Faroe Petroleum Expands Holdings to Southern North Sea Blocks

Faroe Petroleum has, in line with its stated strategy to enhance portfolio diversity and reduce overall risk profile, taken its first step towards building a new position in the UK Southern North Sea Gas Basin with an acquisition. Faroe Petroleum's North Sea strategy is designed to complement the Company's significant Atlantic Margin portfolio, by focusing on opportunities close to existing production infrastructure, with potential to generate early cash flow.

The Company is pleased to announce the acquisition from Sterling Resources (UK) Limited of a 10.0% equity stake in Blocks 42/13 and 42/12 (operated by Sterling), which contain the Breagh gas discovery as well as un-drilled leads with good upside potential. The discovery offers low risk scope to open an exciting new core area for Faroe Petroleum in the Southern North Sea, to complement its Atlantic Margin, Central North Sea and new Norway focus.

An appraisal well is planned to be drilled adjacent to the discovery well 43/12-2, in order to establish commercial reserves which if successful would lead to early development.

Graham Stewart, Chief Executive of Faroe Petroleum, commented:

"As UK's demand for indigenous gas continues to grow, this move introduces some diversification for Faroe Petroleum into gas opportunities to complement the predominance of oil prospects in our portfolio. This exciting first step into the Southern North Sea drew upon the considerable experience our team has built from working in the SNS and in particular in gas field development. The appraisal well, which we expect to drill in 2007, will add further activity to our advancing drilling program over the coming period. "

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