Faroe Petroleum Makes First Move into North Sea

Faroe Petroleum has acquired a 90% equity stake in two part blocks 14/21 and 14/22 in the UK Central North Sea from Shell U.K. Limited and Esso Exploration and Production UK Limited. The blocks extend over 217 square kilometers and are located in 140 meters of water on the Halibut Horst, equidistant from the Claymore and Blake oil fields. This is a highly prospective, yet un-drilled area well known for hydrocarbon seeps, at the edge of the Witch Ground Graben, which contains several billion barrels of reserves currently on production, including the giant Piper and Claymore oil fields.

The License area contains several attractive large structures with significant potential. With shallow reservoir depths of under 2,000 meters, any drilling is expected to be relatively low cost. If drilling proves successful there is good scope for early and low cost development due to the close proximity of existing processing and export infrastructure.

Shell will remain an equity partner in the License at 10%, and will continue as Operator pending transfer of operatorship to Faroe Petroleum in due course.

The License work program involves the purchase of high technology 3D seismic from PGS's Quad 14-99 MC 3D Mega Survey, which will be re-processed to define a drilling location.

Graham Stewart, Chief Executive of Faroe Petroleum, commented:

"This transaction, which is Faroe Petroleum's first in the North Sea, is in line with the Company's stated strategy of enhancing portfolio diversity and value potential while further reducing its overall risk profile. Faroe Petroleum's North Sea strategy focuses on opportunities close to existing production infrastructure, with potential to be quickly converted into cash flow, thereby complementing the Company's now significant Atlantic Margin portfolio. "