The AIM-listed firm had pinned its hopes on the Butch South West exploration well, spudded in early June, following a fruitless search at a nearby site.
Both wells have now been plugged and abandoned in what chief executive Graham Stewart called a "disappointing" turn of events.
Aberdeen-based Faroe revealed it had failed to strike oil at the Butch East exploration in May, ending a run of promising discoveries which had boosted the company's share price by 40 per cent since the end of March.
However, analysts from Westhouse Securities said expectations for the South West well had been low, while Cantor Fitzgerald has maintained its buy recommendation on the company's shares at a target price of 195p.
New prospects at Pil, Snilehorn and Solberg help fulfil the company's target of four to five new drilling programmes per year, aided by generous tax incentives for exploration from the Norwegian government.
In a statement to the stock exchange, Mr Stewart said Faroe would turn its attentions towards "commercialising" the Butch Main oil field, first discovered off the Norwegian coast in 2011 and expected to hold between 50 and 60 million barrels.
He said: "Plans to develop Butch Main are already advanced and we look forward to reporting further progress on this important oil field in the coming months."
Faroe's share price was down 0.75p, or 0.6 per cent, to 124.25p.