FAROE Petroleum said a “transformational” 2016 has left it well-placed for organic and acquisitive growth.

Production at the UK and Norway-focused exploration and production company increased by 65 per cent in 2016, to 17,395 barrels of oil equivalent per day (boepd), but revenue fell 16 per cent to £94.8m as a result of the lower oil price.

Chief executive Graham Stewart said recent site acquisitions in Norway gave it the asset base to push production as high as 50,000 boepd within five years as it entered a “major growth phase”, taking advantage of low industry costs.

But Faroe narrowed its guidance for 2017 ahead of expected production interruptions and natural production decline.

Cost of sales outstripped revenue, as extraction costs increased from $23 to $25 boe. But the group’s impairments were only £2.8m against £45.1m in 2015, which helped narrow losses to £32.8m versus 52.9m in 2015.

Net cash at the end of the year was £96.8m and the group has a £203m reserve-based lending facility.

The production increase was ahead of guidance as the four producing assets in the Norwegian North Sea it acquired in July from Dong Energy performed ahead of expectations.

Mr Stewart commented: “With our hub area focus, centered principally around the Ula, Njord and Brage areas [in Norway], Faroe is now in position for a major growth phase as we take advantage of low industry costs and invest across our core assets in 2017 and beyond.

“We believe that we have the asset base to reach our stated goal of 40-50,000 boepd organically within the next five years, with robust economics even at low commodity prices.”

He added that the group would continue to look at acquisitions on the Norwegian and UK continental shelves, while maintaining its focus on high impact exploration and appraisal drilling.

Describing itself as a “full cycle exploration and production company”, Faroe said that as of January 1 its 2P (proven and probable) reserves stood at 81.3 million barrels of oil equivalent (mmboe), up from 57.4 mmboe. This 42 per cent increase is a result of both the acquisitions from Dong and positive reserve revisions across the portfolio.

Shares closed down 0.8 per cent at 91.5p