LONDON--Falkland Oil and Gas Ltd. (FOGL.LN), an oil and gas exploration company focused on its license areas to the South and East of the Falkland Islands, Tuesday reports poor quality hydrocarbons at Scotia exploration well 31/12-01 which it now plans plug and abandon.

MAIN FACTS:

-Well was drilled to a depth of 5,555 meters and penetrated the mid Cretaceous aged reservoir objective on prognosis, encountering strong gas shows.

-Interpretation of wireline log data indicates that the target interval 4719 meters to 4769 meters comprises 50 meters of hydrocarbon bearing fine grained sandstones and claystones.

-Wireline logs indicate that, at this location within Scotia, the sandstones form fairly poor quality reservoir, although some zones have up to 20% porosity.

-Other thin hydrocarbon bearing sandstones were encountered beneath the main target in the interval 4900 meters to 5164 meters; subsequent evaluation of the main interval using a wireline formation testing tool didn't flow hydrocarbons, indicating that the reservoir has low permeability.

-Well was deepened below the main target in order to penetrate and sample Cretaceous aged source rocks.

-Scotia well has proven a working hydrocarbon system in the mid Cretaceous Fan play and has also demonstrated that Scotia is a viable stratigraphic trap.

-It is expected to take 10 days to plug and abandon the well; it is estimated that Company's cash balance post the 2012 drilling campaign will be 220 million dollars.

-PGS M/V Ramform Sterling is expected to arrive in the Falklands and start 3D seismic acquisition imminently.

-Falkland Oil & Gas is the operator of the well, holding a 40% interest; Noble Energy Inc. (NBL) holds a 35% interest and Edison International Spa, holds the remaining 25% interest.

-Under the terms of the farm-out agreements, Falkland Oil & Gas is paying 15% of the costs of this well.

-Shares at 0915 GMT down 29 pence, or 46%, at 34 pence valuing the company at 204.6 million pounds.

-Write to Ian Walker at ian.walker@dowjones.com

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