Faroe Expects Lower Production in 2014

Faroe Petroleum reported Tuesday that it expects to average between 4,000 and 6,000 barrels of oil equivalent per day this year as its 2013 high-impact exploration program continues into 2014. The expected production for this year is lower than the 6,059 boepd achieved by the company in 2013 or in the previous year (6,900 boepd).

Faroe said that the drilling of three exploration and appraisal wells – Solberg, Pil and Butch East – is currently ongoing on the Norwegian Continental Shelf.  Butch South West is scheduled to be drilled directly following Butch East.

Meanwhile, the company said it is maturing several exploration and appraisal wells for drilling during the second half of 2014 and into 2015. This is likely to include wells on the Pil license, where Faroe announced a discovery March 6.

Faroe plans to spend around $182 million (GBP 110 million) on exploration and appraisal in 2014, while development and production capex is expected to be around $41 million (GBP 25 million).

The firm's revenue for 2013 was $213 million (GBP 129.4 million), compared to $262 million (GBP 158.9 million) with profit at the EBITDA level also coming in lower at $133 million (GBP 80.5 million), compared to $159 million (GBP 96.3 million) in 2012.

In a company statement, Faroe Chief Executive Graham Stewart commented:

"2013 was another year in which we delivered a sustained, high impact exploration program, which delivered success with the drill bit, coupled with a significant increase in our 2P reserves and contingent resources.

"Our active exploration drilling program continues with operations ongoing on three exploration wells in Norway – Pil (Faroe 25 percent), Solberg (Faroe 20 percent) and Butch East (Faroe 15 percent). Pil has already been announced as an oil and gas discovery and a production test is underway. Butch East is the first of two back-to-back wells on the Butch area, on the same structure as the significant Butch Main discovery with the Butch South West well to follow. Drilling operations are also ongoing on Solberg.

"Following the Pil and Snilehorn successes, further de-risked drilling targets are currently being matured for near-term drilling while additional prospects are also being prepared for drilling decisions.  With the new Snilehorn and Pil discoveries, the Greater Njord Area is increasingly becoming an exciting asset with substantial remaining reserves, new discovered resources, and further high potential drilling targets."

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