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Farm-out Agreement, Falklands Islands

South & East Falkland Islands, FOGL Northern & Southern Area Licences

London - August 2012

Following on from the announcement of the farm-out to Edison International in June 2012, Stellar Energy Advisors is now pleased to announce the signature of an agreement between Falkland Oil and Gas ("FOGL") and Noble Energy Falklands Limited ("Noble"), an affiliate of Noble Energy, Inc. (NYSE: NBL), for the farm-out of exploration licences in the East Falklands Basin.

Summary terms of the Farm-Out Agreement:

  • Noble will farm-in to the Northern Area Licences for a 35% interest except for two excluded areas. FOGL will continue as operator of the entire Northern Area Licences until early 2013, when operatorship of the farm-in area will be transferred to Noble.
  • The excluded areas within the Northern Area Licences will be delineated both geographically and stratigraphically and comprise the Loligo complex and the Nimrod-Garrodia complex. Noble will not participate in certain stratigraphic horizons in these excluded areas and FOGL will retain a 75% interest and operatorship with Edison International S.p.a ("Edison") holding the remaining 25% interest. However, Noble will remain a participant in the excluded areas regarding other horizons.
  • Noble will also farm-in to the Southern Area Licences for a 35% interest, with FOGL continuing as operator of these licences until no later than early 2014, when Noble will become the designated operator.
  • FOGL will be proposing to the partners that the Scotia prospect in the Northern Area Licences will be drilled in the fourth quarter of 2012 immediately following the FOGL Loligo well.

Noble's financial contribution comprises the following elements:

  • 60% of the Scotia well costs, including associated costs incurred during 2011.
  • A $25 million cash contribution to be paid in January 2013 predominantly relating to certain historical costs.
  • 60% of the costs of the Southern Area Licences commitment well.
  • 45% of a discretionary exploration well, should Noble elect to participate in the well.
  • Noble's total investment over the next 3 years is currently estimated to range between $180 million and $230 million.

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Stellar was the sole advisor to Falkland Oil & Gas Limited.