Falkland Oil and Gas swings to annual profit

Falkland Oil and Gas swung from a loss to a profit in 2012 as the company secured major farm-out agreements and made commercial discoveries.

Profit for the year came to $1.1m compared to a loss of $6.6m the previous year, while cash balances jumped to £174m from $45m.

Results were boosted by significant farm-out agreements with international exploration and production companies Noble Energy Falklands and Edison International.

During the year the group also expanded its operational capacity and drilled two exploration wells in the East Falkland basin on schedule and within budget.

The two exploration wells, Loligo and Scotia, encountered hydrocarbons.

The company's partner Borders & Southern Petroleum also made a gas-condensate discovery in the southern part of the basin with their Darwin well.

"With our partners, we have an ambitious work programme designed to further de-risk our prospect inventory and in particular, focus on the oil potential within our licence areas," said Chairman Richard Liddell.

"This will lead to the identification of new targets and further exploration drilling in 2014/15.

"To date we have acquired 35,000km of 2D seismic, drilled three wells, and as a result proved a working petroleum system. Now with our new partners we are funded to shoot over 10,000sq km of 3D seismic and drill three further exploration wells. We remain optimistic about the potential of our licences."

RD