The Combined Code

Falkland Oil and Gas Limited's shares are traded on AIM and as such, FOGL is not subject to the requirements of the Combined Code on Corporate Governance, nor is it required to disclose its specific policies in relation to corporate governance. The Directors, however, support high standards of corporate governance and will progressively adopt best practices inline with the Combined Code on Corporate Governance, so far as is practicable.

The Board of Directors operates within the framework described below:

The workings of the Board and its Committees
The Board meets frequently to consider all aspects of the Company's activities. A formal schedule of matters reserved for the Board has been issued and approved and includes overall strategy and approval of major capital expenditure.

The Board consists of the Chairman, Deputy Chairman, Chief Executive Officer, Non-executive Director, Commercial Director and Finance Director. All Directors have access to the advice of the Company Secretary and the Company's professional advisers.

Remuneration Committee

The Remuneration Committee comprises David Hudd and Richard Liddell, and is chaired by David Hudd. Its terms of reference are discussed in the remuneration report, contained in the Company's Annual Report.

Audit Committee

The Audit Committee comprises David Hudd and Richard Liddell and is chaired by David Hudd. It is responsible for ensuring that the financial performance of the Company is properly reported on and monitored, and for reviewing the auditors' reports relating to accounts and internal control systems.

Nomination Committee

The Company's Nomination Committee comprises David Hudd and Richard Liddell, and is chaired by Richard Liddell.

Communication with shareholders

Communication with shareholders is given a high priority by the Board of Directors who take responsibility for ensuring that a satisfactory dialogue takes place. Directors plan to meet with the Company's institutional shareholders following the announcement of interim and final results and at other appropriate times. The Directors are also in regular contact with stockbrokers' analysts. The Company has developed this web site containing investor information to improve communications with individual investors and other interested parties.

Internal Control

The Directors acknowledge their responsibility for the Company's system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage the risk of failure to achieve the company's strategic objectives. It cannot totally eliminate the risk of failure but will provide reasonable, although not absolute, assurance against material misstatement or loss.