Sept. 18 (Bloomberg) -- Faroe Petroleum Plc, an Aberdeen, Scotland-based oil explorer focused on the U.K. and Norway, plans to buy stakes in established exploration projects.
The company has already invested in the Darwin prospect, buying a 12.5 percent stake in the Barents Sea area operated by Spanish company Repsol, where drilling is planned to begin at the end of this year.
“It’s quite new to us, we’ve been a very much organic growth-oriented company, but we’ve always been open to potential farm-ins,” Graham Stewart, Faroe Petroleum Chief Executive Officer, said in a telephone interview. “We just haven’t done them and it’s not because we wouldn’t, but opportunities were not there. But opportunities are there and we’re looking at a few now that are quite attractive”
Faroe Petroleum is interested in mature projects that lack the money for further exploration. Although the company has not made any oil discovery this year, it has a 50 percent success rate for the period of 2009-2012.
“The definition of exploration is that it will not all work,” Stewart said. “We are quite comfortable about farming into other people’s licenses and I think that is a strength that we have now given our strong balance sheet.”
The company posted a profit after tax of 3.74 million pounds for the first six months of this year, in comparison with losses of 18.2 million pounds in the same period of last year. Its revenue more than doubled to 90.6 million pounds, according to a statement published today.
“We have undrawn credit facilities, we have strong cash flow, so we are looking into insuring we always have a large number of choices for investing our money in wells,” Stewart said.
Faroe has raised the lower limit of its production guidance by 1,000 barrels of oil equivalent per day to 7,000 to 8,000 barrels a day and doesn’t exclude increasing its production even more, its CEO said. “Don’t be too surprised if we add more production in the next months, that’s a likely outcome.”
The company is searching for oil exploration opportunities mainly in the so-called Atlantic Margin, the area north of Scotland between Shetland and Faroe islands, but also in the region of east Iceland and north Norway.
Faroe has drilled eight wells in Norway since 2009, with three commercial discoveries, but two of its most recent projects, the Clapton and the Cooper wells in the North Sea failed in finding any oil. In the Barents Sea, Faroe holds two exploration licenses and has bought a share in the Darwin project.
“The potential out there is huge, it is a truly vast area,” Stewart said. “The well density is incredibly low and that is something that will draw more and more companies in.”
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