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Operational Update


Faroe Petroleum, the independent oil and gas company focussing principally on exploration, appraisal and production opportunities in Norway and the UK, is pleased to provide an operational update.

Graham Stewart, Chief Executive of Faroe Petroleum commented:

“2015 was another year of growth and good progress for Faroe despite a backdrop of significantly lower commodity prices.  We delivered our exploration drilling programme safely and under budget, adding further 2C resources, and we doubled our 2P reserves in high quality assets.  Our diverse North Sea production portfolio also outperformed expectation, averaging 10,530 boepd with low unit operating costs, and we ended the year with a significant cash position of over £90m and a largely undrawn debt facility.

“Looking ahead at 2016, we are well prepared to face the challenges of a continuing period of low commodity prices, while seeking to capitalise on our strong financial position to pursue consolidation opportunities in our core areas on the UK and Norwegian continental shelves.”



Except for the Njord and Hyme fields, where costs associated with the well suspension and tow-in projects will be incurred, no major capital investments are expected in 2016 in Faroe’s principal producing fields, which are all expected to continue to produce at stable rates during the year.

Reserves and Resources 

On 6 January 2016 the Company published the 2P year-end reserve numbers from an independent technical report undertaken by Senergy (GB) Limited, where it was reported that Faroe’s reserves were materially higher than those reported for the previous period. Faroe has now completed its own internal assessment of reserves and resources at 1 January 2016, which are as follows:

The table set out below presents the 2P reserves net to Faroe by geographic location and split in oil and liquids reserves and gas reserves. The reserves are reported in accordance with the Petroleum Resources Management System (PRMS), the joint reserves/resources definitions of the Society of Petroleum Engineers, the World Petroleum Congress and the American Association of Petroleum Geologists.

Faroe Petroleum – Proven plus Probable (2P) Reserves as at 1 January 2016


Oil and NGLs






Norway 39.3 63.1 49.8
UK 4.3 19.9 7.6
Total 43.6 83.0 57.4



Faroe has an active exploration drilling programme in 2016 with three wells planned – all to be drilled in Faroe’s core areas in Norway.

Faroe continues to build its portfolio of exploration licences organically. Active participation in licensing rounds across core areas led by our exploration team has proven to be a highly successful and cost-effective strategy for Faroe to grow its prospective resource base. On 20 January 2016, Faroe was awarded a further six new prospective exploration licences, including two operatorships, under the 2015 Norwegian APA (Awards in Pre-defined Areas) Licence Round.


Underpinned by high uptime across the production portfolio and a progressive hedging policy, Faroe has ended 2015 in a robust financial position with significant cash reserves and a largely undrawn credit facility:

An updated presentation is available on our web site ( and a conference call for sell-side analysts will take place at 08.30 a.m. today, for details please contact Emerson Clarke at FTI Consulting: or tel. 020 3727 1564.

For further information please contact:

Faroe Petroleum plc
Graham Stewart, CEO
Tel: +44 1224 650 920

Stifel Nicolaus Europe Limited
Callum Stewart / Ashton Clanfield
Tel: +44 20 7710 7600

RBC Capital Markets
Matthew Coakes/Daniel Conti/Roland Symonds
Tel: +44 20 7653 4000

FTI Consulting
Edward Westropp/Tom Hufton
Tel: +44 20 3727 1000


John Wood, UK Asset Manager of the Company with over fifteen years’ experience of the oil and gas industry and who holds an M.Sc in Petroleum Engineering from Imperial College, has read and approved the production and development  disclosure in this regulatory announcement.

Andrew Roberts, Group Exploration Manager of Faroe Petroleum and a Geophysicist (BSc. Joint Honours in Physics and Chemistry from Manchester University), who has been involved in the energy industry for more than 25 years, has read and approved the exploration and appraisal disclosure in this regulatory announcement.

1 Economic production for 2015 includes 12.5% of Blane, where Faroe received the economic benefit from the associated production from 1 January 2015 but can only account for it from the completion of the acquisition on 5 November 2015. Accounting production for 2015 was 10,260 boepd
2 Njord and Hyme excluded as from the scheduled shut in date at the end of May-16
3 Reduction over the period includes the cash payment for an additional 12.5% interest in the producing Blane field of £10.3milion
4 Amortised from $250 million in accordance with the facility agreement

Reserves Assessment

To assess the reserves, the Company has used the definitions and guidelines set out in the 2007 Petroleum Resources Management System prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) and reviewed and jointly sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE)


“APA” awards in pre-defined areas
“bscf” billions of standard cubic feet
“best estimate” an estimate representing the best technical assessment of projected volumes. Usually the P50 value. For Contingent Resources, the term of best estimate is denoted as 2C
“boe” barrel of oil equivalent
“Contingent Resources” Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources are a class of discovered recoverable resources.
“mmboe” millions of barrels of oil equivalent
“mmstb” millions of barrels of stock tank oil
“net” the portion that are attributed to the equity interests of Faroe
“Proved + Probable Reserves” or “2P” those additional Reserves which analysis of geoscience and engineering data indicate are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate
Prospective Resources are estimated volumes associated with undiscovered accumulations. These represent quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from oil and gas deposits identified on the basis of indirect evidence but which have not yet been drilled. This class represents a higher risk than contingent resources since the risk of discovery is also added. For prospective resources to become classified as contingent resources, hydrocarbons must be discovered, the accumulations must be further evaluated and an estimate of quantities that would be recoverable under appropriate development projects prepared.
“reserves” reserves are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorized in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by development and production status


Notes to Editors

The Company has, through successive licence applications and acquisitions, built a substantial and diversified portfolio of exploration, appraisal, development and production assets across the Atlantic margin, the UK and Norwegian North Sea, Norwegian Sea, Barents Sea and the Celtic Sea.  Faroe Petroleum has extensive experience working with major and independent oil companies and its joint venture partners include BP, Centrica, ENGIE, E.ON Ruhrgas, Maersk, OMV, Repsol, Shell, Statoil, Total, Tullow and Wintershall.

The Company’s substantial licence portfolio provides considerable spread of risk and reward.  Faroe has a very active drilling programme ahead and it currently has interests in six principal producing oil and gas fields in the UK and Norway, including interests in the Schooner and Ketch gas fields and Blane oil field in the UK, and interests in the producing Njord, Brage and Ringhorne East fields in Norway.  Full year average production for 2016 is estimated to be between 7,000 boepd and 9,000 boepd.

In November 2013 and March 2014 Faroe announced the Snilehorn and Pil discoveries in the Norwegian Sea in close proximity to the producing Njord and Hyme fields.  In July 2014 the Company announced the successful drilling of the Bue side-track well, and provided an update of the resource range for the Pil and Bue discoveries of between 80 and 200 mmboe (gross). More recently, in 2015, the Company announced the Shango and Boomerang discoveries in the Norwegian North Sea.

Norway operates a tax efficient system which incentivises exploration, through reimbursement of 78% of costs in the subsequent year. Faroe has built an extensive portfolio of high potential exploration licences in Norway which, together with its established UK North Sea positions provides the majority of prospects targeted by the Company’s sustainable exploration drilling programme.

Faroe Petroleum is quoted on the AIM Market of London Stock Exchange.  The Company is funded from cash reserves and cash flow, and has access to a $225 million reserve base lending facility, with a fully funded committed drilling programme through 2016.   Faroe has highly experienced technical teams who are leaders in the areas of seismic and geological interpretation, reservoir engineering and field development, focused on creating exceptional value for its shareholders.