Faroe Buys North Sea Assets from Tullow
Faroe Petroleum has boosted its interests in the Ketch and Schooner gas fields in the UK North Sea to 60-percent each after a transaction with Tullow Oil, both companies reported Wednesday.
Faroe said that the deal sees it acquire Tullow's 60-percent interest in the Ketch field and a 53.1-percent stake in the Schooner unit, in which the junior oil firm already had a 6.9-percent interest. Faroe will also gain operator status over the fields.
Net production pertaining to Faroe from the two fields is estimated at between 3,000 and 4,000 barrels of oil equivalent per day – which is expected to increase the firm's average economic production in 2014 to between 7,000 and 10,000 barrels of oil equivalent per day. Faroe's proved and probable reserves will increase by an estimated 5.9 million barrels of oil equivalent to 33.1 million barrels.
Faroe Chief Executive Graham Stewart commented in a company statement:
"We are very pleased to announce this acquisition, funded entirely from existing resources and debt facilities, which significantly boosts and diversifies our oil and gas cash flow generation.
"Ketch and Schooner are good quality producing fields, well known to the company as they are located in one of our core areas and offer significant upside potential in the form of increasing reserves, production and field life. The transaction is highly tax efficient for us, providing shelter for both past and future tax losses in the UK and is in line with our strategy to grow our production portfolio to continue the efficient funding of Faroe's busy and highly successful exploration program.
"This is our first move into operating producing assets. This transaction gives us the opportunity to add value to these fields over time, and both assets offer numerous possibilities and options to grow. Nevertheless, our clear strategic focus on exploration will remain unchanged going forward.
"Elsewhere, drilling activities continue in our exploration and appraisal program with the drilling of the Pil side-track (Faroe 25 percent) in the Norwegian Sea, following the significant Pil discovery and associated successful production test. In addition drilling continues at the Butch East exploration well (Faroe 15 percent), located adjacent to the Butch Main discovery (Faroe 15 percent) in the Norwegian North Sea, with results expected in the coming weeks."
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