Falkland Oil and Gas : Operations Update

16 October 2015

Falkland Oil and Gas Limited ('FOGL')

Operations Update

Falkland Oil and Gas Limited ('FOGL'), the exploration company focused on its extensive licence areas to the North, South and East of the Falkland Islands, is providing an operational update on the 53/02-01 Humpback exploration well.

· The 53/02-01 Humpback exploration well has been drilled to 4,718 metres

· Oil and gas shows recorded whilst drilling through main target horizon

· Intermediate wireline logs indicate the possible presence of hydrocarbon bearing sandstones within main target horizon

· Well now being deepened to evaluate additional targets. FOGL carried through this phase of drilling by Noble Energy in return for assigning a 32.5% interest in the deeper targets to Noble Energy

Progress on the well has been slower than anticipated because a side-track was required at 4,360 metres for mechanical reasons. The well has now been drilled to a depth of 4,718 metres. A number of sandstone intervals in the Lower Cretaceous (APX-200) were encountered between 4,642 metres and 4,704 metres and oil and gas shows were recorded whilst drilling through this section. A set of intermediate wireline logs have been run and these indicate the possible presence, based only on preliminary petrophysical analysis, of hydrocarbon bearing sandstones, within the main APX-200 target horizon. The APX-200 contains approximately 40 metres of net sand, with moderate porosities. Without fluid samples it has not yet been possible to definitively determine the formation fluid (oil, gas, water), nor accurately calibrate the petrophysical analysis.

FOGL's overall share of the Humpback well costs have increased as a result of the various delays. FOGL has however, sufficient funds and contingency to complete the well.

The well will now be deepened to evaluate additional targets below the APX-200 sandstone. FOGL will be carried through the cost of this deepening by Noble in return for assigning a 32.5 percent equity interest to Noble in these deeper targets (FOGL retaining a 20% working interest).

Once the well has reached total depth a further set of wireline logs will be run. Subject to operational constraints, this will include a formation test tool which may be able to establish a pressure gradient within the sands and also recover a sample of formation fluid to surface for definitive analysis. A further announcement will be made once total depth has been reached and this is expected to be by the end of October 2015.

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