Oil Discovery at 14/20-2 exploration well

11 January 2016

Falkland Oil and Gas Limited

("FOGL" or "the Company")

Oil Discovery at 14/20-2 exploration well on the Isobel/Elaine Fan Complex

Highlights

· Oil discovery confirmed at Isobel Deep

· Significant oil column of over 480 metres

· Net oil pay 27m

· No oil-water contacts or gas encountered

· Four additional oil bearing F3 reservoirs

Falkland Oil and Gas Limited (AIM:FOGL), the oil and gas exploration company focused on its extensive licence areas to the North, South and East of the Falklands Islands, is pleased to announce the successful results of the 14/20-2 exploration well on the Isobel/Elaine structure (The "Well"). This was a re-drill of the Isobel-1 (14/20-1) well, which discovered oil in the Isobel Deep reservoir but had to be prematurely abandoned for operational reasons.

The Well is located on licence PL004a in which FOGL has a 40% working interest. This will increase to 64% following the merger with Rockhopper Exploration, which is expected to complete on the 18 January 2016.

The Well successfully re-drilled the Isobel Deep reservoir at a location 4 kilometres west of the original Isobel-1 well and reached a total depth of 3014 metres.

Although the Well was principally designed to re-drill the Isobel Deep sands, it was also able to test other sand bodies within the F3 sand system. The well successfully penetrated five separate fans within the complex, including: Isobel Deep, Isobel, Elaine South, Emily and Irene. All five of these fan systems were oil bearing and no gas was encountered. The well did not encounter an oil-water contact in any of the sands. The well discovered total net pay of 27m in the Isobel Deep, Isobel and Emily reservoirs.

A very large oil column (in excess of 480 metres) has now been proven between from the crest of the structure to the current location. The location selected for the re-drill of Isobel Deep was not optimal for any of the other fans. As such, most of the fans were penetrated at their margins and FOGL expects that based on analogous systems, better quality reservoir will be present in the main bodies of the fans.

Whilst the data acquired is still to be fully evaluated and integrated, the initial view of the Company is that the Isobel/Elaine complex is likely to contain commercially viable quantities of recoverable oil. The 14/20-2 well will now be plugged and abandoned.

Tim Bushell, CEO, commented:

"This is an excellent result and completes a highly successful 2015/16 drilling campaign, with 3 out of 4 wells making significant oil discoveries. Such an outcome was considerably beyond our pre-drill expectations. Furthermore, the very positive well results in the North Falkland Basin underlines the importance of our decision to acquire Desire Petroleum in 2013 and diversify our exploration risk.

"The merger with Rockhopper is now the natural next step for the Company and should see the realisation of shareholder value via the progression of Sea Lion to first oil, the development of surrounding oil discoveries including Isobel/Elaine and further exploration of a number of material untested prospects.

"I look forward to progressing the commercialisation of hydrocarbons in the Falkland Islands through my position on the Board of Rockhopper and I would like to take this opportunity to thank FOGL staff for all their hard work over the years in getting the business to where it is today and I would also like to thank our shareholders for all their support since we came to the market in 2004."

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