Faroe Petroleum - Buying opportunity

PUBLISHED: 11 Sep 2015 @ 08:54 | Comments (0) | More info about Long Over Short

Today (LSE:FPM) Faroe Petroleum announced that their Portrush exploration well encountered no hydrocarbons. This has sent the share price down nearly 5% which I see as a good buying opportunity.

This well was the third off a seven well campaign across the North and Barents Sea which has been relatively successful. What is very exciting is that Faroe are nearly at TD of the Boomerang follow up well to their Pil discovery which has a good chance of being successful.

There is then another follow up well to Pil and then two more wells in the Barents Sea (with large prospects), if they come in the share price will go much higher.

Faroe is cash rich and making acquisitions which is a good sign that the management team are ready to capitalise on the weak oil price. It looks a good bet for the future and if there is any success with the drill bit it will leave 65p behind.

Another important note was that CEO Graham Stewart said today that ‘Whilst the results of this well are disappointing, we were fortunate in that we have been able to take advantage of reduced rig rates and associated drilling costs, which coupled with the Norwegian tax rebate system, realised a significantly lower well cost, net to Faroe.’

I think this is a great sign and hopefully it will mean the campaign comes in under budget.

Read my full piece on Faroe here

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