MercoPress. South Atlantic News Agency

Falkland Oil& Gas sign a letter of intent for CSEM surveying

UK Company FOGL has signed a letter of intent with US Survey Offshore CSEM to undertake a Controlled Source Electro-Magnetic survey (“CSEM”) over the company's licences in the South and East Falkland Basins.

The use of CSEM technology in this environment is particularly appropriate and exciting. CSEM is a method which investigates the electromagnetic properties of rocks and has a recognisable response when oil and gas is present. CSEM is an extremely cost effective method of high grading an extensive inventory of exploration prospects and leads.

CSEM imaging works best under certain conditions, including deepwater (>500metres), simple sand & shale geological sequences, and large traps (prospects), all of which are prevalent within FOGL's South & East Falkland Basins.

This programme has the potential to indicate which of our numerous prospects may contain hydrocarbons. Our strategy will be to obtain CSEM data over many of the larger prospects and based on the results, infill 2D seismic will then be acquired in order to determine the best sites for exploration wells.

This is the first part of our revised forward exploration programme recently discussed with the Falkland Island Government. FOGL had already begun preparatory work which will enable rapid implementation of a CSEM survey, further demonstrating FOGL's commitment to this exploration acreage.

We expect to commence both the CSEM and 2D seismic surveys before the end of 2006 and bein a position to announce the results early next year.

Tim Bushell, Chief Executive Officer commented:

"We are very excited by this new technology and its application in our licences. The use of CSEM imaging is an appropriate exploration tool given the large number of prospects and leads that we have identified. We believe that CSEM can help to significantly reduce risk, improve the chance of success and allow us to focus on the best prospects for drilling in 2008".