Faroe Petroleum provides operational & drilling update

Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in Norway and the UK, has provided the following operational update:

Drilling operations have commenced on the follow-up drilling programme to the significant Pil/Bue 2014 discoveries in the PL586 licence in the Norwegian Sea with the spudding of exploration well 6406/12-4S (Faroe 25%) on the Boomerang prospect.

Shell-operated exploration well to test the Portrush prospect in the PL793 licence (Faroe 20%) has been added to the expected programme for Q3 2015. The prospect is in the Norwegian Sea, close to the producing Njord field (and Pil discovery).

Production for the five months period from 1st January to 31st May 2015 averaged 11 324 boepd.

Average operating cost per barrel of oil equivalent of approximately US$22 was achieved for the same five month period, reflecting increased throughput and lower production costs.

Cash and net cash (unaudited) increased by £14 million from 31 December 2014 to £107 million and £84 million respectively at 31st May 2015.

Boomerang exploration well commences Pil follow-up drilling campaign in Norwegian Sea

The Boomerang prospect is located in the Norwegian Sea in licence PL586, which also contains the significant Pil and Bue discoveries announced in 2014. The Boomerang prospect is located approximately 30 km to the southwest of the producing Njord field (Faroe 7.5%).

The drilling programme will target prospective resources in the Upper Jurassic reservoirs analogous to the Pil, Bue and Draugen field reservoirs. After the drilling of the Boomerang exploration well bore (6406/12-4S) the campaign will continue with an updip side-track (6406/12-4A) and thereafter a further exploration well (6406/12-5S) on the on the Central Boomerang (Blink) prospect (Faroe 25%).

The Boomerang exploration well is located in water depth of approximately 320 m and is operated by VNG Norge AS (30%) using the Transocean Arctic semi-submersible drilling rig with partners Spike Exploration Holdings AS (30%) and Rocksource Exploration Norway AS (15%). The Company will announce the results from the Boomerang well when drilling operations are complete.

Portrush exploration well in Norwegian Sea added to programme, expected to be drilled in 2015

The Portrush prospect is located in the Norwegian Sea in licence PL793 (Faroe 20%) and less than 10 kilometres south east of the producing Njord field (Faroe 7.5%). The exploration well will target prospective resources along the Vingleia fault in analogous Upper Jurassic reservoirs to Pil, Bue and Draugen.

The exploration licence PL793 was awarded to Faroe in January 2015 as part of the 2014 APA licensing round with joint ventures AS Norske Shell (40% and operator), VNG Norge AS (20%) and Petoro AS (20%). The well will benefit from reduced rig rates and the timing of the well will allow the results from a discovery in the well to be included in forthcoming concept selection and development decisions in the greater Njord and Draugen areas.

Group production performance exceeds forecast in the period January to May 2015

Group production averaged approximately 11 324 boepd in the five month period from 1st January to 31st May 2015, reflecting better than forecast performance from the main producing fields in Faroe’s portfolio. The average operating cost per barrel of oil equivalent for the same period was approximately US$22, reflecting higher throughput and lower costs in general. The Company is expecting full year operating costs to be around US$30/boe.

Following a successful wireline campaign on the Schooner and Ketch fields (UK) production has continued at stable rates and better than forecast. In the Brage field (Norway), the first of two infill wells has been successfully completed and brought on stream very recently, with good initial performance. The second infill well has spudded and is expected to be brought on stream in Q4 2015.

Average production guidance for the year is under review but currently remains at 8000 to 10 000 boepd. A review of this guidance will be undertaken following the summer maintenance period.

Work on the Njord future re-development project is progressing to plan. Concept selection for this significant and important project is scheduled for mid-2016; suspension of production and tow-to-shore of the Njord A facility are currently planned for Q2 2016.

On the Butch field development project, several attractive development scenarios are being matured in parallel, encompassing subsea tie-back solutions and a fixed jack-up facility. Concept selection is expected in the coming months and the field development plan is planned for submission in 2016.

Graham Stewart, Chief Executive of Faroe Petroleum commented:

“I am delighted to report that Faroe Petroleum is performing very well despite continuing low oil prices and sector instability. 2015 is proving to be Faroe’s most active year to date, with several exceptional prospects to be drilled and production at an all-time high. Faroe’s consistent strategic focus and prudent approach to financial management have ensured that we have a strong balance sheet and are well placed to take advantage of attractive opportunities.

“Kicking off our follow-up drilling programme on the significant 2014 Pil and Bue discoveries, I am very pleased to announce the spudding of the Boomerang exploration well, located in the same licence and within tie-back distance of the producing Njord field infrastructure. I am also delighted that we can look forward to a further near-term exploration well, on the Shell-operated Portrush prospect, again located close to the Njord and Draugen fields.

“The Greater Njord Area, which includes the Pil and Bue discoveries, the producing Njord and Hyme fields as well as the Snilehorn discovery announced in late 2013, represent a significant proven resource and a substantial position for Faroe. The Company’s exciting 2015 exploration drilling campaign, focused entirely on this area, has the potential to add considerable additional value.”

Adapted from a press release by David Bizley

Published on 24/06/2015

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