Faroe Petroleum said yesterday it had a £250million war chest to help further boost production and frontier exploration options.
Chief executive Graham Stewart said the independent oil and gas firm was also looking for acquisitions to further increase production and potentially add more acreage and 500million to 1billion-barrel prospects in the Atlantic Margin.
His comments came as Faroe said it had more than doubled its revenue in the first six months of the year to £90.6million, on the back of a jump in production and higher oil prices.
The firm, which also moved into net profit despite a £53million exploration write-off, said the revenue boost would help further enhance its exploration programme, which includes BP’s North Uist deepwater west-of-Shetland well plus frontier exploration in Norway’s Barents Sea.
Aberdeen-based Faroe said production, mostly from Norwegian assets acquired in a swap with Petoro last year, averaged 8,581 barrels of oil equivalent per day (boepd), compared with 1,263boepd in the first half of 2011.
Mr Stewart said: “With our cash position and debt facilities we have got about £250million, quite a war chest to out hunting with, for both acquisitions and farm-ins. We want to be drilling one frontier well a year and we want to have good choices.”
He said that, while Faroe had had a disappointing first half for exploration success, its drilling programme was exciting with results from a further four exploration wells due in coming months. These include the Darwin well in the western Barents Sea, North Uist and Rodriguez South well in the Norwegian Sea.
Keith Morris, an analyst at Investec, said Faroe’s strategy of four to five high-impact wells a year funded by cash flow from production “cannot be faulted”.
The firm’s focus has shifted towards Norway, where it benefits from exploration tax rebates.
Faroe has also recently applied for acreage in the Jan Mayen area off Iceland, plus more UK and Norway licences. Full-year production is expected to be 7,000-8,000boepd.
Pre-tax losses for the six months to the end of June were £15.8million, against £24million in the same period last year. But after tax credits of more than £19million, Faroe posted profits of £3.7million.