Faroe Petroleum yesterday announced it was spending nearly £20million on a west-of-Shetland deal.
The Aberdeen company is to acquire a 10% non-operated interest in the East Foinaven field and a 0.5% interest in the west-of-Shetland pipeline system from Marubeni Oil and Gas (North Sea).
Graham Stewart, chief executive of Faroe, said: “We are very pleased to further broaden our production portfolio through the acquisition of the East Foinaven interest, which boosts and continues to diversify our oil and gas revenue.
“East Foinaven is a good-quality producing field which provides significant upside potential from one of our core areas.
“The transaction is very tax efficient for Faroe Petroleum, providing shelter for both past and future tax losses in the UK and is in line with our strategy to grow our production portfolio to continue the funding of our exploration programme.”
East Foinaven was discovered in August 1995 and first oil came from the field in September 2001.
It is a subsea tieback to the main Foinaven field.
Remaining proved and probable reserves have been put at 1.55million barrels of oil equivalent net to Faroe. Average 2012 projected gross production rate for East Foinaven is about 3,500 barrels of oil equivalent per day; 350 of this belonging to Faroe.
Faroe said its analysis indicated that, in the medium to longer term, reserves were expected to grow, with the potential to extend the field’s life beyond 2022.
The company said earlier this week it had a £250million war chest to help further boost production and frontier exploration options. Mr Stewart said then that the 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.
Shares closed unchanged last night at 150.75p.
o Oil rose for a second straight session yesterday as supply concerns and economic optimism fuelled a rebound from a 7% slide earlier in the week.
November Brent futures settled up $1.39 at $111.42 a barrel after touching highs of $111.58. Brent hit a low of around $107 on Thursday, its weakest since August 3.
US crude – also for November delivery – gained 47 cents to $92.89, off highs of $93.84.
Export delays of North Sea Forties oil, the most important of the four grades that form the Brent basket, stirred supply concerns.