THE head of Faroe Petroleum has expressed his wish for the Aberdeen-based oil and gas company to remain independent amid a flurry of consolidation among independents engaged in North Sea exploration and production.

Graham Stewart was speaking as Faroe, whose model is based on investing revenue from oil production into exploration, reported a near doubling of turnover last year.

Recent consolidation in the sector has seen Ithaca Energy bid £203 million to take over Valiant Petroleum. That followed the acquisition of Dana Petroleum by KNOC (Korea National Oil Corporation) in 2010, and the merger of Melrose Resources with Dublin-based Petroceltic International in 2012.

In spite of the continuing consolidation, Mr Stewart said that, while he was powerless to stop speculation naming Faroe as a takeover target, he was convinced the AIM-listed company had the potential to grow significantly in its current guise.

Mr Stewart said: "We're having a good bit of fun doing what we're doing and don't want to stop doing it. It is going very well.

"We think there is a lot more value in the company than you can currently see, and that comes from the wells we have yet to drill.

"We have a huge throughput of drilling opportunities that are being matured for drilling next year and the years beyond, so I think it would be unfortunate if we were to be taken over early, which I still consider now to be.

"But you never know with these things. The market is such that everybody is for sale.

"You can't do much about that except be on the front foot, and we are in that respect.

"I guess we could potentially be looking at other companies to take out as well."

Faroe, which is focused on the northern seas around the UK, Norway and Iceland, saw turnover rise to £158.8m in the year ended December 31, 2012, compared with £80.2m the year before.

The increase was driven by the contribution of acquisitions made by the group in 2011, including the Brage, Njord, Ringhorne East and Jotun fields in Norway.

Total average production in 2012 was measured at 6900 boepd (barrels of oil equivalent per day), compared with 2500 boepd the previous year.

The figure swelled to 7200 boepd when the company's interest in BP-operated East Foinaven field in the Atlantic margin was taken into account. Faroe acquired a 10% non-operated interest in the field in September.

Faroe was also said to have benefited from continuing high oil prices over the period.

The company reported a loss after tax of £5.2m for the year, which Mr Stewart attributed to write-downs in the potential value of licences.

He noted that the write-downs stemmed largely from Norway, where the government provides as much as 75% of funding for exploration activity.

Last year the company made a profit after tax of £47.4m, which was driven by a £40m exceptional gain from the disposal of its interest in the Maria prospect.

While production increased last year, the company reported a broadly mixed year on the exploration front, mitigated by discoveries in Butch and Rodriguez (post year-end) in Norway.

The period saw Faroe increase its portfolio to more than 60 licences with high equity stakes in 16 new awards. Seven new licences, including three operatorships, came on board for the UK, and eight were added in Norway (three operatorships, post year-end).

The company also acquired a

frontier licence as an operator in Iceland – its first award win for the country.

Mr Stewart emphasised the importance of the portfolio approach Faroe takes to exploration.

He said: "For exploration to work, unless you are a real gambler and putting it all on red, a portfolio is really important.

"We have a 60-licence portfolio, [having] just added 16, and we'll add more this year.

"It means we can spread the risk over a large number of wells. Collectively, the ones which are successful will add up to the equivalent to these huge discoveries that one sometimes hears about ."

Faroe's share closed up 2p at 149.5p.