Falkland Oil and Gas falls despite £48.5m in new funding

Falkland Oil and Gas (FOGL), one of the firms hoping to discover substantial oil resources around the Falkland Islands, has raised £48.5m to fund an enhanced drilling programme.

A rig is currently on route to the remote British territory to begin exploration for Borders and Southern (B&S), which owns several blocks to the south of the islands.

After completing drilling for B&S the Leiv Eiriksson rig will start operations for FOGL, probably in May.

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The problem for the firm has been that, while it had access to a rig, it wanted to dig as many holes, to as deep a depth as possible. The new funding will enable that to happen.

Today's announcement also makes clear that FOGL is in discussions with several possible farm-in partners, but that the company "does not expect to receive a suitable offer within the necessary timeframe to guarantee funding for (our) preferred drilling strategy".

the company is attempting to replicate the success of Rockhopper Exploration which has discovered around 400 million barrels of recoverable oil to the north of the islands.

Commenting on the share issue FOGL's Chief Executive, Tim Bushell, said: "We are delighted by this show of support from new and existing shareholders. The additional funds will significantly increase our flexibility over the forthcoming drilling programme."

Shares in the firm had dropped 6.5% by 10:00 in London.

BS