Faroe Petroleum reported a strong financial performance for the first half of the year.
The UK and Norway operator recorded a loss of £300,000 – a significant improvement on last year’s £34.3million loss for the same time period. The company posted revenues of £80.1million, up on last year’s £23.1million. Faroe credited its DONG acquisition, which closed in December, for the boost.
Chief executive Graham Stewart insisted the firm had exceed all expectations.
Mr Stewart said: “I am pleased to report that Faroe Petroleum is performing ahead of expectation across its range of activities, despite continuing low oil prices. Faroe benefited from a number of positives in the period including: strong production performance in H1 2017, averaging 14,800 boepd; appraisal success on the Brasse discovery, increasing our recoverable resource range; a growing low cost exploration and appraisal programme; significant progress on our organic development projects; the acquisition of a further 14% interest in the Blane field (announced in July 2017); and rapid payback achieved on the DONG deal within 6 months of completion. Faroe now has a strong and diversified asset base with a clear path to increase profitable production to over 40,000 boepd within the next five years, with robust project economics even at low commodity prices.”
The company chief heralded the firm’s Brasse field, which it has a 50% stake in, as its “standout project”.
“Brasse was applied for, drilled, discovered and appraised by our team. We now move forward to the exciting phase of planning its development, in the knowledge that the significant resources in this prolific reservoir have considerable value, particularly given their shallow water location close to competing process and export infrastructure,” he said.
“Gross plateau flow rates for this field have the potential to exceed 30,000 boepd, with first production scheduled for 2020/21.
“The Company has delivered good financial performance in H1 2017 with strong cash flow, improved cash reserves and an undrawn RBL credit facility of $250 million, ensuring significant financial flexibility going forward as we progress our development and exploration programmes simultaneously. Looking ahead, while we actively manage our organic programme, we will seek to continue to capitalise on our strong strategic and financial position as we pursue further attractive and value accretive M&A opportunities.”
Faroe’s exploration spend for the year is expected to be £45million pre-tax. It’s development and production costs are expected to hit £90million.
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