The lease covers roughly 33,500 square kilometres to the south and east of the Falkland Islands.

As a result of this extension, Phase I of the licence now runs until July 2007. Subject to a drilling commitment, Phase II will run from July 2007 until July 2010.

During Phase 1, FOGL and Hardman must acquire and interpret an additional 4,000 km of 2D and 2,000sq km of 3D seismic. To enter Phase II in July 2007, the joint venture has to commit to the drilling of two wells.

“The extension will allow more time to investigate and assess the increased number of identified leads from the approximately 4,000 line kilometre seismic survey completed in the first quarter,” Hardman said in a statement on Friday.

In May, Hardman said initial results from the survey had identified numerous new leads, with indications that some could potentially be commercially significant in size.

"The results of the 2D seismic are very encouraging," Hardman managing director and CEO Simon Potter said at the time.

"Initial interpretation of the new data gives considerable cause for optimism. There is a wide range of play types with several different styles identified.

“The number of leads identified has exceeded our estimates and we believe it has greatly enhanced the licence area's value [but] it is clear that the scope of work needed to maximise the potential of our acreage has to be increased significantly.”

On Friday, Hardman said a new 4,000 kilometre 2D seismic survey has already commenced and the joint venture expects to conduct the 3D seismic survey later this year and into 2006.”

Interests are: Falklands Oil and Gas (operator) 77.5% and Hardman 22.5%.