ABERDEEN-headquartered Faroe Petroleum's shares surged yesterday after drilling revealed the presence of oil at a Norwegian Sea exploration well.
Shares in Faroe, which is focused on exploration, appraisal, and production opportunities in the Atlantic Margin, the North Sea, and Norway, jumped by 12.5p or 9% to 149p. This raised Faroe's stock market worth by £26.5 million to £316.5m.
Faroe said the Cooper well in the Norwegian Sea, in which it has a 30% interest, had been drilled to a depth of 5330 metres below sea level and had "encountered hydrocarbons in Middle Jurassic Garn formation".
Based on preliminary results, the joint venture involved in the well, which is operated by Scottish Gas owner Centrica with its 40% interest and includes Suncor of Canada with a 30% interest, had decided to perform a "drill stem test" of this Garn formation "to evaluate the likely productivity of the reservoir".
Faroe chief executive Graham Stewart said: "We are encouraged by the preliminary results for the Cooper well. However, we need to await the results of the flow-testing programme to establish likely productivity of the hydrocarbons and the commercial potential and size of the discovered resource."
He expects results from the North Uist exploration well west of Shetland, in which Faroe has a 6.3% interest, within weeks.
Mr Stewart said: "This continues to be an exciting period for Faroe, with operations ongoing on the BP-operated North Uist exploration well west of Shetland, where a number of technical issues have delayed the drilling operations. Results are expected in the coming weeks together with the test results for the Cooper well."
Faroe also said it had doubled its bank credit facility to $250 million (£160m) to support growth. Its banking facilities are with BNP Paribas, Lloyds TSB, Commonwealth Bank of Australia, DNB Bank, Royal Bank of Scotland, SEB, and SR Bank.
Faroe had cash of about £103m at June 30. Citing cash flow from producing assets including the Blane, Brage, Njord, Ringhorne East and Jotun fields, it said it was "well-financed" for forward work programmes.
Iain Lanaghan, finance director, said: "Alongside our robust production cash flows, this available credit provides us with greater funding capacity to support the development of the group in our core areas, both in terms of organic and acquisition growth."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article