Rig Contract Signed

4 June 2014

Falkland Oil and Gas Limited

("FOGL" or "the Company")

Rig contract signed

FOGL, the oil and gas exploration company focused on its extensive licence areas offshore the Falkland Islands, is pleased to announce the signing of a rig contract.

Highlights

· Rig contracted for a six well firm drilling programme commencing in early 2015

· FOGL will participate in five wells: two wells operated by Noble in the South and East Falkland Basin and three wells operated by Premier in the North Falkland Basin

· Up to eight option slots available for additional drilling

· FOGL is fully funded throughout its five well programme

On 3 June 2014 Premier Oil plc ("Premier") signed a contract for a dynamically positioned, harsh environment semi-submersible drilling rig. In addition, several other related contracts have also been entered into and these include a rig sharing agreement with FOGL's partner Noble Energy Falklands Limited ("Noble").

The rig will be mobilised to the Falkland Islands to commence the drilling programme in late Q1/early Q2 2015. This will comprise a minimum of six firm wells; four wells operated by Premier and two operated by Noble. A number of option slots have been secured which will facilitate additional drilling. These comprise eight options that can be exercised prior to the rig being mobilised and up to eight further options that can be elected during the drilling campaign.

The currently envisaged drilling schedule consists of two wells in the North Falkland Basin operated by Premier, followed by two wells in the South & East Falkland basin operated by Noble and then a further two Premier operated wells in the North Falkland Basin. The total firm programme is expected to have a duration of some 240 days, excluding mobilisation.

FOGL will participate in three wells in the North Falkland Basin on the Zebedee, Jayne East and Isobel Deep prospects with a material, 40% interest in each of these wells. The prospects are all located in licence PL004 to the south and east of the Sea Lion field. The drilling location for each of these prospects has now been agreed by the joint venture partners. FOGL estimates that the three prospects have combined prospective resources (recoverable oil) net to FOGL of over 200 million barrels.

In the South and East Falkland Basin FOGL will participate in two Noble-operated wells. Prospect identification, based on the recent 3D surveys is ongoing and will continue into the summer of 2014.

The sheer size of the surveys, with over 12,000 sq. km of new data, and the number of prospects under consideration, is driving selection of these well locations into Q3 2014. Resource estimates for the target prospects have yet to be finalised, but will be announced in due course.

As a result of the Company's strong balance sheet and previous farm-out arrangements FOGL is fully funded for this five well drilling programme.

 Tim Bushell, Chief Executive commented:

"We are delighted to have secured a suitable deepwater rig.

FOGL will be the only company drilling in both the northern and southern basins and will have by far the largest equity participation in this campaign. As such, this rig contract represents a major milestone for FOGL and will give our shareholders exposure to an exciting, high impact and fully funded, five well drilling programme in 2015."

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