MercoPress. South Atlantic News Agency

FOGL has identified large prospects for exploration in the South Falkland Basin

CEO Richard Liddell said 2010 was a “landmark year” for the company

London listed Falkland Oil and Gas says that its negotiations to secure a deep water rig are at an advanced stage as it seeks to drill the large prospects it has identified across the South Falkland Basin.

The company said securing the rig was its key focus as it seeks to unlock the potential of its deepwater prospects and it was “looking forward with much anticipation” for the drilling campaign to get underway.

The announcement came as the company reported its full-year results for 2010, in what chairman Richard Liddell hailed a “landmark year” for the company.

It saw Falkland Oil and Gas drill the first exploration well in the East Falklands Basin. While the result of Toroa wasn't desirable, with the company failing to find hydrocarbons, it dubbed it an “attractive target for initial drilling” and said it had provided it with “valuable information to plan future wells”.

FOGL invested 21.8 million in its exploration program off the Falkland Islands, compared to 12.9 million the year before, which included 19.7 million to drill the Toroa wildcat.

On the Southern Licence area, having fulfilled the phase 1 work commitment with the drilling of Toroa, the second phase began at the start of December 2010.

Partner BHP Billiton elected not to enter the second phase and subsequently assigned its 51% of the southern licence area and operator-ship to Falkland Oil and Gas.

In order to garner further drilling options across its acreage, the company is currently undertaking a site survey program, covering a number of separate sites and two new prospects. In addition, it may elect to acquire up to 1,300 kilometres of new 2D seismic data, using the same vessel.

The update came as the company said it had slashed its full-year pre-tax losses to 3.7 million US dollars from 5.5 million a year earlier. Its cash balance stood at 69.8 million USD as of 31 December.

FOGL has contracted Gardline Ltd to undertake site surveys over its licensed acreage. The Gardline vessel, Ocean Endeavour is currently on location in the South Falkland Basin and will survey a number of separate locations.

Five companies are currently involved in hydrocarbons exploration in Falklands’ waters: Desire Petroleum, Rockhopper Exploration, Borders & Southern, Argos Resources and FOGL.