Strategy

  • FOGL seeks to add shareholder value by pursuing an aggressive exploration programme in its licences to the south and east of the Falkland Islands. Exploration drilling will commence this year, which if successful, could lead to the development of a new hydrocarbon province in the South Atlantic.

 

  • In order to progress this strategy FOGL entered into a partnership with BHP Billiton and raised sufficient equity finance to ensure funding for its share of the costs of the initial exploration drilling programme.


Commencement of exploratory drilling

2010 will see the culmination of the work undertaken since FOGL was founded in 2004, with the drilling of its first exploration well; the first ever well to be drilled in the East Falklands Basin.

In November 2009, we announced that we were in advanced discussions with Desire Petroleum to contract the Ocean Guardian rig to drill the Toroa prospect. The Ocean Guardian has been contracted by Desire to drill a multi-well programme and the rig arrived in Falkland Islands waters in mid-February 2010. This rig has now been contracted for the third slot in the drilling programme, and FOGL expect to start this well in May 2010.

Due to the water depth, the Toroa prospect is best drilled by an anchored rig, such as the Ocean Guardian. However, the other prospects which have been site surveyed, Loligo, Nimrod, and Endeavour, all lie in water depths greater than 1,000 metres and are best suited to being drilled by a dynamically positioned drillship or semi-submersible rig. Toroa lies in water depths of between 550 and 750 metres and is situated approximately 140 kilometres (90 miles) south of Stanley, within the Company’s southern (2002) licences.  BHP Billiton is actively seeking a modern, dynamically positioned, semi-submersible rig or a large drillship to drill the deep water prospects.

Funding

FOGL believes it is funded for its share of the costs of the initial drilling programme. We have retained a significant 49% interest in the licences, whilst under the terms of the farm-in agreement BHP Billiton is funding more than two thirds of the total cost of the committed two well programme.