Falkland Oil & Gas (LON:FOGL) swung into profit in 2012 and says it remains optimistic about the potential of its licences.
In the year to Dec 31, the explorer posted profit of US$1.1 million compared to a loss of US$6.6 mln in 2011.
So far, the firm said it had gained 35,000km of 2D seismic, drilled three wells, and as a result proved a working petroleum system.
It is now funded, with new partners, to shoot more than 10,000sq km of 3D seismic, it told investors.
The next drilling programme is now being planned and will be operated by partner Noble, which is actively seeking a suitable drilling rig to begin operations in the second half of 2014.
FOGL chairman Richard Liddell said: "In 2012 FOGL made great progress towards its objective of making commercial discoveries within our licences. As operator, two deep-water exploration wells were drilled, safely, within budget and on schedule.
"Both wells significantly de-risked the East Falkland basin and, in the case of Loligo, demonstrated significant in-place gas volumes within multiple reservoirs. Post well drilling analysis indicates that significant potential for oil discoveries still exists within our licences.
"Major farm-out agreements were secured with two substantial international E&P companies with strong exploration track records. At the same time FOGL retained a very substantial interest in its extensive acreage."
As at year end, the company had cash of US$174 million with a further US$45 million due from the farm-outs.