Faroe Petroleum Agrees to Sell Stake in Norwegian Sea Development
Independent oil and gas company, Faroe Petroleum plc, has agreed to sell part of its stake in the Norwegian Sea’s Fenja development to Suncor Energy Norge AS.
As part of the deal, Faroe will divest a 17.5 percent working interest in Fenja, located in PL586, for a cash consideration of $54.5 million. Faroe, which will retain a 7.5 percent stake in Fenja, expects the transaction to reduce its future capital expenditure on the asset to approximately $97 million.
The deal has an effective date of January 1 and remains subject to regulatory approval by the Norwegian Ministry of Petroleum and Energy. The transaction is anticipated to complete during the first half of this year.
“I am very pleased to welcome Suncor, a significant global integrated energy company, into the Fenja joint venture,” Faroe CEO Graham Stewart said in a company statement.
“Suncor’s acquisition of a 17.5 percent stake in Fenja from Faroe confirms our belief in the attractiveness of this project. We look forward to working together with Suncor as the Fenja project progresses to first oil,” he added.
As detailed in the plan for development and operation submitted on December 19, 2017, the operator, VNG Norge AS, expects total gross recoverable reserves from the Fenja development of approximately 97 million barrels of oil equivalent.
Oil and gas analysts at GMP FirstEnergy said Faroe sold its stake in Fenja at a good price.
“This is a good transaction that values the asset ahead of what we carry [$54.5 million versus $35 million for a 17.5 percent working interest],” the analysts said in a statement sent to Rigzone.
“It also reduces Faroe’s exposure to large upcoming capex spending with the risk of pressure on the balance sheet,” the analysts added.
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