Faroese Petroleum Ministry Approves Exploration Well for 2007

Exploration for Oil and Gas on the Faroese continental shelf has taken an important step in the course of finding commercial quantities of hydrocarbons.

Mr. Bjarni Djurholm, the Minister of Trade and Industry has signed an agreement with the license holders of License 004 and License 007 on the drilling of an exploration well to commence in 2007.

BP Amoco Exploration (Faroes) Limited ("BP") and Shell U.K. Limited ("Shell"), the license holders of License 004, earlier this year initiated negotiations with the Petroleum Administration on the possibility of transferring the two remaining commitment wells in License 004 into a sub-basalt exploration well on License 007.

After the outcome of the Svinoy well, drilled on License 004 in 2001, the companies have concluded that the prospectivity of License 004 has been significantly reduced and that the remaining commitments would be better utilized elsewhere within the Faroese License area. The Petroleum Administration agrees that Faroese exploration will benefit from a well testing a sub-basalt prospect and recognizes that the decision to include 9 year "frontier type" licenses as part of the first licensing round now turns out to be the key for making this transfer possible.

BP and Shell have agreed with Anadarko Faroes Company ("Anadarko"), sole Licensee on L007, on drilling an exploration well within the License 007 area to test the 'William' prospect. BP and Shell will thus farm into License 007 whereupon BP becomes the operator of the License. BP and Shell will subsequently relinquish License 004.

Bjarni Djurholm, Minister of Trade and Industry, is pleased with the new development for the country's exploration endeavors and says:

"Oil and Gas Exploration has been taking place for 4 years now. The results have proven the Faroese area to accommodate an active petroleum system and we see now that the exploration efforts are moving away from the Judd basin and further on to the basalt covered part of the Faroese continental Shelf. The well we have agreed today will first and foremost test the license for hydrocarbon bearing formations, but will also facilitate important geological information to be collected for the benefit of future exploration." "We have seen that Faroese companies, which have been given the opportunity to provide goods and services to the exploration operations, have proven that they are competent and capable of lifting these tasks."

"It is my hope that the companies that now have decided on this undertaking, will succeed in their task for the benefit of our society as a whole."

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