MercoPress. South Atlantic News Agency

Falklands plans AIM listing to fund exploration.

FALKLANDS Oil & Gas is set to list on London's Alternative Investment Market to raise funds for its Falklands exploration programme, writes Martyn Wingrove .

The company, which is owned by Falkland Islands Holdings, Global Petroleum and RAB Capital, is seeking to raise up to £12m ($21m) to fund an initial two-year exploration programme in the South Atlantic.

Falklands Oil & Gas holds seven oil and gas exploration licences south and east of the islands, where Australia's Hardman Resources is a partner.

Seismic exploration activity is set to begin in the fourth quarter of this year and will be followed up with 3D marine surveys in 2005.

"We are tendering for a 2D seismic survey this week to start in the fourth quarter, which shows our commitment to these blocks," said John Armstrong, executive chairman of FOGL.

"On completion of the surveys this year, we intend to undertake 3D seismic surveys to provide a more detailed and accurate picture of the licence area."

The company is using its own funds for this year's survey, but hopes to use proceeds of around £8.5m from the imminent initial public offering to pay for the 3D surveys.

"We have identified eight major leads that have the potential of 200m-600m barrels of recoverable oil, plus a lot of upside," said James Webb, project manager for FOGL.

"The area merits more 2D over these leads. We plan to shoot 3D in mid-2005 and to start drilling in 2006."

For the company to drill on the prospects it will need to farm out some of the acreage, and already several oil companies have shown interest.

The blocks lie between the Malvinas Basin, off Argentina, where Exxon drilled two discoveries over 20 years ago, and the Falklands Plateau, where the Deep Sea Drilling Project found oil source rocks.

The eight leads have been identified from 2D surveys shot by Western Geco in mid-1990s.

Source: Lloyd's List.