FOGL.L Regulatory News (FOGL)

2nd February 2015

Falkland Oil and Gas Limited

("FOGL" or "the Company")

Operations Update

FOGL, the oil and gas exploration company focused on its extensive licence areas to the North, South and East of the Falkland Islands, is pleased to announce the following operational update with respect to its 2015 drilling programme.

Rig mobilises for 2015 drilling campaign

The Eirik Raude rig has commenced mobilisation from West Africa to the Falkland Islands for the 2015 drilling programme, which will be operated by Premier Oil ("Premier") and Noble Energy ("Noble"). The drilling programme will commence in March 2015 on the Premier operated, Zebedee well which will test the southern lobe of the Sea Lion field. The Isobel Deep well, also located in the North Falklands Basin will be the second well in the programme.

In order to reduce the cost of multiple rig moves around the Falkland Islands a slightly modified drilling order is now being considered:

1. Zebedee (FOGL 40.0%) North Falkland Basin, Licence PL004b

2. Isobel Deep (FOGL 40.0%) North Falkland Basin, Licence PL004a

3. Jayne East (FOGL 40.0%) North Falkland Basin, Licence PL004c

4. Non-FOGL well North Falkland Basin, Licence PL032

5. Humpback (FOGL 52.5%) South Falkland Basin, southern licence area

6. Second Noble operated well South or East Falkland Basin, to be decided

Interpretation of the 3D seismic acquired over FOGL's South Falkland Basin licenses is progressing well, but given the range of new prospects identified, this work is still ongoing and will not be completed until the end of March 2015. This work is now principally aimed at providing a shortlist of possible drilling targets for the second Noble operated well. Good progress has been made and the choice has been narrowed to three potential options, being: Stingray, Scharnhorst North or Starfish. 

Based on the operators' cost estimates, FOGL is funded for the four agreed wells. FOGL's funding commitment for the fifth well will be dependent on drilling location, FOGL's equity interest in the well and whether it is an exploration or appraisal well. A further update will be provided once the location is finalised. As at 31 December 2014 FOGL has c. $100m of cash with no debt.

Diomedea Fan Complex, South Falkland Basin, Southern Licence Area

Several large prospects have been identified within the Diomedea Fan Complex. From these, the Humpback prospect has been selected as the prime target for the first well in the South Falkland Basin. FOGL estimates gross unrisked mid-case prospective resources for Humpback of 510 mmbbls.

If the result from Humpback is encouraging, there is significant follow-on potential. The operator estimates over a billion barrels in this play alone. Other plays, with similar potential, are also being evaluated.

Stingray (gross prospective resources of 266 mmbbls), which is a similar prospect to Humpback, is a possible second well candidate.

Fault Block Area, South Falkland Basin, Southern Licence Area 

Work on the Scharnhorst North prospect has continued, and this has been based on detailed seismic amplitude and AVO studies. In light of this work, FOGL has increased its mid case gross resource estimate for the Scharnhorst prospect from 188 to 355 mmbbls. Detailed seismic analysis has demonstrated a subtly different seismic response to that of the nearby Darwin condensate discovery, which could be interpreted as an 'oil' response.

East Falkland Basin, Hersilia Fan Complex, Northern licence area

The two main geological plays within this area are the mid Cretaceous fans and the Jurassic fault blocks. Using the new 3D seismic data a number of attractive prospects and leads have been mapped.

Multiple prospects and leads have been identified within the mid Cretaceous fan play and the preliminary combined gross resource estimate is in excess of 2 billion barrels oil equivalent. Given the results of the Scotia well the joint venture deems it vital to try to distinguish the likely hydrocarbon phase in order that oil, rather than gas filled reservoirs can be targeted. As a result the Starfish prospect has been high graded as a potential oil prone target. FOGL estimates gross unrisked mid-case prospective resources for Starfish to be 402 mmbbls. Detailed seismic amplitude analysis and evaluation of this prospect is ongoing and this work is now expected to be completed by the end of March 2015.

North Falkland Basin

Final locations for the wells on Zebedee, Isobel Deep and Jayne East have all been agreed. The combined gross resource estimates for these three prospects is in excess of 600 million barrels. Any success across these three wells has the potential to radically enhance the development economics of the Sea Lion area. The joint venture partnership is also considering potential follow-up (appraisal) locations to take advantage of successful wells in the initial drilling programme.

The drilling programme will commence with the Zebedee well, which will test the southern lobe of the Sea Lion field (F2 sands). The well has also been carefully located to target additional sands, both shallower (F1) and deeper (F3), than the main Sea Lion zones. FOGL estimates gross unrisked mid-case prospective resources for the F1 and F2 reservoirs to be160 mmbbls and 121 mmbbls for the deeper F3 zones.

FOGL has also continued to evaluate its broader prospect inventory within the North Falklands Basin. As a result of this work, the Susan prospect, located in PL005 (FOGL 100%), has been identified as a potential future-drilling target. Susan is situated on the east flank, in an analogous geological setting to the Sea Lion field and Isobel/Elaine prospects. The reservoir sequences are slightly older than those being targeted by the Isobel deep well, however success at Isobel would de-risk Susan. FOGL estimates gross unrisked mid-case prospective resources for Susan to be 340 mmbbls.

Other

FOGL has issued a new investor presentation which provides further detail on the upcoming drilling programme. A copy of the presentation can be found on the Company's website: www.fogl.com

The Company also announces that Numis Securities Limited has assumed the role of Joint Broker to the Company alongside RBC Capital Markets.

Tim Bushell, Chief Executive of FOGL, said:

"Over the last 12 months we have worked hard to select the best prospects for drilling and have now, with our partners, put in place an exciting drilling programme targeting over 1.4 billion barrels of gross unrisked prospective resources. FOGL has the largest acreage position of any explorer in the Falklands Islands and the biggest exposure to the upcoming drilling campaign, the results of which have the potential to be transformational for us."

Enquiries:

Notes

In accordance with the AIM Rules, the information included in this announcement has been reviewed by Colin More BSc., MSc. (Exploration Director), who has over 25 years of experience in petroleum exploration. Mr More is a member of the Geological Society of London, the American Association of Petroleum Geologists and the Society of Exploration Geophysicists.

Glossary

mmbbls: millions of barrels of oil

AVO: Amplitude versus offset. AVO analysis is a technique that geophysicists execute on seismic data to determine a rock's porosity and the likely fluid content (oil, water, or gas) within that pore space.