New exploration licences awarded in Norway21 January 2015
Faroe Petroleum plc
(“Faroe”, “Faroe Petroleum”, the “Company”)
New exploration licences awarded in Norway
Faroe Petroleum, the independent oil and gas company focussing principally on exploration, appraisal and production opportunities in Norway and the UK, is pleased to announce that it has been awarded five new prospective exploration licences, including one operatorship, under the 2014 Norwegian APA (Awards in Pre-defined Areas) Licence Round on the Norwegian Continental Shelf.
The Company has been awarded three new licences in the area surrounding the Company’s Pil & Bue discoveries:
• Licence PL793 Portrush – Blocks 6407/7, 8, 10 and 11: Faroe (20%), A/S Norske Shell (40% and operator), Petoro (20%) and VNG (20%): The Portrush Prospect is an analogue to the Boomerang Prospect. The main prospect at Portrush is an Upper Jurassic sandstone wedge along the main basin bounding fault, and in addition the licence area contains several other promising prospects and leads. The work programme includes licensing of 3D seismic data. The Boomerang Prospect is one of the targets to be drilled in summer 2015 by the Company (Faroe 25%) as a follow up to the Pil discovery in the PL586 licence.
• Licence PL794 Rosapenna – Blocks 6407/7 and 6407/10: Faroe (20%), Statoil (40% and operator), E.ON (20%) and VNG (20%): The Rosapenna prospect is another direct analogue to the Boomerang Prospect. The work programme includes the licensing of 3D seismic data.
• Licence PL792 Slynge – Blocks 6306/2: Faroe (50%) and Centrica (50% and operator): The Slynge area is located immediately to the south of the PL586 Pil licence with a structural setting analogous to the Pil discovery and Boomerang prospect. The work programme includes the licensing of 3D seismic data.
Norwegian North Sea
The Company has been awarded two new licences in the North Sea as extensions to existing exploration licences:
• Licence PL676BS Firkløver extension – Block 25/7, 10: Faroe (40% and operator), Total E&P Norge AS (“Total”) (20%), Det norske oljeselskap ASA (”Det Norske”) (10%), E.ON (10%) and Petoro AS (20%): This North Sea licence extension is located east and south-east of the existing North Sea PL676 S licence awarded in the 2012 APA round. The extension will include up-dip areas of the Krembanan Prospect east of the existing licence area. There is no incremental work programme cost associated with this licence. The work commitment is to perform and complete technical studies already initiated in the PL676S licence.
• Licence PL627B Shango Extension – Block 25/6: Faroe (20%), Total (40% and operator), Centrica Norge AS (20%) and Det Norske (20%): This licence is located north of the PL627 licence area and covers the northern extension of the Shango Prospect which is scheduled to be drilled in the first half of 2015. There is no incremental work programme cost associated with this licence.
Graham Stewart, Chief Executive of Faroe Petroleum, commented:
“Faroe has again been very successful in its licence application strategy, winning a further five important licences in the latest Norwegian licensing round, and again demonstrating the strength of our position in Norway. These new awards enhance our licence portfolio, which is one of the largest on the Norwegian Continental Shelf. The new licences and licence extensions add exciting potential to the Company in Norway and further boost our already significant position in the highly prospective area surrounding our Pil and Bue discoveries.
“Despite the challenges of a low oil price, Faroe remains robust due to its strong, largely unleveraged balance sheet, profitable cash flow from a balanced production portfolio and modest capital commitments. This strength, in combination with Norway’s progressive and highly successful fiscal incentivisation, ensures Faroe is well placed to continue to grow its position in Norway as a key part of our value creating strategy.”
For further information please contact:
|Faroe Petroleum plc||Graham Stewart, CEO||Tel: +44 1224 650 920|
|Oriel Securities Limited||Callum Stewart /Michael Shaw/Ashton Clanfield||Tel: +44 20 7710 7600|
|RBC Capital Markets||Matthew Coakes/Jeremy Low||Tel: +44 20 7653 4000|
|FTI Consulting||Edward Westropp/Tom Hufton||Tel: +44 20 3727 1000|
(see also Faroe Petroleum plc website: www.faroe-petroleum.com)
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.
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, DONG, E.ON Ruhrgas, GDF, Maersk, OMV, Repsol, RWE Dea, Statoil, 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 economic production for 2014 is estimated to be between 7,000 boepd and 10,000 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 and in April 2014 the Company announced the Solberg discovery in the Norwegian Sea. 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).
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 west of Shetlands and North Sea positions provides the majority of prospects targeted by the Company’s sustainable four to five well per annum drilling programme.
Faroe Petroleum is quoted on the AIM Market of London Stock Exchange plc. The Company is funded from cash reserves and cash flow, and has access to a $250m borrowing base facility, with a fully funded drilling programme through 2014 and 2015. 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.