Faroe Petroleum's production rises while it softens outlook for 2017

Oil and gas explorer Faroe Petroleum production and reserve base increase in 2016 boosted by acquisitions to its Norway portfolio, while it softened its outlook for 2017.

The AIM-listed company's production from its UK and Norwegian portfolio averaged about 17,400 barrels of oil equivalent per day in 2016, and Faroe increased its 2P reserves base by 42% to 81.3m barrels of oil equivalent, compared to the previous year, due to acquisition of stakes in the Norwegian Ula, Tambar, Trym and Oselvar producing fields and positive reserve revisions.

While 2C contingent resources were 7.5% lower at 90.9m barrels of oil equivalent following new resources from the 2016 Brasse discovery, which partly compensated for the reduction in resources related to the withdrawal and sale of interests in the Perth, Lowlander, Tornado and Solberg licences.

For 2017, production is forecast to be in the range of 12,000-15,000 barrels of oil equivalent per day from all fields, split about 60% from liquids and 40% from gas. This is lower than 2016 due to work programmes being undertaken on some of its fields, particularly from those bought from Dong.

The Njord and Hyme fields will not produce while it refurbishes the facility, and the Tambar field’s production will be interrupted due to in-fill drilling and the installation of a gas lift which should boost production from 2018 onwards, while the Trym field is at risk of potential capacity constraints across the Harald host facility.

The company said that the range will be narrowed when there is greater clarity on the level of production from Trym.

Faroe also ended the year with a cash position of £97m and a new seven year reserve based lending facility worth $250m which is undrawn.

Chief executive Graham Stewart said: "2016 was transformational for Faroe with the acquisition of a Norwegian portfolio of producing assets from Dong doubling group production, the material Brasse discovery in Norway, and a successful £66m equity fund raise.

"We are now poised for a major growth phase as we invest across our core hub assets in 2017 and beyond, and believe that we have the asset base to reach our stated goal of 40-50,000 barrels of oil equivalent per day over the next five years. We continue to seek to capitalise on our strong financial position to pursue consolidation opportunities in our core areas on the UK and Norwegian continental shelves, while kicking off another exciting high impact exploration drilling campaign."

Shares in Faroe Petroleum were up 1.57% to 113p at 1103 GMT.