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Faroe wins licences to boost Norway presence

FAROE Petroleum has been awarded a clutch of licences off Norway in a success that analysts said underlined the company's status but has also suffered a drilling disappointment off country.

OIL GOOD: Faroe chief executive Graham Stewart hailed the new licence wins and said the firm had 'robust' cash balances.
OIL GOOD: Faroe chief executive Graham Stewart hailed the new licence wins and said the firm had 'robust' cash balances.

Aberdeen-based Faroe was a big beneficiary of the latest licensing round in Norway in which it was awarded eight licences. The awards increase the size of its Norwegian portfolio by a third.

Chief executive Graham Stewart said the new licences significantly enhance Faroe's strategic position in Norway, which is attracting increased attention from the industry's big guns.

He said: "These licences contain a wide range of play types and risk profiles, which increase our Norwegian acreage position to 32 licences across the key exploration areas, giving us the largest licence position of any UK independent operating in Norway."

Faroe will work with giants including Statoil, Total and Centrica on some of the new licences. Edinburgh-based Cairn Energy has a stake in one.

"Both the government and the majors clearly view FPM (Faroe Petroleum) as a credible partner and operator of offshore Norwegian assets," analysts at Jefferies International told clients.

Aberdeen-based Bridge Energy was awarded a licence in the Norwegian Sea in the latest round.

Faroe has made several discoveries in Norway including the landmark Maria find, which it traded for producing assets. However, the company announced yesterday that the Rodriguez South Well in the Norwegian Sea found no signs of hydrocarbons in the area targeted and will be plugged and abandoned.

Faroe is still waiting for the results of the closely-watched North Uist well west of Shetland, in which it has a 6.25% stake.

The BP-operated well started in March last year but has suffered lengthy delays following what Faroe called related technical difficulties.

"The well is, however, nearing target depth and completion of operations is expected in the near future." said Faroe.

In an operations update, the company said total average economic production for 2012 was approximately 7200 barrels oil equivalent daily.

In September Faroe said it expected production to average 7000-8000 boepd in 2012.

Yesterday, it said production was impacted by temporary unscheduled production shut-downs on the Njord and Brage fields off Norway and Blane in the UK North Sea. All fields are now back on production. First oil from the Hyme field in the Norwegian Sea is expected in the first quarter.

Average 2013 production is anticipated to be 7000-9000 boepd. Mr Stewart said the company has "robust cash balances and a substantially undrawn debt facility".

In September, he told The Herald that Faroe was keen to buy producing assets in the UK North Sea.

Faroe said it expects to drill five exploration wells in the near term, all in Norway.

Shares in the company closed down 2p at 132.75p.

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