Shares in Aberdeen-based Faroe Petroleum fell yesterday after it said drilling on the Anne Marie exploration prospect off the Faroe Islands had failed to find thick reservoir sands.
Analyst David Farrell, of Evolution Securities, said the reservoir development was poor and it could be regarded as a non-commercial discovery.
Analysts at Canaccord Genuity said: “The Anne Marie result is clearly disappointing for Faroe and we expect the group’s shares to come under pressure.”
The stock finished the day down 9.2% at 176.5p.
Analyst Richard Rose, of Oriel Securities, said he would not rule out a bid for the company, although Faroe was not an obvious bid candidate. He added: “For anybody who wants a position west of Shetland, it could be a nice bolt-on.”
Faroe said hydrocarbons had been found in thin sandy layers, indicating robust evidence of the presence of an active petroleum system.
It added: “Further analyses are in progress to evaluate the size and the characteristics of the discovery.”
Faroe said semisubmersible rig Seadrill West Phoenix was expected to plug and abandon the well as planned and move away from the location in the coming days.
Before drilling began, Anne Marie had a reserve potential of about 140million barrels of oil equivalent.
Faroe chief executive Graham Stewart said: “While we did not encounter thick reservoir sands at the Anne Marie well location, the discovery gives us significant encouragement to continue exploration efforts in this licence, which we have held together with Eni for over 10 years.”
Eni Denmark is operator and has a 25% interest in the licence, while Dana Petroleum has 25%, OMV 20%, Faroe Petroleum 12.5%, Cieco E&P (Faroe) 12.5% and First Oil Expro 5%.
Meanwhile, Faroe said the Lagavulin exploration well operated by Chevron west of Shetland had been started last month. The well being drilled with the Stena Carron drillship will target potential oil-bearing reservoirs.
Faroe said Lagavulin had potential reserves of more than 500million barrels of oil equivalent, classing it as “one of the largest undrilled structural closures” on the Atlantic Margin.
The well is expected to take about 120 days to complete. Faroe has a 10% stake in the licence.
Mr Stewart said: “Our high-impact exploration programme continues with the drilling of Lagavulin, and Faroe’s ongoing multi-well exploration drilling programme will carry on through 2011 and beyond as we push forward to test our substantial northern seas portfolio of over 40 significant licences, to which we have last week added a further four, as operator, awarded under the UK’s 26th licensing round.”
Recommended for you
