Faroe Underscores StatoilHydro's Spudding of New Grosso Well

Faroe Petroleum has announced that drilling has commenced on the Norwegian License PL376 (Faroe 10%), which holds the substantial Grosso exploration prospect.

This license is located on the North East flank of the North Viking Graben licence and following extensive geological and geophysical assessment, multiple prospects have been identified in both structural and stratigraphic closures, with Jurassic and Lower Cretaceous reservoir objectives. This is the first well to be drilled on the License, which is located immediately north of the Jurassic gas/oil Gjoa Field and south of the undeveloped Cretaceous Agat gas discovery.

The drilling operation, to be undertaken by the operator StatoilHydro using the Ocean Vanguard rig, is expected to take approximately 70 days. The other partners in the License are E.ON Ruhrgas Norge AS (10%) and Gaz de France (20%).

Graham Stewart, Chief Executive of Faroe Petroleum, commented, "The Grosso well is an exciting exploration prospect and is part of a three well drilling program which Faroe Petroleum is currently undertaking in the Norwegian North Sea. The other two wells to be drilled consecutively are the Hyme exploration and South East Tor appraisal wells. All of these wells qualify for 78% tax rebate under Norway's fiscal system, designed to encourage exploration."

"The Company has a NOK 500 million revolving credit facility with Barclays Bank and the Bank of Scotland, secured on excellent terms, for financing exploration and appraisal activity in Norway. This facility will be drawn upon to pay the majority of costs on all our Norway wells going forward, thereby conserving the Company's equity capital."

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