FOGL - Rig Contract Confirmed

FOGL, the oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands, announces that it has signed an assignment agreement and associated documents (together the “Rig Contracts”) with Borders & Southern Petroleum plc.

(“B&S”) and Ocean Rig 1 Inc. to contract the Leiv Eiriksson for two firm drilling slots. The rig is currently expected to arrive in the Falkland Islands in the fourth quarter of 2011. FOGL expects to access the rig for the third and fourth slots in the combined B&S and FOGL programme and to commence drilling in the first quarter of 2012.

As announced on 19 April 2011 the Company is currently funded for a deep well on Loligo, a prospect within the Tertiary Channel play which has estimated Pmean reserves of 4,700 mmbbls. The well will have an estimated duration of 50 days. Based on its latest cost estimates and assumptions, the Company also has sufficient funds for a second well on either Loligo (as an appraisal well), or on one of the other high ranked prospects such as Nimrod, Vinson or Inflexible.

As an alternative, FOGL is also considering options to drill the second well on one of the deeper Mid Cretaceous prospects such as Scotia (Pmean reserves of 1,060 mmbbls). Such a well would involve additional cost due to its greater total depth and the Company continues to explore options to provide additional financial flexibility around its drilling options. In particular, the Company would look to fund this additional cost principally via a farmout and it is currently in discussion with several parties who have expressed an interest in participating in our exploration drilling programme.

Further to the announcement on 19 April 2011 and, as a result of the signing of the Rig Contracts, the Placing and the RAB Arrangements have become unconditional other than in respect of admission to trading on AIM. Application has been made for admission to trading on AIM of 45,714,281 Placing Shares and 15,103,978 RAB Shares (“Admission”). Admission of the Placing Shares and the RAB Shares is expected to become effective in on around 24 May 2011, following which the Company will have 207,235,325 Ordinary Shares in issue.

Tim Bushell, Chief Executive of FOGL, commented:

“We are delighted to have secured the Leiv Eiriksson which, together with the successful completion of the Placing, positions us to drill two wells commencing in Q1 2012.”

FOGL intends to utilise the Leiv Eiriksson to drill its first well on the Loligo complex. This is a prospect within the Tertiary Channel play which has estimated Pmean reserves of 4,700 mmbbls. The Loligo complex comprises multiple reservoir objectives which have previously been referred to as the Loligo prospect, together with a number of additional underlying reservoir targets. FOGL is planning to drill a well to approximately 4,000 metres below sea level which will be designed to penetrate five separate reservoir targets, lying between 3,000 and 4,000 metres below sea level. This includes, the T1 and T2 Loligo reservoirs, together with three deeper independent reservoir objectives named ‘Trigg’, ‘Trigg Deep’ and ‘Three Bears’. The well is expected to spud in Q1 2012 and take approximately 50 days to drill.

Source: FOGL