FAROE Petroleum’s wide-ranging drilling programme should reinvigorate its shares this year, according to a raft of analyst notes produced ahead of the company’s results on Tuesday.
The Aberdeen-based firm, led by chief executive Graham Stewart, has rebalanced its portfolio after swapping a major find for stakes in several producing oil fields, which will see it report that revenues doubled to more than £150 million last year.
But analysts say it is the company’s “exciting drilling programme” in waters off Norway and the Shetlands that is of interest to investors. Charlotte Elliott, at Credit Suisse, said: “Geological diversity, in regions well understood by Faroe, could unlock significant upside and help Faroe’s shares re-rate.”
She highlighted the North Uist well West of Shetland, the Darwin prospect in the Barents Sea and Faroe’s Novus project in the North Sea as having the best potential to give the company a boost this year.
HSBC and Liberium Capital both recently initiated coverage of Faroe, with “overweight” and “buy” recommendations respectively.
Kate Sloan, at Liberium, said the company’s strategy of quickly cashing in on exploration finds rather than developing them, while unconventional, had proved a success and enabled rapid growth – and she expects to see it repeat the trick with further finds.
She said Faroe’s assets had “a number of attractive features”, adding: “These portfolio qualities could render it an attractive bid target.”