Falkland Oil & Gas gives up on Toroa well

Falkland Oil & Gas (FOG) has not found anything at its Toroa well to the south of the islands, sending the Aim-listed group's stock into freefall yesterday.

FOG's shares plunged by more than 60 per cent in early trading, recovering only slightly to close down by 51 per cent at 99p, after yesterday's announcement of plans to plug Toroa.

FOG's chief executive Tim Bushell tried to downplay the implications of the failure yesterday, stressing that the company will continue its exploration programme in the region. "Whilst the results of the Toroa well are disappointing, it has to be remembered that this is the first well in a previously undrilled frontier basin," he said.

There has been a renewed flurry of interest in potential reserves under the sea off the Falkland Islands in recent months.

FOG rival Rockhopper Exploration struck oil in the Sea Lion prospect about 220 kilometres north of the islands in early May, sending the group's shares rocketing up by more than 150 per cent in a single day.

The find is the first potentially significant strike in the region, despite interest stretching back more than 10 years, but it will now be subject to a welter of tests to establish whether production is commerically viable. Even the suggestion of exploitable reserves in the region fans the flames of the long-running political dispute over the sovereignty of the Falkland Islands.