FAROE Petroleum has acquired five producing oil and gas fields in the Norwegian North Sea from Denmark’s Dong Energy for $US $70.2m (£52.7m) - and plans to fund the deal with proceeds from a fresh share placing, writes Scott Wright.
The oil and gas independent is aiming to raise £60.8m from the placing, the funds from which will also be used to accelerate the development of the key Brasse discovery in the Norwegian North Sea.
Faroe said the acquisition will boost its production by an estimated 8,000 boepd (barrels of oil equivalent per day) this year, and increase its aggregate average production to between 15,000 and 17,000 boepd for the year ended December 31.
The assets include the Ula field, where it will have a 20 per cent working interest, Tambar (45 per cent), Tambar East Unit (37.8 per cent), Oselvar (55 per cent) and the Trym gas field (50 per cent).
Faroe chief executive Graham Stewart said: "We are delighted to announce the acquisition of these high-quality assets in the Norwegian North Sea. The acquisition of these producing fields creates a new strategic hub for Faroe, centred around the Ula platform, in one of our core areas offshore Norway. As well as the strategic nature of this deal, the acquired assets will have a material impact on production, reserves, cash flow and debt capacity.
"We have reviewed a significant amount of opportunities in the lead up to this, and as a pre-qualified operator in Norway, this portfolio of assets provides the most strategic sense for us, delivering synergies and upside potential from our existing portfolio.
"The proposed placing also announced today will ensure we continue to take advantage of the growth potential within the portfolio in the most capital efficient manner; taking advantage of exploration opportunities and progressing our development projects while maintaining balance sheet strength and flexibility; delivering our goal of becoming a self-sustaining full cycle E&P company."
Faroe announced the acquisition and placing as its unaudited accounts showed a pre-tax loss of £22.8m in the three months to March 31, compared with a £686,000 profit at the same stage last year. Revenue for the first quarter was booked at £10.3m, compared with £29m in the three months to March 31, 2015.
Shares in Faroe closed down 0.75p at 79.75p.
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