FOGL defers Falklands drilling

Falklands Oil & Gas (FOGL) has successfully applied for alterations to its licensing requirements on acreage south and east of the Falkland Islands.

Offshore staff

LONDON -- Falklands Oil & Gas (FOGL) has successfully applied for alterations to its licensing requirements on acreage south and east of the Falkland Islands.

In view of the currently tight rig market, the company believes it will not be able to start the next phase of its drilling program this year, as stipulated by the current license terms.

Following discussions, the Falkland Islands government has agreed to extend the first phase of FOGL’s northern 2004 licenses by one year, and these will now expire on Dec. 15, 2011. FOGL will not incur additional work obligations or face acreage relinquishment as a result; existing Phase 1 work commitments remain unchanged.

BHP Billiton, the company’s partner, has opted not to enter the second phase of the partnership’s southern 2002 licences, which starts on Dec. 3 this year. It will assign its 51% interest in these permits to FOGL, which will likely re-assume operatorship during the next few months.

FOGL believes, however, that drilling results from its recent Toroa well in the east Falklands basin suggest that the licenses are prospective. Further well data should become available later this month.

Having fulfilled its Phase 1 obligations, FOGL has decided to enter the second phase of the southern licenses, which will entail drilling of a single exploration well by December 2015.

The company has also identified numerous prospects and leads in the deepwater area of its northern licences. It remains on the look-out for a deepwater rig to resume drilling in this area as soon as possible.

10/07/2010

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