 33,700 sq km;Hardman Resources Limited holds the remaining 22.5% interest in these licences.In December 2004, the Company was awarded a 100% interest in licences over anadditional 50,000 sq kms adjacent to its existing licence areas. On 3 May 2005, FOGL announced the preliminary results of a 9,450 km 2D seismicsurvey over most of its licence areas. The survey has identified 130 leads, farin excess of the eight leads identified at the time of the AIM IPO in 2004.Given the positive results, FOGL announced that it planned to significantlyincrease the scope of its exploration programme. Use of proceeds The net funds raised, together with existing cash resources which totalledapproximately £11,000,000 at 31 March 2005, will enable the Company to fund itsplans to conduct further seismic surveys targeting all the leads but withparticular emphasis on the 50 most promising. The aim will be to develop about20 high quality, technically sound and potentially economically viable drillingprospects. This programme is expected to include a minimum of 8,000 km andpossibly up to 15,000 km of 2D seismic survey, through the contract with GSIreferred to above, and possibly a 2,000 sq km 3D seismic survey. The fundsraised will be sufficient, in the opinion of the Directors and on the basis ofcurrent estimates, to fund this work and cover the Company's overheads through2006. The strengthened funding position should also improve the Company's positionwhen negotiating with potential farm-in partners. Further details of the placing Application will be made to London Stock Exchange plc for the New OrdinaryShares to be admitted to trading on AIM. Admission of the New Ordinary Shares isexpected to become effective on 3 June 2005. The New Ordinary Shares will be issued credited as fully paid and will rank paripassu in all respects with the existing ordinary shares, including the right toreceive all dividends and other distributions declared or paid thereon followingadmission. The placing is conditional upon the placing agreement between KBC Peel Hunt Ltdand the Company having become unconditional in all respects and not having beenterminated prior to admission of the New Ordinary Shares, and admission of theNew Ordinary Shares becoming effective by 3 June 2005 or such later date (notbeing later than 17 June 2005) as the Company and KBC Peel Hunt may agree. John Armstrong, Executive Chairman, commented: "The results of the 2D seismic announced in May were very encouraging and farexceeded our most optimistic estimates. It was clear from the large number ofleads identified that the amount of work needed to maximise the potential of ouracreage had increased significantly. "The proceeds of this placing will provide us with the necessary funds to expandthe scope of our planned exploration programme and give us the best possiblechance of success." Enquiries: FOGL John Armstrong, Executive Chairman 0061 408 824370 David Hudd, Deputy Chairman 07771 893 267 KBC Peel Hunt Ltd Jonathan Marren 020 7418 8900 College Hill Ben Brewerton / Jim Joseph 020 7457 2020 END This information is provided by RNS The company news service from the London Stock Exchange