FAROE Petroleum has hailed the progress it has made in the North Sea where the company has expanded through acquisition, although it fell into the red in the first half after facing complications off Norway.
Aberdeen-based Faroe highlighed the benefits it expects to enjoy following the purchase of stakes in the Schooner and Ketch gas fields in the UK North Sea from Tullow in May, for an initial £35m.
"The Schooner and Ketch operated production acquisition considerably boosts and diversifies our oil and gas cash-flow generation," said chief executive Graham Stewart, who described the deal as "highly tax efficient".
Mr Stewart has noted the tax advantages firms can gain from buying producing assets in the UK. Losses incurred on exploration activity elsewhere in the UK can be offset against the income from the producing assets acquired.
In the company's interim results announcement, Mr Stewart also said both Schooner and Ketch offer considerable upside. This could be realised by making further finds on the licences or boosting production from the fields.
Mr Stewart said Faroe has been one of the most active and successful explorers off Norway in 2014. It made discoveries in the first half, with the Pil, Bue and Solberg wells. Faroe's share of estimated resources in the finds is between 21 and 54 million barrels oil equivalent.
However, the Butch East and Butch South West wells were unsuccessful.
Faroe made a £3.7m loss after tax in the six months to June, compared with a £12.2m profit in the same period last year.
Average production fell to 3,901 barrels oil equivalent daily, compared with 7,477 boepd in the first half last time. The Njord and Hyme fields off Norway were shut in while maintenance work was completed on the platform used for them. They were brought back onstream in July.
Faroe expects full year production to average 7,000-10,000 boepd, following the acquisition of the stakes in Schooner and Ketch.
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