Placing and Public Offer

Falkland Islands Holdings PLC
14 September 2004

Tuesday 14th September 2004





Falkland Islands Holdings plc


Update on Falkland Oil and Gas Limited Admission to AIM



Falkland Oil and Gas Limited ('FOGL'), of which Falkland Islands Holdings plc 
('FIH') holds 28.9%, today issued an announcement (set our below) regarding the
status of a placing and public offer. FIH is writing to all of its shareholders
to give them details of how to register to receive a copy of the prospectus if
they so wish.



The following sets out the text of the announcement issued today by FOGL:



Tuesday 14th September 2004



                          Falkland Oil and Gas Limited

                       Placing of Shares and Public Offer



Falkland Oil and Gas Limited ('FOGL') intends to commence marketing with a view
to the issue of new shares for cash through a Placing and Public Offer (the 
'Issue') to raise up to £12 million enabling it to expand its oil exploration
programme.  FOGL intends to apply for admission of its shares to trading on AIM,
subject to completion of the Issue.



The prospectus, when published, will be available to eligible investors from the
offices of KBC Peel Hunt, 111 Old Broad Street, London EC2N 1PH and from
www.falklandoilandgas.com



  • FOGL was formed in May 2004 to invest in an offshore oil exploration
    programme in licences covering approximately 33,700 sq km to the south and
    east of the Falkland Islands.


  • FOGL holds a 77.5 per cent. interest in seven offshore production licences
    granted by the government of the Falkland Islands.



  • Two wells in the adjacent Malvinas Basin to the west of the FOGL's acreage
    have flowed hydrocarbons. In addition, in a well to the east, clean sands of
    Oxfordian age were found which could provide potential reservoirs for oil
    and gas if present in FOGL's licences.



  • Based on FOGL's interpretation of the pre-existing seismic data, eight
    leads have been identified as being potentially capable of trapping
    hydrocarbons and have been selected for further investigation.



  • The directors of FOGL believe that each of the eight leads is of a
    sufficient size that they could contain commercially exploitable volumes of
    hydrocarbons, provided source rocks exist and there are suitable reservoirs
    and seals to hold the oil and gas.


  • The existence of reservoirs and source rocks to the west and east of the
    South Falklands Basin leads the FOGL directors to believe that similar
    geological features may exist in the area of FOGL's licences.



  • The first stage of further investigation of these leads involves a 2D
    seismic survey already funded by the founding shareholders and targeted to
    commence by the end of 2004 with a view to further delineating and ranking
    their prospectivity.



  • Following a period of interpretation of the results of the 2D seismic
    survey in early 2005, and assuming the results of such interpretation are
    satisfactory, FOGL would expect a 3D seismic survey to be commenced in
    mid-2005 in order to establish the most promising locations for drilling.
    This survey is expected to cover an area of up to 1,500 sq km. Drilling is
    targeted to commence in 2006, subject to satisfactory results of the 3D
    seismic survey, rig availability and agreeing a suitable funding
    arrangement, possibly by farm-out.



  • The Falkland Islands fiscal system applicable to production licences
    currently compares favourably with that of many other countries. The regime
    is predominantly profits based and the FOGL directors believe that the
    Falkland Islands Government is committed to ensuring that the overall tax
    system remains attractive and conducive to attracting future investment.







John Armstrong, Executive Chairman of FOGL, said:



'On completion of the surveys scheduled for this year, we intend to undertake 3D
seismic surveys to provide a more detailed and accurate picture of the licence
area and intend that this will be funded by the proceeds from the placing and
public offer.'





KBC Peel Hunt has been appointed as Nominated Adviser and Broker to FOGL.



www.falklandoilandgas.com



Enquiries:


Falkland Islands Holdings plc
    David Hudd, Executive Chairman                  07771 893 267


Falkland Oil and Gas Limited
    John Armstrong, Executive Chairman              020 7457 2020

College Hill
    Tony Friend / Ben Brewerton                     020 7457 2020



KBC Peel Hunt Ltd                                   020 7418 8900



Introduction



FOGL was formed in May 2004 by Falkland Islands Holdings plc (through its
subsidiary The Falkland Islands Company Limited), Global Petroleum Limited
(through its subsidiary Dampier Oil Limited) and RAB Special Situations LP to
invest in an offshore oil exploration programme.



FOGL's principal assets are 77.5% interests in seven exploration licences
covering approximately 33,700 sq km in the South Falkland and Falkland Plateau
Basins.  These licences are held jointly with Hardman Resources which has the
remaining 22.5% interest.



FOGL and Hardman plan to commence 2D seismic surveys in the final quarter of
2004, the funding for the Company's share of the cost of which has already been
provided by the founder shareholders.



Reasons for the Placing and Public Offer



Following the analysis of the results of these surveys in the first quarter of
2005, FOGL will conduct 3D seismic surveys. It is intended that these will be
funded by the net proceeds of the proposed Placing and Public Offer.



Subsequent to completion of the Issue, it is expected that Admission to AIM will
take place in October 2004.



Current Ownership of FOGL



Current shareholdings in FOGL are: Falkland Islands Holdings plc 28.9%; Global
Petroleum 25.7%; and RAB Special Situations LP 45.4%.



Falkland Islands Holdings plc is the UK listed parent of the Falkland Islands
Company, an historic company incorporated under Royal Charter involved in
several commercial activities in the Islands ranging from Retailing and
Distribution to Port Services & Shipping.  FIH has recently acquired a 26%
shareholding in the Portsmouth Harbour Ferry Company as part of a strategy to
diversify its activities.



Global Petroleum Limited is an Australian-based exploration company.  In
addition to its interest in FOGL, Global has a 20% interest in a major licence
offshore Kenya in joint venture with Woodside Petroleum and Dana Petroleum.
Global provides the operational management and support for FOGL's current
exploration programme.



RAB Special Situations LP is one of a number of funds managed by RAB Capital
plc, the AIM listed fund manager.





This document has been approved by KBC Peel Hunt Ltd ('KBC Peel Hunt') for the
purposes of section 21 of the Financial  Services and Markets Act 2000. FOGL has
appointed KBC Peel Hunt, whose registered office is at 111 Old Broad Street,
London EC2N 1PH to act as its nominated adviser and broker for the purposes of
the London Stock Exchange's AIM Rules in connection with FOGL's proposed
admission to AIM. KBC Peel Hunt is acting exclusively for FOGL in relation to
FOGL's proposed admission to AIM and no-one else and will not be responsible to
anyone, other than FOGL, for providing the protections afforded to customers of
KBC Peel hunt or for advising any other person on FOGL's proposed admission to
AIM, on any acquisition of shares in FOGL or on any other matter referred to in
this document.



Prospective investors are advised that an investment may only be made by
eligible investors and in reliance on the Prospectus when published and their
attention is drawn to the risk factors to be set out in that document.'








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