Faroe Petroleum poised to reveal results from key Shetland well

OIL and gas explorer Faroe Petroleum is expected to announce the first results from its key Lagavulin well off the coast of Shetland within the next two weeks.

Graham Stewart, chief executive of the Aberdeen-based company, told Scotland on Sunday that he would be "very surprised" if the announcement did not come in the next fortnight.

Lagavulin, the most northerly exploration well ever drilled in UK waters and one of the deepest on record, could be transformational for Faroe, opening up production along the Atlantic margin.

In a stock exchange announcement in April, Faroe said that results from the well were expected "in the coming weeks", with City analysts at the time claiming news was "imminent".

Stewart said the well had taken much longer to drill than the company had originally hoped because of delays caused by bad weather when work began in December, and a tighter regulatory regime in the wake of BP's Deepwater Horizon disaster in the Gulf of Mexico.

He added that the project had become even more complicated because of the types of rock through which his exploration rig was drilling.

"The fact we're still drilling and have not yet stopped is a good sign," Stewart said. "This is one of the deepest wells ever drilled, not just through the depth of water in which we're operating but also through the rock. The Atlantic margin is the 'final frontier' for the UK oil industry - that's where all the next big discoveries are going to be made."

Stewart said that - even carrying out the job with the modern exploration rig, which he likened to the "Starship Enterprise" - progress in such extreme conditions had been slow going.

But he praised the team running the drilling, which is being carried out in partnership with field operator Chevron and smaller shareholders OMV and Idemitsu.

Stewart also revealed that Faroe will start drilling in the Fulla prospect, off the west of Shetland, within the next two weeks.

Faroe is listed as the operator of the field and holds a 50 per cent stake, with Canadian Overseas Petroleum owning the balance.

Faroe's chief executive agreed any discoveries along the Atlantic margin could make his company a more attractive takeover target.

The Korea National Oil Corporation holds a 22.6 per cent stake in Faroe following its acquisition last year of Aberdeen-based oil and gas producer Dana Petroleum. But Stewart said any talk of a bid was a "purely theoretical" at this point.