investor presentation february 2015 january...

Investor Presentation – February 2015

January 2015

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Disclaimer

FALKLAND OIL AND GAS LIMITED

DISCLAIMER

This presentation is not and is not intended to be a prospectus and does not or is not intended to constitute or form part of any offer for sale or solicitation of any offer to buy or subscribe for any securities in Falkland Oil and Gas Limited (the "Company") in any jurisdiction. It shall not form the basis of, or be relied on in connection with, or act as invitation or inducement to enter into, any contract or commitment whatsoever. No offer of securities is being or will be made in circumstances which would require a prospectus or similar document to be approved.

While the information contained in this presentation, which does not purport to be comprehensive, is believed to be accurate, neither the Company nor any other person has conducted any investigation into or verified such information. No representation or warranty, express or implied, is or will be given by the Company or its directors, officers, employees or advisers or any other person as to the accuracy, completeness or fairness of this presentation and, so far as permitted by law and except in the case of fraud, no responsibility or liability whatsoever is accepted for the accuracy or sufficiency of any of the information contained in this presentation or for any errors, opinions, omissions or misstatements, negligent or otherwise relating to this presentation. Each recipient must conduct its own independent investigation and analysis of the Company and of the information contained in this presentation and bear all the costs of doing so.

This presentation may include certain "forward looking" statements which are based on expectations, projections and forecasts relating to the future performance of the Company. Such statements, projections and forecasts, which are intended as a guide only, represent the Company's own assessment and interpretation of information available to it at the date of this presentation and reflect significant assumptions and subjective judgements by the Company. A number of factors could cause actual results to differ materially from the potential results discussed in such forward looking statements, estimates and forecasts, including (but not limited to) changes in general economic and market conditions and all other risk factors (whether political, regulatory or otherwise) associated with offshore exploration, development and production. In all cases, recipients should conduct their own investigation and analysis of the information contained in this presentation. No representation or warranty is made or assurance given that the statements, projections and forecasts contained in this presentation will be borne out in practice or that the Company will perform as projected and the Company does not assume responsibility for verifying any of such statements, projections or forecasts. Neither the Company nor any persons shall be liable for any direct, indirect or consequential loss or damage suffered by any person as a result of relying on any statement in or omission from this presentation.

This presentation has been made available to recipients for information only. The Company gives no undertaking to provide the recipient with access to any additional information or to update this presentation or any additional information or to correct any inaccuracies in it which may become apparent.

No person has approved (for the purposes of section 21 of the Financial Services and Markets Act 2000 (the “FSMA”)) the contents of, or any part of, this presentation. This presentation is only directed at persons who have professional experience in matters relating to investments and who: a) in relation to persons resident in the UK, fall within the exemptions contained in Articles 19 or 49 of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (including certain investment professionals, high net worth companies, unincorporated associations or partnerships and the trustees of high value trusts); or b) in relation to U.S. Persons (as defined in Rule 902 of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”)), are an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act; or c) are otherwise permitted by the laws of the jurisdiction in which they are resident to receive them; and d) in relation to persons in member states of the European Economic Area (“EEA”), are a “professional client” or an "eligible counterparty" within the meaning of Article 4 (1)(II) and 24(2), (3) and (4), respectively, of MiFID as MiFID is implemented into national law of the relevant EEA state.

Persons falling within one of the categories of persons described above must comply with the terms of this disclaimer and they will conduct their own analyses or other verification of the data set out in this presentation and bear the responsibility for all or any costs incurred in doing so. Persons who do not fall within one of the categories of persons described above should not rely on this presentation nor take any action upon it.

Neither this presentation nor any copy of it may be taken or transmitted into the United States of America or its territories or possessions (the "United States"), or distributed, directly or indirectly, in the United States, or to any U.S. Person as defined in Regulation S under the Securities Act, including U.S. resident corporations, or other entities organized under the laws of the United States or any state thereof or non-U.S. branches or agencies of such corporations or entities or into Canada, Australia, Japan, New Zealand, the Republic of Ireland, or the Republic of South Africa, except in compliance with applicable securities laws. Any failure to comply with this restriction may constitute a violation of United States or other national securities laws.

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• Pure Play Falklands Explorer

– Largest Falkland Islands license holder (> 40,000km2)

– Material interest in all licenses (> 40%)

– Only explorer operating in the North, South and East basins

• Active 2015 drilling programme

– Five well programme targeting c.1.4bn bbl gross unrisked

prospective resources(1)

– Eirik Raude contracted to commence drilling in March 2015

• Strong Track Record

– > 12,000 km2 3D seismic, > 35,000 km 2D seismic

– Two encouraging wells drilled as operator in 2012

– Successful merger with Desire Petroleum in 2013

– Farm-outs completed with Noble Energy, Edison, Premier

Oil and Rockhopper Exploration

The Leading Falklands Explorer

(1) Mid case unrisked gross prospective resources based on FOGL management estimates

FOGL Southern Licenses FOGL Eastern Licenses

East Falkland Basin

northern licence area

FOGL: 40.0%

Noble (op.) 35.0%

Edison: 25.0%

South Falkland Basin

southern licence area

FOGL: 52.50%

Noble (op.) 35.0%

Edison: 12.5%

Northern Licences

FOGL: 40.0%

Premier: 36% (op)

Rockhopper: 24%

FOGL Northern Licenses

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(2) CoS: Geological Chance of Success

(3) Includes F1, F2 and F3 reservoirs

2015 Drilling Programme

Prospect

Name

Unrisked

Gross Res.

Targeted(1)

(mmboe)

FOGL WI

(%)

FOGL

Paying

interest (%)

CoS(2)

(%)

Q1 Q2 Q3 Q4

North Falkland Basin

Zebedee 281(3) 40.0% 40.0% 20~50%

Isobel Deep 240 40.0% 0.0% 25%

Jayne East 85 40.0% 0.0% 30%

South and East Falkland Basin

Humpback 510 52.5% 27.5% 20%

Well 2 c.300~40040.0% or

52.5%30.0/42.5% _

Total c.1,400

2015

Five well programme targeting c.1.4bn bbl gross unrisked prospective resources

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• Interests in five licences

• PL004b (40% WI) contains Sea Lion

southern extension

• Material exploration prospects:

– Zebedee 281 mmbbls*

– Jayne East 85 mmbbls*

– Isobel 240 mmbbls*

– Elaine 270 mmbbls*

– Susan 340 mmbbls*

– Helen 220 mmbbls*

FOGL’s North Falkland Basin Licences

Jayne East

Elaine

Isobel

Zebedee

Susan

* Mid case unrisked gross prospective resources based on FOGL management estimates

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FOGL’s North Falkland Basin Geological Setting

Basement structure Mature oil source kitchen area F3 reservoir distribution

50km

• Proven oil play • Significant upside potential • c. 2 Billion bbls of gross prospective resources

Source: Premier Oil Source: Premier Oil Source: Premier Oil

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• The Sea Lion field straddles PL032 & PL004b

• FOGL estimate that c.30% of the Sea Lion oil-in-place lies

within PL004b

• 85 mmbbls 2C resources net to FOGL

• Premier are proposing a two phased development

concept, targeting the northern area first

• Further appraisal required in PL004b to determine

resources distribution & potential: Zebedee will be the

next key well

• In a success case c.50% of Sealion oil-in-place could

lie within PL004b

• FOGL has a significant stake in Sea Lion and

unitisation discussions with the other field owners are

ongoing

Sea Lion area

PL032

PL004b

Zebedee Location

Phase 1

development area

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Sea Lion Area: Material Resource Potential

(1) Includes SLMC, Casper, Casper South and Beverley

(1)

Resourc

es N

et

FO

GL

85

64

48

34

231

0

50

100

150

200

250

Proven reservoirs Zebedee F1 & F2 Zebedee F3 Jayne East Total RecoverableResources Net FOGL

mm

bb

ls

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WI (%) / PI (%) 40% / 40%

Gross Prospective

Resources

160mmbbl (F1 & F2 reservoirs)(1)

121mmbbl (F3 reservoirs)(1)

Net Prospective

Resources

64mmbbl (F1 & F2 reservoirs)

48mmbbl (F3 reservoirs)

Spud Date March 2015

Operator Premier Oil (36%)

Partners Rockhopper (24%)

PL004b: Zebedee

• Zebedee well will test seven target horizons

• Extension of proven Sea Lion F2 sands

– Penetration of underexplored F1 & F3 fans

– Key risk is reservoir quality

Low Risk, High Value Prospect


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• Intended to test a large un-drilled east flank fan system

• Success will de-risk the Elaine & Susan prospects

• Key risks are the up-dip seal and reservoir quality

WI (%) / PI (%) 40% / 0%

Gross Prospective

Resources240mmbbl(1)

Net Prospective

Resources96mmbbl

Spud Date Q2 2015



PL004a: Isobel Deep

De-risking another Sea Lion scale fan-complex


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• Well will test five potential reservoir levels across

the F2 and F3 sequences

• In success case can be tied back to Sea Lion

• Key geological risk is the updip seal

WI (%) / PI (%) 40% / 0%

Gross Prospective

Resources85mmbbl(1)

Net Prospective

Resources34mmbbl

Spud Date Q2 2015




PL004c: Jayne East

High Impact, near field well

Jayne East Location

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Diomedea Fan Complex

FISA 3D survey

Cretaceous Fault Blocks

FIST 3D survey

Hersilia Fan Complex

FINA 3D survey

FOGL’s South & East Basin Licences

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South & East Falkland Basins

• Five wells have been drilled across the South and

East Falkland basins to date

– 3 wells drilled by FOGL

– 2 wells drilled by Borders & Southern

• Four of the five wells encountered gas or condensate

• Two wells encountered good quality Cretaceous

reservoirs

• Three wells encountered Cretaceous source rocks

• Proved a working hydrocarbon system

Well (Op.) Date Results

Scotia

(FOGL)Nov-12

Gas shows – proven working hydrocarbon

system but poor quality reservoir

Loligo

(FOGL)Sep-12

Gas bearing zones encountered, but poor

quality reservoir

Stebbing

(B & S)Jul-12 Gas shows – but poor quality reservoir

Darwin

(B & S)Apr-12

Condensate discovery – 263mmboe of

recoverable resources

Toroa

(FOGL)Jul-10

Dry – but excellent quality Cretaceous

reservoirs

Exploration Well Summary

High impact play opening wells targeting oil

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Prospect selection for Noble operated wells

First Well

• Humpback prospect (in the Diomedea Fan Complex)

Second well

Humpback results will guide choice of second well. Current options being evaluated:

Diomedea Fan Complex

• Stingray (In the event of success at Humpback)

Fault Block Area

• Scharnhorst North

Hersilia Fan Complex

• Starfish

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• Diomedea area comprises a large system of

deepwater channels & fans

• Multiple material prospects identified on 3D seismic

• Main hydrocarbons in place expected to be oil

• Six potential drilling targets identified (> 1.7bn bbl

gross prospective resources (1))

• Significant ‘follow-on’ potential in the event of

success at Humpback

• Current prospect inventory :

• Humpback: 510 mmbbls*

• Stingray: 266 mmbbls*

• Finback: 232 mmbbls*

• Caperea: 225 mmbbls*

• Minke: 240 mmbbls*

• Bowhead: 275mmbbls*

Diomedea Fan Complex (FOGL 52.5%)

Prospects and Leads map

* Mid case gross prospective resources (un-risked) based on FOGL management estimates

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Diomedea Fan Complex: Humpback

WI (%) / PI (%) 52.5% / 27.5%

Gross Prospective

Resources510mmbbl(1)

Net Prospective

Resources268mmbbl

Spud Date Q3 2015

Operator Noble Energy (35%)

Partners Edison (12.5%)


Potential high impact play opener, with multiple follow-on prospectivity

• Humpback comprises a system of stacked slope-channel reservoirs

• Located up-slope from mature oil source kitchen

• Up-dip seal mapped on 3D

• Potential world-class prospect with stacked reservoir objectives

Seismic amplitude map over Humpback

The first well targets the Humpback channel and

Stingray is a possible follow-up

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• The Darwin exploration well discovered gas and a rich condensate in

good quality Cretaceous sands

• Seismic amplitude responses indicate the possibility of different

hydrocarbon phases, including oil

• Potential drilling candidate:

• Scharnhorst North: 355 mmbbls*

• Seismic interpretation is on-going and final

results are expected in late Q1 2015

Cretaceous Fault Blocks (FOGL 52.5%)

Fault Block play shown on an amplitude map generated from the new 3D seismic data

* Mid case gross prospective resources

(un-risked) based on FOGL management estimates

Scharnhorst North

Seismic amplitude map over

Scharnhorst North

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• Multiple material prospects identified on 3D seismic

• Mid Cretaceous Fan Play:

• Starfish: 402 mmbbls*

• Bullfish: 453 mmboe*

• Shearwater: 700 mmboe*

• Fulmar: 220 mmboe*

• Toothfish: 115 mmboe*

• Hoki: 150 mmboe*

• Jurassic Fault Block Play

• Endurance: 524 mmboe*

• Endeavour: 838 mmboe*

• Cooper: 685 mmboe*

• Seismic interpretation is on-going and final results are

expected in late Q1 2015

Hersilia Fan Complex (FOGL 40%)

* Mid case gross prospective resources (un-risked) based on FOGL management estimates

mmbbls: million barrels of oil

mmboe: millions of barrels of oil equivalent. Note this metric is used due to current uncertainty

regarding hydrocarbon phase: oil, condensate or gas

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• Eirik Raude has mobilised from West Africa and is in transit to the Falklands

• High impact drilling campaign scheduled to start in March 2015

• Five well drilling programme targeting over 1.4 billion barrels of gross prospective resources

• Cash of c.$100m at 31 December 2014, no debt

• Interest of at least 40% in each licence ensures shareholders will have substantial equity exposure to these

resources in the case of success

Summary

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Appendix

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Achievements to Date

2012 20142013

Farm-Out Agreement with Premier & Rockhopper

3 Oct 2013FOGL entered into a farm-out agreement with Premier Oil and Rockhopper Exploration with respect to licences PL004a and PL004c

Acquisition of Desire Petroleum

3 Oct 2013FOGL merges with Desire Petroleumto enter the North Falklands Basin

Farm-Out with Edison

20 Mar 2012FOGL entered into a farm-out agreement with Edison with respect to the southern area licences; $40mm cash contribution plus back costs of $17mm

3D Seismic

24 Feb 2014Completes its 3D acquisition programme (total of 12,000sq.km2)

Rig Secured

4 Jun 2014Rig contracted for FOGL’s five firm drilling programme commencing in early 2015

2012 Drilling Programme

20122 wells drilled on-time and on-budget (Scotia & Loligo)

Farm-Out Agreement with Noble Energy

6 Aug 2012Entered into a farm-out agreement with Noble Energy for its Northern and Southern area licenses;$25mm cash contribution plus partial carry on three exploration wells

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Tim Bushell – Chief Executive Officer

• Joined FOGL in 2006

• Previously CEO of Paladin Resources

• Spent 10 years at Lasmo as Manager of North Sea assets and General

Manager of its South Atlantic business unit

• Experience with Ultramar, British Gas and Schlumberger

• Qualified geologist

Executive Team & Board Members

Richard Liddell – Non-Executive Director (Chairman)

• Joined the Board in 2005

• Former Operations Director on the Board of Premier Oil from 1999

before joining the Board of FOGL in March 2005

• Previously spent 2 years as Director of Development at BG E&P

• Held a number of senior international positions during an 18-year

career at Philips

Timothy Jones – Non-Executive Director (Finance Director)


• Previously worked with PwC where his clients included a major UK

offshore oil and gas operator

• Subsequently founding his own accountancy and consultancy practice

• Board member of Xcite Energy Limited (AIM and TSX listed)

• Qualified as a Chartered Accountant with Price Waterhouse

David Hudd – Non-Executive Director

• Experience as Chairman / Chief Executive of a number of listed

companies

• Currently Executive Chairman of Falkland Islands Holdings Plc which is

a significant shareholder in FOGL

• Founding Director of FOGL in 2004

• Former Partner at Price Waterhouse until 1982

Colin More – Exploration Director

• Joined FOGL in 2006 (joined the Board in 2009)

• Over 30 years’ experience in the oil and gas industry

• Previously UK Exploration Manager Paladin Resources

• Experience with Cairn Energy (Exploration Manager of China and India),

Conoco and Scott Pickford

Stephen Phipps – Non-executive Director


• Over 20-year experience in Capital Markets as a stockbroker in London

and New York, for Hoare Govett and Salomon Brothers

• Previously on the Board of Desire Petroleum for 17 years, latterly as

Chairman

• Also Director of Phipps & Company Limited

Ian Duncan – Non-executive Director


• Over 30 years’ experience in the oil exploration industry

• Previously CEO of Desire Petroleum plc for 8 years

• Experience with Esso, Clyde Petroleum where he was appointed a

director in 1991

• Qualified petroleum geologist

Robert Lyons – Non-executive Director


• Over 25 years’ experience in the oil industry

• Former Non-Executive Director of Desire Petroleum for 7 years

• Experience with Enterprise, the Peak Group in Aberdeen as the COO

• Holds a Bachelor of Science degree (Class I) in Mining Engineering and

Master of Engineering degree in Petroleum Engineering

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Group Balance Sheet (as at 30 June 2014)

US$mm As at 30 June 2014

Assets

Non-current assets 242.1

Current assets 111.5

Cash & Cash Equivalents 108.7

Receivables 3.8

Total Assets 353.5

Equity & Liabilities

Current liabilities 2.3

Shareholder Equity 351.2

Total Equity & Liabilities 353.5

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Basin model

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