Aberdeen-based firm plans to drill five wells this year
Faroe Petroleum has announced plans to invest £50 million drilling five new wells in 2013.
Faroe sunk six wells in 2012, with the highlight being the Butch discovery in Norwegian waters described as having a “very high net to gross ratio”.
The Aberdeen-based exploration firm said its 2012 year-end cash position will be in the region of £75 million which, along with undrawn debt, will go towards financing the 2013 drilling programme.
Faroe said one well in particular in the 2013 drilling programme in North Uist – operated by BP and in which Faroe holds a 6.25 per cent stake – “offers significant resource potential and is located in the same area as a number of important discoveries on the Atlantic margin's Corona Ridge, including Rosebank and Cambo”.
The company added: “Drilling of this deep-water well commenced in March 2012, but due to drilling-related technical difficulties there has been considerable delay.
“The well is, however, nearing target depth and completion of operations is expected in the near future.”
Faroe said production rates for 2012 had averaged 7,200 barrels of oil equivalent per day (boepd) and current production rates are approximately 8,000 boepd.
Production was cut back in May and June 2012 to allow for a scheduled programme of maintenance, repair and tie-in works on the Njord and Brage fields.
Faroe's production rate have been lifted by its acquisition of interests in four oil and gas fields in UK and Norwegian waters, notably Njord, Brage, Ringhorne East and Blane.
Faroe said its Hyme development project “is progressing according to schedule” with production expected to begin in the first quarter of 2013,which will add an estimated 1,000 boepd to net production figures.
Average 2013 production is anticipated to be in the range of 7,000 to 9,000 boepd.
Interim results posted by Faroe last September stated production averaged above 10,000 boepd in the first four months of the financial year.
In an operational update posted today, chief executive Graham Stewart said: “We expect higher average production rates in 2013 and, as in 2012, we expect that the cash flow from production will fully fund the exploration programme and a large part of the development capex, with the remainder being funded from reserves and our debt facility, as appropriate.
“We drilled six exploration wells during 2012 and the pace of our exploration programme has continued into 2013 with a further five exploration wells planned for 2013 as well as five development wells.
“The company is in an excellent position to maintain its momentum in exploration and to make further investments as we execute our growth strategy through the drill bit.”
Faroe also announced today it has been awarded eight new prospective exploration licences, including three operatorships, under the 2012 Norwegian APA Licence Round on the Norwegian Continental Shelf.