Faroe Petroleum Plc (LON:FPM) , the oil and gas group with a focus on exploration and production opportunities in the Atlantic Margin, the North Sea and Norway, has raised £62.2m in a placing of shares priced at 165p. Cash from the move has been earmarked to fund the appraisal and pre-development of Faroe’s recent discoveries together with increased exposure to exploration upside, by taking larger equity stakes and committing to new wells. The company said the funding would also pay for the acquisition of appraisal and production assets. Shares in Faroe dipped during early trading by 3.5% to 172.5p
As part of today’s news, Faroe said it had also agreed a new strategic partnership with Scottish & Southern Energy (LON:SSE) to develop wider co-operation between the two sides. Scottish & Southern has subscribed in the placing for a 5.1% stake in Faroe’s enlarged share capital. Faroe said the agreement offered scope to develop wider co-operation, including joint acquisition targets and leveraging mutual strengths.
Graham Stewart, the chief executive of Faroe Petroleum said: “We are delighted to have received such strong support from our existing and new shareholders for this placing, which will allow us to fund the new opportunities that we have generated, encompassing appraisal and pre-development work, expansion of our exploration programme, and further acquisition opportunities. Alongside today's placing we have entered into a significant strategic agreement with SSE through which we will leverage our respective resources to mutual benefit in growing our respective upstream portfolios. This relationship has been cemented by SSE's investment in Faroe through the placing, endorsing our significant potential as a rapidly growing independent exploration and production company.”
Since completing a £69.8m Rights Issue in April this year, Faroe has generated a number of new opportunities on the back of its successful Glenlivet, Tornado and Fogelberg discoveries. These have included a high quality oil discovery in its Maria licence in Norway and completion of drilling on the Anne-Marie prospect in the Faroes, where technical assessment is underway.
Faroe has also increased its stake in the Clapton prospect in Norway, from 20% to 40%, where a well is scheduled in 2012. In the Atlantic Margin, the company also has a number of new exploration…
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Useful Scotsman article throwing a bit of light on the SSE and potential? KNOC partnerships
http://business.scotsman.com/business/SSE-buys-18m-Faroe-stake.6633219.jp
Alistair Phillips-Davies, energy supply director of SSE, said: "Our goal is to build up a presence in the upstream gas sector in a measured way to provide an additional source of primary fuel and a hedge for our gas generation and supply activities."
And on KNOC ..
Stewart also said his team had now met with the Korea National Oil Corporation, which inherited a 27.5 per cent stake in Faroe after sealing the deal to buy Dana Petroleum recently.
"They have a target of increasing production over the next couple of years and we may be able to be of some assistance to them in that," Stewart said of the Koreans. "We may also be able to partner them in a few exploration activities."
Although KNOC has been touted as a potential bidder for Faroe, Stewart said he believed that the Koreans were currently very focused on dealing with the Dana acquisition and on stretching production targets over the next two years.
"I think they are pre-occupied with their production targets and we wouldn't really have much impact on those," he said.
Looks to me like the Koreans will stay more or less at arms length to FPM - at least for the short/medium term .
