Faroe Petroleum has agreed to buy a near-14% stake in the Blane field in the UK North Sea from Japanese firm JX Nippon for $5.25million (£4million).
The acquisition is expected to go through later this year subject to regulatory approvals and production resuming following a sub-sea work programme this summer.
Aberdeen-based Faroe said the £4million consideration would be funded from existing cash resources.
The deal increases Faroe’s interest in the Blane field in the UK sector of the North Sea to 44.5%.
Blane, discovered in 1989, is in the Central Graben Area and extends into the Norwegian sector.
It was developed as a sub-sea tie-back to the Ula platform, which is 20% Faroe-owned.
The field started producing in 2007.
Blane pumped out about 2,900 barrels of oil equivalent per day in 2016 and Faroe believes it can extend the field’s life and reduce operating costs.
Partners on Blane include operator Repsol Norge, Dana Petroleum and Repsol Sinopec Resources UK.
Faroe acquired an initial 18% interest in Blane Field in 2010.
In 2015, it snapped up a further 12.5% through its takeover of Roc Oil.
Faroe chief executive Graham Stewart said:”We are pleased to announce this acquisition, which further increases our stake in this low cost, high quality and long life asset and at a fair value of $5.0 per boe.
“Raising our stake again in Blane, offers significant upside potential as we realise synergies through Blane’s use of our key Ula hub; increasing net production, reducing average operating costs, increasing profitability and providing access to further reserves potential from the field.
“The transaction is also very tax efficient for us, providing shelter for both past and future tax losses in the UK.
“Faroe continues to advance a number of key projects in and around the Ula hub area, all of which will serve to extract greater value from this particular deal through improved operating synergies.”
Faroe shares were up 0.59% to 85.25p on the London Stock Exchange as of noon today.
Earlier this week, the company upgraded the reserve estimates for the Brasse field in the Norwegian North Sea following the drilling of a sidetrack well.
Faroe said recoverable resource volumes now stand somewhere between 56million and 92million barrels of oil equivalent, up from previous estimates of 43-80million.
Read more: Faroe boosts reserve estimates from Brasse after sidetrack well drilled
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