Faroe Petroleum Share Discussion Threads

[harry rags] 20/6/2017 07:56

Let's hope it is reflected in the sp

[whites123] 20/6/2017 07:43

Actually super impressed.
All key points have perfomred well.
Increased production above targets.
Cash in hand increased by some 18%
Carries to progress this year

Actually it all looks just to damned good. :-)

Delek IMO will be eyeing this up before the company manage to enact upon their major growth plans. Delek will (IMO) want to be seen as responsible for that.

[bountyhunter] 20/6/2017 07:35

Yes, debt free, £100k+ cash, 15k boepd, exploration fully financed - a far stronger position than IAE were in.

[dahhad] 20/6/2017 07:18

Very encouraging statement. Bodes well imno

[whites123] 20/6/2017 07:07

OPERATIONAL UPDATE.

Faroe Petroleum plc

("Faroe", "Faroe Petroleum", the "Company")



2017 Annual General Meeting Operational Update



Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in Norway, the UK and Atlantic Margin, is pleased to provide an operational update ahead of its Annual General Meeting later today.



HIGHLIGHTS



Production

· Strong Production: averaged 15,100 boepd for the period from 1 January to 31 May 2017



Finances and balance sheet

· Cash increased: to £113.8 million (unaudited) at 19 June 2017 from £96.8 million 31 December 2016

· Undrawn RBL facility: Faroe has an undrawn reserves based lending credit facility ("RBL") of $250 million (plus $100 million accordion)



Development and projects

· Oda PDO approved: Plan for the Development and Operation ("PDO") for Oda approved by the Norwegian Ministry of Petroleum triggering cash compensation payments to Faroe estimated to be £14 million net in 2017 and 2018

· Njord Future and Bauge PDOs: PDO approval from the Norwegian Ministry of Petroleum expected shortly; projects progressing to plan

· Tambar infill and gas lift project on track: in-fill drilling and gas lift installation project was approved in March; main contracts awarded and the project is underway to boost production from 2018 onwards

· Brage infill drilling underway: the drilling of the first of two production wells has commenced



Exploration and appraisal

· Brasse appraisal progressing well: drill stem production test underway and results expected shortly

Two additional E&A wells committed: drilling programme progressing / developing with two new E&A wells, both benefit from 78% Norwegian tax rebate

o Goanna exploration well committed with full carry to Faroe at 30% WI ("Working Interest"): committed to drill the Goanna exploration well; spud expected Q4 2017

o Fogelberg appraisal well committed: appraisal well to be drilled on Fogelberg with 33% WI; spud expected late 2017 or early 2018

· East Corrib farm out for full carry at 20% WI: Irish Ministerial approval granted for a farmout to Nexen of licence 16/23, West of Ireland



Production

Group production averaged approximately 15,100 boepd in the period from 1 January to 31 May 2017, with better than forecast performance from the main producing fields in the portfolio. The average operating cost per barrel of oil equivalent for producing fields for the same period was approximately US$25.

Average production guidance for the year remains at 13,000 to 15,000 boepd reflecting various forecast shutdowns to enable production enhancing work to be undertaken. A review of this guidance will be undertaken following the summer maintenance period.



Finances and balance sheet

Cash: cash increased to £113.8 million (unaudited) at 19 June 2017 from £96.8 million at 31 December 2016



Credit facilities: other than the revolving Norwegian credit facility, funded by the tax rebate, Faroe remains debt-free: Faroe has an undrawn RBL credit facility of $250 million plus a $100 million accordion.



Committed projects financed: prudent financial management combined with strong production and improved commodity prices ensures that the Company remains fully financed for its committed projects.



Development and projects

Oda: in May 2017, the Partners in the Oda development received PDO approval of the Oda field (licence PL 405) from the Norwegian Ministry of Petroleum and Energy. The Oda field (Faroe 15%) in the Norwegian North Sea, will be developed via a four-slot seabed template with two production wells, and one water injection well, which will tie back to the Ula platform (Faroe 20%), located approximately 13 kilometres to the east.



The Oda subsea tie-in will connect to the existing pipeline between Oselvar (Faroe 55% and operator) and Ula and reuse the existing Oselvar facilities at the Ula platform. Production from Oselvar is scheduled to cease in 2018 to allow the Oda tie in works to be undertaken and the Oselvar owners will be financially compensated accordingly. The net compensation payment to Faroe as an Oselvar and Ula joint venture partner, is estimated to be approximately £14 million due to Faroe in 2017 & 2018 (this takes into account the payment it makes as an Oda joint venture partner and the final tariff compensation payable to Ula). An initial payment to Faroe of £7.4 million is due later this month.



Njord and Bauge: approval of the PDO for the Njord Future Project and Bauge field (Faroe 7.5%) is expected shortly from the Norwegian Ministry of Petroleum and Energy. In the meantime the works on the Njord A Facility in the Stord dry dock are continuing on time and on budget, with the pre-fabrication of new pontoons progressing on schedule. In parallel, the project to refurbish the Njord B storage tanker is also progressing to plan. The planning for the Bauge subsea tie-back continues with the finalisation of the contract strategy for project execution.



Tambar infill and gas lift project: in-fill drilling and gas lift installation project, to boost production from 2018 onwards, is now underway and on track. The main scope for this project is the installation of gas lift for up to five wells, and the drilling of two infill wells. The installation of gas lift is expected to allow for long term robust flow rates as water cut starts to increase. The Mærsk Interceptor rig will arrive on location between October and December 2017 to be used to drill the infill wells and provide accommodation.



Brage infill drilling: the Brage drilling rig has been remobilised as planned for the drilling of three wells, with one producer-injector pair in the Statfjord horizon and one producer in the Fensfjord. The first Statfjord producer is scheduled to come on stream in September. Continued further infill drilling beyond the current three wells will be subject to the results from the ongoing drilling campaign.





Exploration and appraisal



Brasse: Licence PL740/B (Faroe 50% and operator) - following the successful appraisal well results announced last week, the Drill Stem Test ("DST") is now underway to provide further confirmation of well productivity, investigation of reservoir distribution and important additional information for development project planning. The results are expected shortly together with a decision on the commitment of a side-track.



Goanna: Licence PL881 (Faroe 30%) was awarded in February 2017 as part of the APA16 licence round and is operated by Wellesley Petroleum (70%). The Goanna licence is located in the Northern North Sea, near the border with the UK and east of the very large producing Statfjord and Snorre fields, which offer the potential for alternative export routes upon success. The Goanna prospect straddles the border between PL881 and PL037, the Statfjord group. The PL881 joint venture expects to drill a well on this licence in Q4 2017 targeting a structural and stratigraphic prospect of Upper Jurassic age sandstones, using the Deepsea Bergen rig on favourable market rates. Faroe's associated costs of drilling this well will be fully carried at 30% WI by its joint venture partner up to the budgeted dry hole cost.



Fogelberg: In February 2017, the PL422 joint venture was awarded a licence extension with a deadline to submit a PDO by July 2019. To make sure a robust development plan can be proposed with a well justified 2P reserves base and production profile, and before committing to the Front End Engineering and Design (FEED) project, the licence group has committed to drill an appraisal well. The well will be drilled in a down-dip location with the objective of adding additional 2P reserves, and dependent on the results, drill a side-track on the crest of the structure to conduct a production test on this 2010 discovery. Faroe is increasing its working interest to 33.3% in this Centrica-operated (66.7%) licence. The drilling operations, again utilising the Deep Sea Bergen rig, are expected to commence in late 2017 or early 2018, back-to-back after the Goanna well. The objectives of the appraisal well are to increase reserves and reduce volume uncertainty by establishing the Free Water Level (FWL) or the Gas Down To (GDT) and verify reservoir quality and productivity by conducting a DST, which will allow optimisation of well count and design (and potential cost savings).



East Corrib: Faroe recently executed a farm out of its Irish licence option 16/23 (Faroe 100%) to Nexen Petroleum UK. Under the terms of the farm-out agreement, which has received Ministerial approval, Nexen has taken over operatorship of this licence and an 80% working interest (Faroe 20%) and in return will meet the full costs of the associated work programme, including any acquisition of seismic data and the possible drilling of an exploration well, if a positive drilling decision is made after the seismic work phase has been completed.





Graham Stewart, Chief Executive of Faroe Petroleum commented:



"I am pleased to report that Faroe Petroleum is performing very well across its range of activities, with strong production performance in the first five months averaging 15,100 boepd, appraisal success on the Brasse discovery, a growing low cost exploration and appraisal programme and significant progress on our development projects.



"The Company has also delivered good financial performance with strong cash flow, improved cash reserves and an undrawn Reserve Based Lending facility of $250 million - this ensures we have significant financial flexibility going forward.



"I am particularly encouraged, that as we enter the second half of 2017, alongside the excellent progress made across our production and development portfolio, we have been able to increase further the level of low cost and high impact activity in our exploration and appraisal portfolio, with the addition of the Goanna and Fogelberg wells later this year, as well as the farm-out to Nexen, for a full cost carry, on the East Corrib licence west of Ireland.



"With our focused strategy, centered principally around realising value from both our considerable exploration success and M&A success, Faroe is now in position for a major growth phase as we take advantage of low industry costs and invest across our core assets in 2017 and beyond. We believe that we now have the asset base to reach our stated goal of increasing production to over 40,000 boepd organically within the next five years, with robust economics even at low commodity prices.



"Looking ahead, while we actively pursue our organic programme, we will also continue to seek to capitalise on our strong strategic and financial position to pursue further consolidation opportunities on the Norwegian and UK continental shelves."

[blueball] 17/6/2017 19:40

stay long.

[mirabeau] 16/6/2017 14:24

The Guardian

So you don't think Delek will bid for FPM and pay a premium?

Well, I've bought them so I am sticking with them. I'll be happy with 110p or even 100p

let's see what happens..

[harry rags] 16/6/2017 14:07

I would have thought that with Delek upping their holding and a bid looking likely the share price could well reach 120p before a bid comes in as people buy in hoping for a quick profit ( it has been up to 115p without Delek) all IMHOHarry

[the guardian] 16/6/2017 08:42

Mirabeau, just read your post on the HUR board. I was in IAE when it was bought out by Delek and there was no premium to the share price, even though the company was days away from oil production.

[mirabeau] 16/6/2017 08:30

Bought around 49k this morning at prices around 90p average. I'd be happy with 110p though I know there's a buyer in the market and that provides some reassurance and maybe support..

I missed out on IAE big time and FPM gives me a second bite at the Delek cherry though who knows what will happen

[rogerlin] 16/6/2017 08:25

IAE price had risen a long way already prior to the Delek bid, partly because of the Delek stake, FPM price has not done much lately and also FPM not over-borrowed, and so hopefully in a better position, but we are certainly at risk starting from here.

[bountyhunter] 16/6/2017 08:05

Hi Ed, the directors should still either reject or at least put any potential low ball offer to all shareholders rather than turning any hostile unreasonable offer into a 'friendly' offer as was the case with IAE.
I agree that shale production will cap oil prices going forward but still believe that prices will be higher in a year or two.

[ed 123] 15/6/2017 23:37

Hi Bountyhunter.

Number of voting options in the money will depend on the price of an offer. Setting aside options for a moment, Delek hold 15.1%, whereas the directors of Faroe hold only 0.89%. The directors are (in terms of holdings) in a weak position. If the second largest shareholder supported management but shareholders 3 to 9 supported Delek, Delek would win.

I'm still holding Faroe and so you might think me inclined to optimism here. Not so, however. My view is I'd be lucky to get 120p per share, when the time comes. I'd be satisfied with 115p, and think 110p is possible.

US shale drillers are not only impacting the profits of the smaller producers, they are potentially impacting their independence too.

[bountyhunter] 15/6/2017 22:18

That depends on the proportion of shares held by major shareholders. In the case of Ithaca the BoD of directors had a significant holding when you factor in their significant options (vesting immediately on takeover) so without their acceptance the bid would have been hostile and things could have been different.

[ed 123] 15/6/2017 21:35

It won't be up to the BoD. It will be decided by the major shareholders. Anyone remember the takeover of Dana Petroleum?

[bountyhunter] 15/6/2017 17:23

thedudie, quite right the Ithaca BoD was certainly a pushover, this BoD must have more sense just by the law of averages!

[harry rags] 15/6/2017 16:51

Hope I get a chance to top up before this takes off ( on holiday)

[oli12] 15/6/2017 16:04

Look at the volume. Don't miss the boat here. Delek clearly buying more today.

[oli12] 15/6/2017 15:49

Delek buying in the market place. Watch them snap this up for peanuts like they did with Ithaca a few weeks ago.

[cwa1] 15/6/2017 14:16

Indeed:-



....starting to look a bit interesting now with a few tanks getting strategically placed on the lawns.....

[thedudie] 15/6/2017 13:38

Looks like Delek have bought another 7million - their stake now above 15%.
Looks like it puts a floor under things around here.
Management will have to be a bit careful or the company will go to a low ball offer ....Don't think they would roll over quite as easily as the guys at Ithaca though (who would!).

td

[wbodger] 14/6/2017 19:53

Coincides with my summer trip to Dordogneshire. (Same happened last year I think. Oh, and Brexit - did anything ever come of that Referendum?) Anyway as a wine-lover and cheese-lover the pleasure of a few summer days in the French provinces eclipses the attraction of fighting traffic to watch Resolutions carry by 95% approval. Thanks in advance to anyone who might attend and be kind enough to report back.

Perhaps GS will indicate where 31/7-3 is planned in Q3. Yesterday's RNS was pretty neutral: "This well proves the presence of excellent hydrocarbon bearing reservoir to the south of the original discovery" - this does not quantify any enlargement of the original discovery, and 2 km south of the original spud sounds pretty cautious if they were planning to enlarge it. The significance may be the adjective 'excellent' for the reservoir.

Statoil's schedule for Carmen ("mid June", if that is confirmed) implies any sidetrack to 31/7-2S will not be done now, and Statoil will have tugs chartered soon (none showing yet). If we don't do the sidetrack it also suggests 31/7-3 might show as a planned Wellbore instead.

[ed 123] 13/6/2017 11:13

Agree, reasonable news, CWA1. :-)

I think the drill stem test is because of the potential importance to Faroe of Brasse. They want to be fairly certain of what they've got before committing to the development cost and bringing this one forward in their budgeting.

I presume the success here means the minumum end of the estimated resources goes up a bit? If they do return later this year and drill to the east, that should help to narrow further the range?

AGM is a week today. I'll be going. Anyone else?

[cwa1] 13/6/2017 07:31

Sounds like reasonable news:-

Graham Stewart, Chief Executive of Faroe Petroleum commented:

"We are very pleased to announce the results of this important appraisal well which firms up the southern extent of the Faroe-operated Brasse field. This well proves the presence of excellent hydrocarbon bearing reservoir to the south of the original discovery and data gathered and yet to be gathered from the forthcoming DST will provide key information as we continue to progress towards development sanction. Importantly, preliminary analysis of the well results confirms Brasse as a commercial discovery.

"Brasse is a significant project for Faroe and the region and it also highlights Faroe's ability to continue to add significant value through low-cost drilling in our core areas.

"While continuing with an exciting ongoing exploration programme in Norway, Faroe is also actively investing in pre-development and development of several of our own discoveries, each of which has the potential to transform the value of the Company in the coming years."

[rogerlin] 10/6/2017 11:46

Faroe seem very positive about Goanna talking of a drill for 17/18 even though they haven't had it long. Partnered with Wellesley, their website gives no useful information.