Faroe Petroleum said yesterday it would pay £60million and farm out a 20% interest in three Atlantic Margin exploration licences to acquire an 18% interest in the Blane oil field.
The Aberdeen-based oil and gas company said the deal, with Eni UK and Eni ULX, would be funded from cash and bank debt drawn against its borrowing facility.
Blane, in block 30/3a in the UK central North Sea and extending into Norwegian waters, was discovered in 1989 and production began in September 2007.
The field has been developed as a subsea tieback to the BP-operated Ula platform on the Norwegian continental shelf.
Faroe said Blane was a low-cost producing field with average gross production rates last month of 11,964 barrels of oil equivalent per day (boepd) with 2,154boepd net to the company. It said that remaining proven and probable reserves – as evaluated independently by Senergy (GB) – were 3million barrels of oil equivalent net to Faroe.
The company added that it believed there was upside potential in the reserves, through a combination of outperformance of the development, and the potential for further infill drilling.
Joint-venture partners in Blane are operator Talisman Resources (43%), Roc Oil (12.5%), Nippon Oil (14%) and Dana Petroleum (12.5%).
As part of the deal, Faroe has also agreed to assign to Eni UK and Eni ULX under a farm-out agreement a 20% interest in the Atlantic Margin Rannva exploration licences which straddle the UK/Faroe border.
The Rannva licences (Faroe Petroleum 100% and operator) are said to contain two “giant prospects” and continuing technical work is under way to define a well location.
Graham Stewart, chief executive of Faroe, said: “We are delighted to be able to broaden our portfolio through the acquisition of the Blane interest and significantly boost our revenue generation capacity with the addition of this high-quality producing oil field.
“As we proceed with operations on the Eni-operated Anne Marie exploration well off the Faroe Islands and the Chevron-operated Lagavulin exploration well west of Shetland, we are pleased to bring in a new partner in the joint venture for the Rannva licences.”
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