Faroe Petroleum has entered into a farm-down agreement with Spring Energy for a 15% share in Norwegian licenses PL405 and PL405B. Faroe Petroleum will retain 15% equity in both licenses.
Spring Energy has acquired a 15% share in PL405 and PL405B in exchange for carrying (i.e. paying a share) of Faroe's costs associated with the first exploration well drilled on these licenses. This transaction is in line with Faroe Petroleum's strategy of reducing its exploration cost exposure whilst retaining material remaining interests. The licenses cover several Upper Jurassic Ula formation prospects, and were awarded to Faroe Petroleum in APA2006 and APA2007 with a drill or drop decision that expires in 2009.
The transaction is contingent upon joint venture partner consent being granted (Centrica Resources Norge AS (operator) and Petro-Canada Norge AS), approval from Norwegian authorities and the existing licencees committing to drill a well.
Graham Stewart, chief executive of Faroe Petroleum commented, "This farm-down agreement is a part of the continued active management of our portfolio. Our Norwegian portfolio consists of 23 prospective licenses, and we continue to participate actively in license rounds and subsequently manage our cost exposure by pursuing farm-in and farm-down opportunities. We are very pleased to have reached an agreement with Spring Energy and we look forward to a successful relationship together."
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