Faroe Commits to Drill T-Rex, Butch Prospects in Norwegian Sea

Faroe Petroleum announced that on August 16th it entered into the second phase of the exploration work program in two Norwegian licenses and has subsequently committed to drill two wells: T-Rex (Faroe 30%) and Butch (Faroe 15%).

The T-Rex well will appraise an existing discovery in the Lower Cretaceous zone located between the Smorbukk and Smorbukk Sor fields in the Norwegian Sea. Hydrocarbons have already been proved in the prospect, which has significant volumetric upside. The T-Rex prospect is in PL431 and was awarded to Faroe Petroleum in the Norwegian APA (Awards in Predefined Areas) 2006 Licensing Round.

In connection with the drilling decision in PL431, Maersk Oil Norway has entered the license as its new operator and has taken on a 70% license interest. Faroe holds the remaining 30% license interest. The transaction is subject to approval by the Norwegian Authorities.

The Butch well in PL405 and PL405B will drill a prospect located on the flank of an untested salt diapir, located on the margins of the prolific Central Graben. This attractive prospect has many analogues in the North Sea and is located approximately 15 kilometers east of the Ula and Gyda Jurassic oil fields.

Faroe previously announced that it has farmed out 15% of PL405 and PL405B to Spring Energy in exchange for carrying part of Faroe’s exploration well costs. The transaction is subject to approval by the Norwegian Authorities. The other partners are Centrica (40% and operator) and Petro-Canada (30%).

Graham Stewart, Chief Executive of Faroe Petroleum, commented, "I am very pleased with the progress we are making in our Norwegian business. In line with our strategy of partnering with major oil companies, we have matured two additional prospects from the license application stage to making firm drilling decisions. T-Rex and Butch are both exciting prospects, and add further to the already considerable potential in our business.

"With the two additional Norwegian wells, Faroe's program of firm wells increases from seven to nine: four in the UK West of Shetland, one in the Faroe Islands and now four in Norway. All Norway exploration costs benefit from a 78% rebate from the State, and accordingly the program remains funded from existing sources. We will commence shortly with the drilling of two high impact wells in the West of Shetland area, Glenlivet and Tornado. Both wells are expected to commence soon with further announcements to be made in due course."