FAROE Petroleum posted a maiden annual profit for 2011 when the company showed it could turn success with the drill bit into hard cash.
The Aberdeen-based oil and gas firm made £14.3 million pre-tax profit in the year to December compared with a loss of £26m in the preceding period, helped by a £40m gain on the sale of a stake in the Maria oil discovery in Norway to Petoro.
The company traded its 30% interest in Maria for interests in four producing fields in Norway.
The deal formed a highlight of a year in which Faroe achieved what the company's chief executive Graham Stewart said was its most significant progress to date.
Combined with the acquisition of a stake in the Blane oil field in UK waters, the acquisition of the Petoro assets helped Faroe increase average daily production to around 10,100 barrels oil equivalent daily in 2011, from 1200 in the preceding year.
The increase in cash-generating production will help fund further increases in activity at Faroe, which combines potential high impact exploration in areas like the Atlantic margin and West of Shetland with lower risk activity in Norwegian and UK waters.
"The considerable increase in cash flow from our substantially enlarged production base, combined with cash balances and available but undrawn debt facilities ensures we are well funded going forward," said Mr Stewart.
He added: "A steady flow of exploration drilling throughout the years ahead is in prospect."
Faroe has planned £180m capital investment in 2012, including £100m on exploration in Norway, where it will drill three wells. It plans to drill two wells in the UK. The company has a stake in the North Uist well that BP started drilling in deep water west of Shetland on Monday.
It made finds with the Fulla well west of Shetland and the Butch well in Norway last year.
Neither the Lagavulin well west of Shetland or the T Rex well in Norway found commercial reservoirs.
Proved and probable reserves increased from 4.3 million boe on January 1, 2011, to 23.8 million boe on January 1, 2012.
Shares in Faroe Petroleum closed up 6%, or 9p, at 163p.
Separately, BP announced it had sold a portfolio of mature gas assets in the UK Southern North Sea to Perenco for $400m (£250m) cash.
The oil and gas giant announced it was selling the assets in February last year, to focus investment on big projects like the Clair Ridge development west of Shetland.
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