Faroe Shines in 1H11 Interim Results
Faroe Petroleum announced its unaudited Interim Results for the six months ended June 30, 2011.
Highlights
- Activity
- Completion of Blane acquisition
- Produced an average of 2,056 boepd in the half year
- £27.8m proceeds from sale of pre-completion inventory reduces effective deal cost to £31.2m
- Significant transaction in Norway to swap Faroe's Maria discovery for non-operated stakes in good quality producing fields ("Petoro Assets")
- Petoro Assets are expected to generate average production in 2011 of 7,300 boepd
- Completion of transaction expected in 4Q 2011
- Deep water, frontier Lagavulin exploration well, west of Shetlands completed - hydrocarbon system encountered but not commercial
- Financial
- Turnover increased four-fold to £40.1m (1H 2010: £9.3m)
- Gross profit increased five-fold to £6.7m (1H 2010: £1.3m)
- Loss before tax of £24.0m (1H 2010: £3.8m)
- Includes expensed exploration costs of £25.9m (1H 2010: £2.6m)
- Excludes substantial income from Petoro Assets pre-completion
- Adjusted cash[1] of £82.9m at June 30, 2011 (December 31, 2010: £132.2m)
- Forward drilling program fully funded from cash resources and production cash flow
- Post-Balance Sheet Events
- Discovery on Fulla, west of Shetland, Faroe's first operated well - announced August 24, 2011
- Refinancing and significant expansion of credit facilities completed in July 2011
- $250MM (approx. £156MM) reserve based lending facility comprising $125MM committed plus $125MM uncommitted; and
- NOK1B (approx. £110MM) Norwegian exploration facility, comprising NOK500m committed plus NOK500m uncommitted
- Outlook
- Exciting drilling program continues, targeting up to five material wells per year
- 12 exploration and appraisal wells in firm and expected program to end 2013, including three 2H 2011 Norway wells: Butch (drilling), Kalvklumpen and T-Rex
- Significant drilling program lined up for 2012, including Clapton, Faroe's first operated well in Norway
- Active preparations to secure further licenses in near-term licensing rounds
- Well positioned to achieve significant program expansion and growth in portfolio value
Graham Stewart, Chief Executive, commented, "We have made excellent progress so far in 2011, resulting in a significant boost to production, proven reserves and cash flow, and following the period end, after the disappointing result from Lagavulin announced in June, we made an important new discovery west of the Shetlands on Fulla which was announced in August 2011. The acquisition of 18% of Blane was completed in May and we also agreed a ground-breaking deal to monetise our significant 2010 Maria discovery by swapping it for high quality, long life oil and gas production from four Norwegian fields. This again demonstrates Faroe's ability to deliver solid value for shareholders through the drill-bit. The resultant cash flow from our new production combined with cash balances and available debt facilities ensures we are well funded to continue to drive value for shareholders."
''Faroe has an exciting drilling program ahead with up to five material exploration and appraisal wells per annum targeted over the next three years alone. Following our successfully operated Fulla discovery in the West of Shetlands, we are preparing for drilling on our first operated exploration well in Norway in early 2012, which will target the exciting Clapton prospect in the North Sea."
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