The Aberdeen-based group, which focuses its efforts in UK and Norwegian waters, posted a pre-tax loss of £35.9 million for the six months to the end of June, compared with a £365,000 profit for the same period a year earlier.
The loss came after the Aim-quoted company saw its revenues tumble to £23.1m, down from £51.1m a year ago, reflecting a drop in production linked to the suspension in June of the Njord and Hyme fields, in which it has a 7.5 per cent stake, for “upgrades and strengthening”. Average production from Faroe’s existing portfolio came in at 9,030 barrels of oil per day (boepd), lower than the 10,971 barrels achieved in the first half of 2015.
However, chief executive Graham Stewart said the firm was “well positioned to progress its exploration-led, production-backed growth strategy”, and its balance sheet had been strengthened by a recent £66m share placing to fund the “transformational” $70.2m (£54m) acquisition from Danish oil and gas group Dong of four producing fields in Norway.
He added: “Pre-acquisition net production was above guidance averaging at approximately 9,000 boepd with operational expenditure per boe of $25, from which we continue to generate cash, despite the challenging market conditions. Faroe has had considerable success with the drill bit in recent years, and we are now seeing the real value of that success materialise.
“The transformational acquisition of a package of producing assets from Dong, negotiated on a bilateral basis, creates a new strategic hub for Faroe, centred round the Ula field platforms, in one of our core areas offshore Norway. The fields, benefiting from the synergies of owning several field interests in and around Ula, will have a material impact on production, reserves, cash flow and debt capacity.”