OIL explorer Faroe Petroleum has discovered oil in the Bue prospect in the Norwegian sector of the North Sea – which has come as a relief to analysts and investors following a recent setback in a part of the Butch field.
The Aberdeen-based firm, which has a 25 per cent share in Bue, said it is likely to yield between six and 25 million barrels of recoverable oil equivalent (mmboe). The firm provided an update for the Pil discovery, expected to produce between 72 and 172 mmboe.
Analysts at Panmure Gordon, who have a “buy” recommendation on the stock, said the news confirms Faroe’s “strong” track record and believe the announcement could add about 10p to the share price.
They regard the firm as their top pick in the sector, “with significant upside of over 70 per cent to our 204p target price”. Faroe is described as “well-funded” following its £65 million financing.
Faroe highlighted that the Pil and Bue discoveries are about 33km to the south-east of the Njord platform, in which it has a 7.5 per cent equity interest, “and are therefore expected to be within tie-back distance of the platform”. Panmure said further successful drilling in the area means it could become a standalone development.
Aim-quoted Faroe on Monday said it was disappointed by the results of drilling in the Butch South-West area, where it was forced to abandon and plug a well after failing to strike oil on reaching its target depth.
Graham Stewart, chief executive, said the focus was now on commercialising the Butch Main field.