11 February 2012

Falkland Oil hits dry well

12/07/2010 Robert Tyerman

Shares in Falkland Oil and Gas (FOGL) plunged 48 per cent this morning as it announced its Toroa F61/5-1 exploration well was dry.

The AIM-quoted company, which has several extensive licence areas to the south and east of Britain's South Atlantic colony, says it will plug and abandon the well after drilling to a depth of 2,476 metres encountered no hydrocarbons. FOGL, which set itself a target of 1.67 billion barrels of oil in Toroa and raised £57.6 million last year to fund its projects, admits the F61/5-1 results are 'disappointing'. But chief executive Tim Bushell points out 'this is the first well in a previously undrilled frontier basin'.

Bushell argues 'we believe these results have helped reduce some of the key risks of the plays in the deep water areas of our licences'. He declares 'we look forward to continuing our exploration prgramme once a suitable deep water rig has been secured'.

Share dealers have been less sanguine, sending FOGL's shares down 97.75p to 104p in the aftermath of the drilling news, in the process wiping £141 million off the company's stockmarket value to £152 million. It will take some impressive results from other wells to revive them.

Tags: AIM, Commodities, Fundraisings

Sector: Oil & Gas Producers

Companies: Falkland Oil and Gas

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