Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in the Atlantic margin, the North Sea and Norway, is pleased to announce that it has signed a rig contract securing the Maersk Guardian jack-up rig to drill the Clapton prospect in late 2011 or early 2012. Earlier this month, Faroe was approved by the Norwegian authorities and its licence partners as the operator of licence PL440S where the Clapton exploration well has been committed.
Faroe Petroleum has increased its stake in Licence PL440S from 20% to 40%, the remaining co-venturers being Det norske oljeselskap (whose stake has decreased from 30% to 10%), Norwegian Energy Company (12%), Lundin (18%) and Dana (20%).
The Clapton prospect is formed on the edge of a salt induced structure referred to as the Mode Dome which was previously explored in the 1980s. The main targets in the structure are the Upper Cretaceous Hod, Tor and Ekofisk formations, which is a proven reservoir in the Central Graben both in Norway and UK.
Faroe Petroleum recently raised Ł60m net through a placing of new shares. This ensures the Company is well funded to take forward its exploration programme including the Clapton well. In addition in Norway, the Company benefits significantly from the Norwegian tax regime under which 78% of exploration and appraisal-related expenditure is reimbursed in the following tax year, which in turn is supported by the Company's revolving credit facility with Bank of Scotland.
Graham Stewart, Chief Executive of Faroe Petroleum, commented:
"We are very pleased to announce that we will be operating our first well in Norwegian waters. The significant Clapton prospect was identified and mapped by Faroe Petroleum for the 2006 APA license round and lies in a very prolific area close to the Ekofisk, Valhall and Eldfisk giant oil fields. Clapton is a good example of an opportunity which Faroe has taken up the value chain; from identification, licence award, mapping, derisking, securing the operatorship and finally drilling."
"We recently announced that we have provisionally been awarded four new exploration licences west of Shetland under the UK 26th Licensing Round, all with significant participating interests and as operator. The Clapton transaction and these new awards are significant steps for the Company and are in line with the Company's ambition to hold bigger stakes and be the operator of key assets."