Faroe Petroleum’s first half results were hit by shut-ins to its Njord and Hyme fields.
The firm recorded £53.5million in revenue down from last year’s £89million. Its EBITDAX stood at £15.6million compared to last year’s £56.9million.
Both Njord and Hyme have since been brought back on line following the completion of structural reinforcement work.
However, company chief executive Graham Stewart insisted the future was bright for the Norwegian explorer. He cited the firm’s Pil and Bue discoveries as major anchors to long-term business growth. The Pil find, which was announced in March, returned significantly larger resources than original pre-drill expectations.
He said: “We are very pleased with the progress of the company in the first half of 2014. The three outstanding achievements during the period were the significant Pil and Bue discoveries, the production acquisition of Schooner and Ketch and our £65million share placing in June 2014. These three successes show that our exploration-led, production-backed growth model is continuing to deliver and has strong investor support.
“The combined recoverable volumes on the Pil and Bue discoveries are estimated to be between 80 and 200 mmboe gross (20 to 50 mmboe net to Faroe), potentially making it our largest exploration success to date. The discoveries have de-risked a number of very exciting prospects on the licence and the partnership has already committed to two further wells on the licence for drilling in 2015.”
In the first half of the year Faroe paid out £35million to acquire 53.1% and 60% interests in the Schooner and Ketch gas and condensate assets in the UK southern North Sea.
The company leader added: “The Schooner and Ketch operated production acquisition considerably boosts and diversifies our oil and gas cash flow generation. The transaction is highly tax efficient, providing shelter for our historic UK tax losses and future capital expenditure in the UK. As anticipated, the Njord and Hyme temporary shut-in reduced turnover and profits for the first half but with these fields having been brought back on production in July, Faroe’s production levels are now higher than ever before.
“The company’s substantially oversubscribed share placing in June 2014 raised £65million gross and we are very pleased with the strong support Faroe received from its existing and new investors. The placing strengthens the company’s finances and allows us to accelerate activities, follow up recent exploration successes and target further production acquisition opportunities.”
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