FAROE Petroleum chief executive Graham Stewart has underlined his confidence in its decision to expand amid the crude price plunge following a strong performance from the latest assets it acquired.
Aberdeen-based Faroe said the five producing fields off Norway it agreed to buy from Denmark’s Dong Energy for $70.2 million (£55m) have performed better than expectations, prompting the firm to revise its production guidance for the year.
The Aim-listed company said it now expects production to average 17,000 to 18,000 barrels oil equivalent per day this year, including the output from the five fields. Announcing interim results in September, Faroe forecast production would average 16,000 to 18,000 boed.
Mr Stewart said the “transformational” acquisition it agreed in July would result in a material increase in production. The output will be profitable even with crude selling for less than 50 per cent of the $115 per barrel it fetched in 2014.
The assets provide a new strategic hub area for Faroe off Norway, with facilities it could use to cut the cost of developing finds in the area.
Dong Energy signalled recently that it planned to exit the oil and gas business to focus on developing a renewable energy portfolio that includes giant windfarms off the UK, such as the London Array.
In September Mr Stewart said it was an opportune time to grow through acquisition in the North Sea, where some firms had put assets up for sale at attractive prices, possibly to reduce debts and work commitments.
Faroe made a final cash payment of $26.7 million on completion of the deal with Dong Energy.
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