Faroe moves deeper into Norwegian waters

Faroe Petroleum, the Aberdeen-based oil and gas explorer, is upping its presence in the Barents Sea off Norway in a deal with Talisman Energy.

Under the farm-in deal, Faroe has agreed to take on Talisman’s share of the costs of an exploration well in return for a 12.5 per cent stake in the licence which covers it.

Faroe, whose investors include Parkmead and Perth-based utility SSE, said the acquisition was an important step towards its ambition of building a strategic position in the Barents Sea and builds on its two existing licences in the Bjarmeland basin further to the east. It said the latest deal would be funded from existing cash resources.

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Graham Stewart, Faroe’s chief executive, said: “This secures Faroe a stake in an attractive, high impact, ‘wildcat’ exploration well. With drilling operations due to begin around the end of the year, this adds a further exciting well to our already substantial drilling programme and gives us access to our first exploration well in the highly prospective Barents Sea.”

Sam Wahab, an analyst at Seymour Pierce which has a target price of 266p for the shares, said he viewed the deal as “another important acquisition” for Faroe. Wahab said, while the announcement was encouraging, he saw the next material share price driver being results from Faroe’s North Uist exploration well.

The agreement with Talisman is subject to approval by the ministry of petroleum and energy in Norway. Shares in Faroe closed up 3.5p at 160p.

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