Faroe Petroleum’s stock rises on Butch oil strike

FAROE Petroleum, the Aberdeen-based oil and gas explorer, continued with its “excellent” drilling record yesterday by announcing that it had struck oil at its “Butch” well in the Norwegian sector of the North Sea.

Shares in the Aim-quoted stock surged 7 per cent as the firm said it would immediately start a side-track well to see if there was more oil in the area. Graham Stewart, Faroe’s chief executive, said: “The Butch discovery is very exciting, with further upside potential from the planned side-track well.”

The well is operated by Scottish Gas-owner Centrica, with the Norwegian arms of Suncor and Spring Energy also involved in the operation.

Matthew Lambourne, an analyst at Numis, said: “Faroe’s excellent exploration drilling performance continues, with this discovery at the Butch prospect lifting the company’s track record to six successes from its past eight attempts.”

RBS Equities analyst James Gardiner highlighted that the Butch prospect was close to existing development fields, which might make it easy for Faroe and its partners to sell the well on to other operators.

Gardiner added: “This latest successful result vindicates Faroe’s technical capability, which we think is differentiated from that of competition.

“The company has a fully-funded exploration programme through to 2013 and plans to commence drilling the T-Rex and Kalvklumpen wells offshore Norway at the end of October and in November, respectively.”

Faroe closed up 10p at 154p.