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Independent oil and gas producer Faroe Petroleum plc (LSE:FPM) said the company “encountered hydrocarbons” from its Cooper Well in the Norwegian Sea, moving shares up by 5.5% to £1.44 a share with a turnover of more than a million, by noon GMT.
The news is a reversal of the disappointing result of the company’s first operated well in Norway, which contained no hydrocarbon “of producible quantities”, according to the company’s announcement on 29th June.
Faroe holds 30% interest in the licence where the Cooper well is located, with the other 30% held by Canada-based Suncor Energy and the remaining 40% controlled by FTSE 100 Centrica plc (LSE:CNA).
The Cooper well lies between two producing fields, Morvin in the west and Smørbukk in the east, proving the continuity of the fault block, stretching about 10 kilometres.
“We are encouraged by the preliminary results for the Cooper well,” said Faroe’s Chief Executive, Graham Stewart.
The joint venture will perform a flow testing to evaluate the commercial potential of the discovery, expecting the results to be “in the coming weeks”, the company said in a statement.
“We need to await the results of the flow testing programme to establish likely productivity of the hydrocarbons and the commercial potential and size of the discovered resource,” he added.
More Funding
In a separate statement, Faroe said it has secured an additional funding of US$250 million, or about £160 million, for “capital expenditure, operating costs, and acquisitions”.
The said funding is twice the original commitment of US$125 million approved by Faroe’s lenders, consisting of seven banks.
“The increased credit facility will provide substantial additional finance to underpin the company’s growth,” the company stated.
Iain Lanaghan, Finance Director of Faroe, commenting on the financing exercise, said:
“This available credit provides us with greater funding capacity to support the development of the Group in our core areas and both in terms of organic and acquisition growth.”
As at 30th June 2012, Faroe revealed its cash position at £103 million with producing assets continuously generating cash flow.
Company Spotlight
Faroe Petroleum plc was named after the Faroe Islands north of the UK, where the company held its first licences. Established in 1997, Faroe Petroleum floated on the Alternative Investment Market in 2003.
