Faroe strengthens links with ENI

Faroe Petroleum has agreed to acquire an 18% interest in the Talisman-operated Blane oil field in the UK North Sea from ENI UK and ENI ULX.

Offshore staff

ABERDEEN, UK -- Faroe Petroleum has agreed to acquire an 18% interest in the Talisman-operated Blane oil field in the UK North Sea from ENI UK and ENI ULX.

The value of the transaction, from the effective date of July 1, 2010, is $95 million, prior to working capital adjustments to completion, along with the farm out, on promoted terms, of a 20% interest in three exploration licenses on the Atlantic Margin.

Blane, in license P111-Block 30/3a (Upper), was discovered in 1989. The location is on the Central Graben, extending into the Norwegian sector. Production started in September 2007 from a Tertiary Palaeocene Forties sands reservoir with a structural closure. The field has been developed as a subsea tie-back to the BP-operated Ula platform 34 km (21 mi) to the north-east in the Norwegian sector, via two horizontal production wells with gas lift and one water injection well.

Average production during September was 11,964 boe/d. Faroe has identified upside potential, through a combination of performance of the existing development above expectations, and via in-fill drilling.

The farm-out to ENI concerns 20% stakes in the Faroese Rannva exploration permits (Licenses 012 and 017) and the UK license P.1740, all of which straddle the UK/Faroese border. Collectively, the permits cover an area of 2,794 sq km (1,079 sq mi), in water depths of around 500 m (1,640 ft), roughly 170 km (105 mi) west of the BP-operated Schiehallion oilfield.

The Rannva licences (which Faroe currently operates with a 100% interest) contain two large prospects along the axis of the Wyville-Thomson Ridge. According to the company, this is one of the largest un-drilled anticlines in North West Europe. Technical studies are in progress across these licenses in order to firm up a location for a well.

In a separate transaction, Faroe has increased its stake in the Tullow-operated Schooner gas field in the UK southern North Sea to 6.96%.

Graham Stewart, Chief Executive of Faroe Petroleum, said: “As we proceed with operations on the ENI-operated Anne Marie exploration well in the Faroe Islands, and the Chevron-operated Lagavulin exploration well west of the Shetlands, we are pleased to bring in a new partner in the Joint Venture for the Rannva licenses. "Straddling the UK and the Faroe Islands, these licenses hold two high impact exploration prospects, and the potential for substantial resources from the opening of a new hydrocarbon play.”

10/26/2010

More in Company News