Oil explorer’s shares soar on funding boost

Faroe Petroleum announced a near-£25million bank boost to help finance its Norwegian exploration and appraisal programme.

A company credit arrangement has been doubled to about £47.5million.

News yesterday of the move, involving Bank of Scotland and Barclays Commercial Bank (BCB), gave a lift to the Aberdeen firm’s shares, which finished the day up 21.5% at 58p.

Faroe said the money would allow it to increase its exploration and appraisal activity in Norway and take advantage of attractive opportunities.

It said it benefited significantly from the Norwegian tax regime under which exploration-focused firms recover 78% of exploration and appraisal-related expenditure in the following tax year.

Chief executive Graham Stewart said: “The doubling in size of this facility further reinforces the company’s already strong financial position. Faroe Petroleum will continue to leverage Norway’s state contribution towards exploration and appraisal expenditure, through its enlightened tax regime.

“This allows us to step up our drilling activity in our Norwegian core area.

“Norway represents an outstanding opportunity to create exceptional value for our shareholders, as we continue to grow our portfolio.

“We are very pleased to build on our long-term working relationship with the Bank of Scotland and to have this opportunity of building on our relationship with Barclays Commercial Bank.”

This is the first time BCB has been a debt provider to Faroe and it is also the first time the bank has invested in an oil and gas company working in Norway.

Walter Cumming, Aberdeen-based regional director of BCB, said: “Barclays Commercial Bank is delighted to be supporting Faroe Petroleum’s growth at this time and very much look forward to forging a long-term partnership with the company. This deal reinforces our continued strong commitment to the dynamic and important oil and gas sector.”

Ashley Kelty, associate director with Bank of Scotland Oil and Gas, said: “We are delighted to be able to provide further funding to Faroe Petroleum to support its exciting exploration programme in Norway.

“This facility strengthens the ongoing partnership between Bank of Scotland and Faroe Petroleum, and illustrates the bank’s continuing commitment to supporting customers to harness the significant potential which exists in Norway’s oil and gas sector.”

Faroe is focused on exploration, appraisal and production in the Atlantic Margin, the North Sea and Norway.