Faroe Wraps Up Schooner and Ketch Stake Acquisition

Faroe Petroleum has completed the previously announced acquisition of a 53.1% operated interest in the Schooner Field and a 60% operated interest in the Ketch Field in the UK Southern North Sea gas basin from Tullow Oil.

Remaining Proved and Probable Reserves, as evaluated by the Company, as at 1 January 2014 were 5.9 million barrels of oil equivalent (mmboe) net to Faroe Petroleum. Average economic production for the first six months net to the Company was approximately 3,700 boepd.

The Ketch and Schooner Fields are located in Block 44/28b, and Blocks 44/26a and 43/30a in the UK sector of the Southern North Sea, 150 kilometres from the Theddlethorpe Gas Terminal on the Lincolnshire coast. The Ketch Field was discovered in 1984 and the Schooner Field in 1987, with first gas from Schooner in 1996 and Ketch in 1999. Both fields, developed by then-operator Shell, are multi-well developments with ‘normally unmanned’ platforms, currently managed by a third party Duty Holder. Gas is exported via the Caister Murdoch facilities to the Conoco-operated Theddlethorpe Gas Terminal where it is sold into the National Grid.

The initial consideration payable for the acquisition of the Interests is £35 million prior to adjustment for Net Income Receivable by the Company from the sale of hydrocarbons from the field from the effective date of 1 January 2014 to completion. Further consideration of up to £10 million will be paid to Tullow if up to 10 Bcf gross (6 Bcf net to Faroe) of incremental gas is produced from a specific reservoir compartment on the Schooner field recently developed by the 2013 SA11 well.

Graham Stewart, Chief Executive of Faroe Petroleum, commented: “We are very pleased to announce the completion of this acquisition, which broadens our production base further and both boosts and diversifies our oil and gas production portfolio.

“Schooner and Ketch are good quality producing fields, well known to the Company and which offer upside potential in the form of increasing reserves, production and field life. The transaction is tax efficient for us, providing shelter for both past and future tax losses in the UK and is in line with our strategy to grow our production portfolio to continue the efficient funding of Faroe’s ongoing exploration and appraisal programme.”

Related: Faroe Acquires Operated Interests in Ketch and Schooner Fields

Faroe Petroleum, the independent oil and gas company, announces the conditional acquisition of a 60% operated interest in the Ketch Field and a 53.1% operated interest in the Schooner Field in the UK Southern North Sea gas basin from Tullow Oil SK Limited, a subsidiary of Tullow Oil plc, for an initial consideration of £35m.

Press Release, October 10, 2014