Faroe Petroleum said higher “expensed exploration costs” were partly to blame for posting an operating loss of £34.3million for the first half of the year.
The slip into the red comes after last year’s £5.6million in profit for the same time period.
It currently has a cash and net cash reserves of £83.9million and £60.9million respectively.
Despite the dip in finances, the firm’s chief executive hailed the first half of the year thanks to its significant Brasse oil discovery.
Graham Stewart said: “I am pleased to announce Faroe’s results for the first half of 2016, a period of strategic delivery for the business with: another significant discovery in Norway at the Faroe-operated Brasse exploration well; production performing above guidance; and post period end, the transformational acquisition of a portfolio of Norwegian production assets from DONG was announced in July 2016.
“Pre-acquisition net production was above guidance averaging at approximately 9,000 boepd with opex per boe of $25, from which we continue to generate cash, despite the challenging market conditions. Faroe has had considerable success with the drill bit in recent years, and we are now seeing the real value of that success materialise. We have made good progress in advancing the high quality Oda development project (Faroe 15%) with first oil scheduled in 2019. Field Development Plan sanction of the Njord Future Project is expected in early 2017, and in addition, concept selection for development of the Pil field (Faroe 25%) is expected by the end of the year. We are very pleased to be progressing these important new projects all of which are taking advantage of falling costs.
“The transformational acquisition of a package of producing assets from DONG, negotiated on a bilateral basis, creates a new strategic hub for Faroe, centred round the Ula field platforms, in one of our core areas offshore Norway. The fields, benefitting from the synergies of owning several field interests in and around Ula, will have a material impact on production, reserves, cash flow and debt capacity. In parallel with the acquisition, we raised gross £66.0 million of equity in July and August 2016 to fund the acquisition and accelerate the progress of Brasse towards development.
“As we proceed towards the year end we remain busy with the drill bit with results due shortly from the near-field Njord North Flank exploration well (Faroe 7.5%); we also look forward to spudding the high impact Barents Sea well Dazzler/Boné (Faroe 20%), and plan the early integration of the new DONG assets and asset team into our business. I look forward to updating you on our progress in due course.”
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