Update on Rig Contract

6 May 2011

Falkland Oil and Gas Limited

("FOGL")

Update on Rig Contract

FOGL notes the announcement today by Borders & Southern Petroleum plc ("Borders & Southern") that it has signed a substitution agreement with Ocean Rig under which the Eirik Raude, the rig specified in the original agreement, has been replaced with the Leiv Eiriksson.

The heads of agreement between FOGL and Borders & Southern which were announced on 19 April 2011, apply equally to this rig and FOGL expects to complete the necessary amendments to the underlying documentation and formally sign the Assignment Agreement to the rig contract shortly. 

Tim Bushell, Chief Executive of FOGL, commented:

"We believe the Leiv Eiriksson offers improved technical capabilities, adds more certainty to our drilling timetable and also flexibility, given its potential availability, after the firm drilling programme has been completed."

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