Faroe to ramp up exploration, pursue M&A opportunities as profits appear

Graham Stewart, chief executive of Faroe Petroleum, will leave the firm within three months.
Graham Stewart, chief executive of Faroe Petroleum, will leave the firm within three months.

Faroe Petroleum will participate in seven wells by the end of next year as the North Sea oil firm “ramps up” exploration activity.

The Aberdeen-headquartered company said it was taking advantage of competitive rig rates and a Norwegian tax incentive for exploration.

London-listed Faroe intends to raise its average daily production to 35,000 barrels of oil from 12-14,000 in the medium term.

Faroe also hinted at acquisition activity, saying it would capitalise on its “proven M&A track record” as it pursues “value-accretive opportunities”.

Interim results showed Faroe was back in the black in the first half of 2018, posting pre-tax profits of £73 million, compared to a deficit of £6m a year ago.

Revenues dropped to £68m from £80m in the first six months of 2018, as income from “produced but not lifted hydrocarbons” was not included.

Highlights for the period included a discovery at the Iris-Hades field in Norway, 20% owned by Faroe, which added 42m barrels to the firm’s resources base.

An appraisal well is slated for the first half of 2019.

Faroe has also been fending off shareholder DNO’s attempts to place its own nominees on the company’s board.

Chief executive Graham Stewart said: “We remain one of the most dynamic and successful explorers in the sector and have a very active drilling programme underway.

“Seven E&A wells will be drilled over the coming months including appraisal of Iris Hades, the Agar/Plantain exploration well in the UK currently drilling and the Faroe-operated Rungne exploration well, due to spud soon.

“The unrisked resource potential net to Faroe targeted by the firm six well exploration campaign programme is estimated to be in the range of 80-150 mmboe.

“In the medium term we are targeting material increase in shareholder value and cashflow with our fully funded investment programme across the portfolio, encompassing exploration, appraisal, development and production.

“I remain confident in our ability to deliver our stated near to medium term production growth target of 35,000 boepd.”