Jul. 22, 2009 (Hugin AS) --
22 July 2009
Faroe Petroleum plc ("Faroe", the "Company")
Sale of the Breagh Field
* Sale of Breagh for $41.6m (approximately £25.3m) in cash
* Completion expected within three months
* Cash to be reinvested in further value-creating opportunities
* Next two wells located in the UK west of Shetlands area - high
risk/high reward Glenlivet and Tornado prospects - both expected
to commence in the next two months
Faroe Petroleum plc, the independent oil and gas company focusing
principally on exploration, appraisal and undeveloped field
opportunities in the Atlantic margin, the North Sea and Norway, is
pleased to announce the sale of its entire 10% interest in the Breagh
Gas Field in the UK Southern North Sea Gas basin to RWE Dea UK SNS
Limited, for approximately $41.6m (approximately £25.3m).
The Company acquired its interest in the Breagh gas field from
Sterling Resources Ltd in 2006. The field is situated close to the
northern limit of the Southern Gas Basin and is one of the largest
discoveries in this area in the last 10 years. During 2008, the
partnership successfully drilled and tested two further wells in the
same block proving up significant additional reserves and achieving
commercial flow rates. These wells proved additional gas resource
and communication between east and west flanks of the field.
Whilst it is clear that Breagh is an outstanding discovery, provision
of development finance for an asset of this scale would be
particularly challenging for junior oil companies, especially in this
economic climate. Against this background the six company
partnership has taken the pragmatic decision to sell 70% of the
discovery to a much larger company which is able to fund the
development costs which are expected to be in excess of $1 billion.
Faroe is participating in this consortium sale in respect of its
entire 10% interest in the discovery (Sterling Resources Ltd, the
current operator, is retaining a 30% interest).
The Company's interest in the Breagh field is being sold for cash for
approximately $41.6m, prior to working capital adjustments, such
consideration being payable at completion of the sale, which is
estimated to occur within the next three months.
