Centrica Halts Drilling Ops at Butch Appraisal

Faroe announced that due to technical difficulties the drilling of a side-track well on the Butch South West exploration prospect has been brought to a close short of its exploration objective.

As announced on December 7, 2011 following the Butch discovery and first side-track appraisal, the license partnership decided to drill a second side-track well from the same surface location. The objective of this side-track well was to target additional oil volumes in an exploration prospect located to the south of Butch within a new segment containing the same reservoir. However hole instability problems were encountered whilst drilling the section above the main reservoir and given that this exploration target can be drilled more efficiently and with significantly lower technical risk from a new well located closer to the prospect, the partnership has decided to curtail drilling operations on this side-track. Accordingly the well is being plugged and abandoned.

The Butch discovery, announced on October 18, 2011, has opened an exciting new oil play. An appraisal side-track was drilled successfully, directly following the discovery well, proving up light oil in excellent quality reservoir. The operator (Centrica) has calculated a preliminary resource estimate of 30 to 60 million barrels of oil equivalent. The discovery is situated in 66 meters water depth in the Norwegian North Sea, close to significant existing infrastructure with the producing fields Ula, Tambar and Gyda located approximately 7 kilometers to the west, 10 kilometers to the south west and 20 kilometers to the south respectively.

The Butch South West exploration target remains un-tested and is an attractive stand-alone exploration opportunity, together with several other new exploration prospects within the PL405 and PL405B licenses around the large Butch salt structure. Planning is underway to design a new appraisal and exploration campaign to test the additional resource potential in this exciting new play.

Equity holders in the Butch license are Faroe 15%, Centrica 40% (operator), Suncor Energy Norge AS 30% and Spring Energy Norway AS 15%.

Graham Stewart, Chief Executive of Faroe Petroleum plc, commented, "Drilling the side-track on Butch South West represented an opportunity to test an additional exploration target to the south of the new discovery, whilst recognizing that drilling it from this location would be challenging. Although it is disappointing that we failed to reach the reservoir target due to drilling difficulties, we remain excited about the prospect, and subject to availability of a suitable rig we hope to be back drilling again in Licence PL405 in 2012 or 2013. Butch is an attractive discovery in its own right, and it has de-risked several additional attractive exploration opportunities on similar prospects around the large Butch salt structure.

"Meanwhile, drilling operations on the T-Rex well in Norway continue and we look forward to providing further updates on progress over the coming period, as we commence our very active 2012 exploration drilling program which will include Kalvklumpen (Norway), North Uist (UK, west of Shetlands), Clapton (Norway), Cooper (Norway) and Santana (Norway)."