Faroe Petroleum, the Aberdeen-based oil and gas operator, said yesterday that 2008 had been its busiest year yet.
Reporting its results for 2008, chief executive Graham Stewart noted that, during the year, Faroe had increased its net reserves – assets in production or with field-development approval – from 4million to 5.5million barrels of oil equivalent (boe).
At the same time, net contingent resources – without field-development approval yet – increased from 22million to 32million boe.
Faroe said the net present value of reserves and contingent resources combined had grown from £129million to £204million at the end of last year.
With modest production from three UK gas fields so far and a fourth, Topaz, expected on stream this summer, Faroe is continuing to progress the substantial Breagh discovery towards production.
Mr Stewart said one option, however, was for Faroe to sell its 10% stake in the field.
Chairman John Bentley told shareholders that the global economy had undergone unprecedented changes which had also affected the oil and gas industry.
He said: “The retrenchment of the credit and equity markets has led to the delaying, and in some cases cancelling, of the development of assets by companies as they seek to preserve funds.
“In some circumstances, small and medium-sized exploration and production companies are now finding themselves without capital to continue to operate and we have already witnessed some of these companies being forced into takeovers or even administration by stakeholders in their businesses.
“This period of depressed asset values represents a good time to secure interests in quality projects on attractive terms.”
The group reported pre-tax losses for 2008 of £28.76million compared with a £4.39million deficit the year before. The 2008 losses will be mitigated, however, by a tax credit of £8.15million.
Turnover for the year was £2.3million, up from £1million the previous year.
Faroe ended the year with cash of £16.7million, down from £63.4million a year earlier, reflecting significant capital investments in 2008, including the acquisition and development of stakes in Wissey and Topaz and the drilling and completion of eight exploration, appraisal and development wells.
Faroe said, however, it was able to fund all its current commitments from existing resources and cash flow.
It has a £25million line of credit with Paris-based bank Societe Generale which is largely undrawn.
Faroe has also announced the appointment of Aberdonian Iain Lanaghan, 53, as full-time finance director with effect from May 4.
He has experience in the energy, transport and service sectors, including as a former finance director of Aberdeen transport giant FirstGroup.
Roger Witts, who has been part-time finance director since June 2007, will be appointed to the board as a non-executive director.