The arrangements extend over the following four UK West of Shetland licenses, three of which are situated along the prospective Corona Ridge on the same trend as the significant Chevron-operated Rosebank Lochnagar discovery (currently under appraisal):
The agreement provides for a significant cost carry for Faroe Petroleum through the remaining work program under the initial term, including the drilling of one exploration well on each license, should such decision be taken by the respective joint ventures. This farm-in represents the first step of Idemitsu's strategic entry into the UK.
The Idemitsu group of companies, established in 1911, focuses on the import, export, refining and distribution of petroleum, oil and gas exploration, coal mining, petrochemical plants and product sales. The group employs 4,500 people world-wide, with 2006 performance of $28billion gross turnover and $347million of net profits, and has a market capitalization of some $3.8billion. It started its upstream business in 1971, and has well-established exploration and production assets in Norway and Southeast Asia.
The farm-out agreement is contingent on joint venture partner consents being granted and approval from the UK Department of Trade and Industry.
Graham Stewart, Chief Executive of Faroe Petroleum, commented:
"This is an important step in Faroe Petroleum's Atlantic Margin strategy of farming out high cost exploration wells in a timely manner to secure a significant free carry, from an initially high license equity position. Idemitsu has recognized the potential of our strategic Atlantic Margin portfolio position, which we have carefully built to include 13 licenses, and we are delighted to have reached agreement with them for the first of our Atlantic Margin farm-outs. Idemitsu has committed substantial capital through this four-license farm-in, and we look forward to a very successful relationship together."
Osamu Kamimae, Executive Officer of Idemitsu Kosan said:
"We are very pleased to have signed this agreement with Faroe Petroleum, which gives us access to a package of highly prospective and material exploration opportunities. Faroe Petroleum is well established in the Atlantic Margin area while, crossing the border, we have had very successful experiences in the Norwegian territorial sea. We look forward to working with them."
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