Falkland Oil looking for cash

Falkland Oil and Gas (FOGL) saw its share price drop after reporting that the feasibility of drilling a second well at the Scotia prospect is dependent on securing additional funding.

The firm, an exploration company focused on the south and east of the Falkland Islands, said the priority of the Scotia prospect may change if information provides further justification for the drilling of a well on either Nimrod or Vinson prospects, or a second well on Loligo.

The company remains funded to drill a well on Loligo and a second well on another target such as Nimrod or Vinson, although based on the latest projections, a second well is fully funded only in the event that a shallower well is drilled on Loligo.

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Advanced stage well planning is being carried out and is focusing on drilling locations on the Loligo, Scotia, Nimrod, Vinson and Inflexible prospects.

The company is awaiting the departure of the Leiv Eiriksson rig from Greenland and now expects it to arrive in the Falkland Islands in late January 2012. FOGL expects to commence drilling in the second quarter of 2012 on its Loligo prospect in FOGL's Northern licence area.

Chief Executive Tim Bushell said: "Preparation for the forthcoming drilling campaign continues apace with the objective of providing as much flexibility as possible.

"We are in the fortunate position of having a number of high potential prospects across a range of different play types, from which to select the second well target. We will be able to take advantage of information gained from both Loligo and the wells being drilled by Borders & Southern in making this decision."

The share price fell 8.47% to 56.75p by 10:55.

NR