Faroe Petroleum Share Discussion Threads

[bountyhunter] 01/10/2017 17:58

Brent header chart rolled

[ed 123] 30/9/2017 13:25

I've emailed the Company about the Bone well cost. Will come back with their reply.

[thegreatgeraldo] 29/9/2017 13:29

Still struggling with the Bone well cost.... it can't have been close to £100 mill, surely? Using the 50/50 rule of thumb for drilling costs (half for rig hire, half for crew & kit), that puts the rig cost alone at roughly $1 mill/day.... nah....

[rogerlin] 29/9/2017 07:52

Wbodger this round seemed to be mostly Barents, is there one since then?

[wbodger] 29/9/2017 06:42

A lot of Faroe's write-downs seem to come from analysis of prospects that are quietly relinquished, or decisions (eg Portstewart which used to be Portrush) where they reduce their involvement. Write-down must include pre-drill costs arising from licence obligations. Not sure why they are written down in the Interim Accounts instead of just informing the market that they will be, and stating the figures more clearly in the Annual Report. It's surely not a commercial confidentiality thing? (I've always wanted them to explain more when prospects on the Website vanish without explanation.)

Faroe are one of the companies who have applied for acreage in the latest Norway round, now closed, results to be announced. I am interested to see if they have appliied near Brasse/Brage/Oseberg.

[thegreatgeraldo] 27/9/2017 17:32

Makes sense, cheers! Bone was a big target, but still, for a well that seems to have gone more or less to plan that's a whacking bill.....

[ed 123] 27/9/2017 17:19

TGG.

You've probably missed nothing.

Yes, it does appear Bone cost must have been around £100 million gross.

Accounting for the rebate? I can't see any government paying out on estimates. So, my assumption is that Faroe wait till they have paid the final amount on the drill, then submit all the paperwork with the rebate claim to the government. At that point in time the balance sheet is likely credited with the amount of the expected tax rebate. When the rebate is paid, that sum comes off the balance sheet and goes onto the income statement. So, H2 2017 balance sheet is likely to see 78% of c. £20 million added to tax receivable (or drop straight into income if the government pays in time).

Yes, drilling the Barents is expensive, as would be development too. Thankfully, Faroe seem to have accepted that Barents (and West of Shetland) is for deeper pockets than theirs.

Faroe's shareholders are much better served by exploration in less extreme locations and close to existing infrastructure - eg. Brasse.

Looking at the latest presentation, the plan area of Brasse Extension appears to have grown - almost certainly informed by the drilling on Brasse. No commitment yet, but I'd be surprised if they didn't drill the Extension at some point. I wonder if they might negotiate use of the Brage infill rig for speed and economy?

[thegreatgeraldo] 27/9/2017 15:44

What have I missed?

[stansmith3] 27/9/2017 15:21

tggwhere have you been all these years...

[thegreatgeraldo] 27/9/2017 15:03

Don't quite follow the explo write-off of just over £20 mill, surely Bone didn't cost £100 mill?? & how can they write off the gross cost without accounting for the tax rebate? Or is that written back when received?

[harry rags] 27/9/2017 13:40

Faroe tipped again by IC

[rogerlin] 26/9/2017 19:24

thedudie thanks for the link to the website results presentation. I like the slide 19 where the financial items have a short explanation beside each, helpful I find. Also a slide for the share price, nice to see some interest shown in this as while the company has progressed well in recent years, the share price sadly hasn't.

[harry rags] 26/9/2017 16:53

Ed123160p per share would do me nicely but I would like it sooner rather than later. Harry

[bountyhunter] 26/9/2017 14:53

Malcy's Blogg today:

Faroe Petroleum
Figures from FPM this morning which reinforce my positive stance as they report numbers ‘ahead of expectations’. Good news in the period included the Brasse appraisal well which upped recoverables there by 20% but I think it could a be a fair bit higher. The company received four new licenses in Norway and farmed-out in Ireland to Nexen whilst keeping a carried interest. Production in the 1st half was 14,800 with Njord and Hyme down for refurb and ’17 guidance unchanged at 13-15/- b/d. with cash at £117.6m and a $250m undrawn RBL the company is in a very strong position.

Undoubtedly the poster boy of the sector as FPM announces strong figures yet again, with a good drilling programme and the results of its excellent exploration success over the years giving it an achievable production target of 40/- b/d. An example of this is Brasse which has been Graham Stewart’s baby from licence application through working up, drilling, discovery and appraisal and will now move into highly profitable development. Graham and his team are out there as the team to beat in the sector, history tells me that they will take some catching…

[thedudie] 26/9/2017 13:57

Results presentation available on their website ....


td

[ed 123] 26/9/2017 13:28

It was Ithaca's debt level that held it back, imo. Risk meant it wasn't in the strongest of negotiating positions. Also, Delek's 19% gave some protection against another party counterbidding. Only one interested buyer = potential for poor price.

And Faroe? Very ballpark...... Faroe is producing about two thirds of Ithaca's output with Stella. Delek paid $1.24 billion for Ithaca. So, Faroe worth about $800 million or about 160p per share.

"Without looking at Delek's books ..."

If you ever do please come back here and explain their books to me!

Different reporting rules apply of course, but the report I read didn't have a balance sheet! Also, Delek gets involved in complicated deals. It has one underway atm, which may or may not complete. Yes, there is a genuine risk of non-completion.

Anyway, they have found a LOT of gas, they are active at corporate and operational level, and they pay their bills. If they one day offer a good cash price for Faroe I'll be very happy.

[wbodger] 26/9/2017 12:46

re. Delek, they got their timing right with Ithaca. It is galling for a former Ithaca holder to have to say that, because Ithaca Board should have held out for more. Without looking at Delek's books, Stella must be very good business at the price they paid for Ithaca?

[ed 123] 26/9/2017 11:02

Agree, no surprises.

As we know, Schooner and Ketch were only bought for their last couple of year production so, although a different reason for ending is likely, the timing is round about expectation at the time of purchase. Faroe will be looking to replace that and the output that goes through Tyra. Another UK waters buy is likely.

I like that the number of assets and the three hubs gives some spread of risk.

They may hedge more with this oil price strength.

Still waiting for those holdings statements. They have to come at some point. The next annual report can't be published with incorrect major shareholder data.

Delek second quarter figures were released at the end of August. They say they have cash resources equivalent to £350 million including credit lines. They have been active in asset trades and are engaged in development of the Leviathan gas field (to come on line end of 2019). No mention of their Faroe investment. It's possible they are too busy on other matters and Faroe is on the backburner?

[bountyhunter] 26/9/2017 09:15

Positive for me...

"Graham Stewart, Chief Executive of Faroe Petroleum, commented:

I am pleased to report that Faroe Petroleum is performing ahead of expectation across its range of activities, despite continuing low oil prices. Faroe benefited from a number of positives in the period including: strong production performance in H1 2017, averaging 14,800 boepd; appraisal success on the Brasse discovery, increasing our recoverable resource range; a growing low cost exploration and appraisal programme; significant progress on our organic development projects; the acquisition of a further 14% interest in the Blane field (announced in July 2017); and rapid payback achieved on the DONG deal within 6 months of completion. Faroe now has a strong and diversified asset base with a clear path to increase profitable production to over 40,000 boepd within the next five years, with robust project economics even at low commodity prices.

The Brasse field is clearly a standout project for Faroe. Brasse was applied for, drilled, discovered and appraised by our team. We now move forward to the exciting phase of planning its development, in the knowledge that the significant resources in this prolific reservoir have considerable value, particularly given their shallow water location close to competing process and export infrastructure. Gross plateau flow rates for this field have the potential to exceed 30,000 boepd, with first production scheduled for 2020/21.

The Company has delivered good financial performance in H1 2017 with strong cash flow, improved cash reserves and an undrawn RBL credit facility of $250 million, ensuring significant financial flexibility going forward as we progress our development and exploration programmes simultaneously. Looking ahead, while we actively manage our organic programme, we will seek to continue to capitalise on our strong strategic and financial position as we pursue further attractive and value accretive M&A opportunities."

and also the oil price is looking healthier at least for now which is an additional plus. Note the "M&A opportunities" ;-)

[wbodger] 26/9/2017 08:52

No surprises at first reading, but none were expected. Market indifferent. I thought there would be more effect of the decline at Brage which is now the biggest of the pre-Maersk fields until Njord comes back up. More infill work there and at Tambar might steady things in H2-2018 but they will have to guide the market towards reduced boepd in 2018 imo.

Losing Schooner/Ketch after next year is worth a mention. Not sure if there is a remedy. They have tax credits which would not be useful if the biggest of their UK interests provides no revenue.

Brasse starting to look promising, to offset those mild downers. My view: neutral. Any other thoughts?

[dahhad] 26/9/2017 07:16

Bit of a mixed bag! It will be interesting to see how the market reacts!

[basem1] 26/9/2017 07:12

How can you make an operating loss with figures like those ????

[freddie ferret] 25/9/2017 17:36

Oil price now getting stronger for the Aramco privatisation?
Turn the taps off boys.

[bountyhunter] 25/9/2017 17:25

Yes FPM does seem to be lagging the crowd - some of it's peers have risen a lot more today as can be seen in the mini charts in the header.