In 2012, Faroe Petroleum laid "a significant amount of groundwork" for an expected busy 2013, according to analysts who follow the company at London-based FoxDavies Capital.
Faroe's latest operational update, released Wednesday, "underlines the frustrating headwinds that hampered the company's progress in 2012", according to FoxDavies in a brief research note. But the bank's analysts believe that cash flow from production "should support what Faroe is all about: exploration".
FoxDavies expects a "good year" from Faroe, which has planned six wells for 2013.
Faroe capped a disappointing year, in terms of both exploration and the development of its production assets, with the plugging and abandoning the 6407/1-6S (Rodriguez South) well in the Norwegian Sea, which was spud in December. There were no signs of hydrocarbons at the primary targets despite developed reservoir sands within a couple of these formations, although the firm insisted that preliminary analysis of data obtained from the drill suggests hydrocarbons may be present in shallower Lower Cretaceous intervals.
The firm's production figures for 2012, approximately 7,200 barrels of oil equivalent per day (boepd), turned out to be within the range of the management's expectations, but these were affected by unscheduled downtime on the Njord, Brage and Blane fields in the fourth quarter of the year.
All these fields are now back on stream and production is currently about 8,000 boepd.
As far as exploration is concerned, Faroe confirmed that its North Uist well, located west of the Shetland Islands, is nearing its target depth despite technical difficulties causing a long delay (the well was spud in March 2012).
The firm is also looking forward to the spudding of a well on the Darwin prospect in the Barents Sea by Repsol during the first quarter. During the second half of the year it is involved in two wells – Snilehorn and Novus – in the Norwegian Sea and two others – Butch East and Butch South West – in the Norwegian North Sea.
Faroe also reported Wednesday that it has been offered eight licenses as part of the Norwegian APA 2012 licensing round. These include shares in seven licenses in the Norwegian North Sea and one in the Norwegian Sea.
"Faroe Petroleum is delighted to have been awarded eight prospective exploration licences in the 2012 Norwegian APA licensing round announced yesterday, three of which will be operated by Faroe, which significantly enhances our strategic position in the country," Faroe CEO Graham Stewart commented in a company statement.
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