MercoPress. South Atlantic News Agency

Gusher dreams push up Falkland Oil and Gas

Exploration minnow Falkland Oil and Gas gushed after seismic reports dramatically increased the prospect of discovering sizeable reserves of oil and gas.The company will have to raise fresh funds to step up the exploration work.

The shares jumped 10p to 119p, having risen from 40p when it floated on AIM last October. The company was spun off from Falkland Islands Holdings, which still has 18%. Other major holders are Australian oil group Global Petroleum, 16%, and AIM-listed UK fund manager RAB Capital with 31%.

An upbeat chief executive John Armstrong said the Falkland Islands ?could become a new petroleum province by the end of the decade' and called the seismic reports ?remarkable.'

He added: ?This is the most exciting project I've seen for years ? the number of leads identified has far exceeded our most optimistic estimates and we believe it has greatly enhanced FOGL's prospects.'

The data identified 130 leads - a feature requiring further technical appraisal prior to a decision to drill ? some of which appear capable of containing recoverable reserves in excess of 200 million barrels. At the time of the float FOGL identified just eight structures worthy of closer scrutiny.

The company now plans to carry out further seismic surveys targeting all the leads, but with emphasis on the 50 most promising. The aim is to develop 20 high quality prospects ready for a drilling programme to begin in 2007.

At the time of its float FOGL held a 77.5% interest in seven offshore production licences covering 33,700 sq km to the south and east of the Falklands. FOGL holds the licences in a joint venture with Hardman Resources. In December it was awarded a 100% licence over a further area giving a total of 83,700 sq km equivalent to 380 North Sea blocks.

Armstrong said the increased scope of the exploration work would require further funding. At the end of March it had £10.9 million cash.