LONDON (Alliance News) - Faroe Petroleum PLC Tuesday said its loss was narrower in 2015 despite reporting a fall in revenue as the company reduced spending on exploration and reduced its other costs, but the company also warned that production will fall this year.
The oil and gas company operating offshore the UK and Norway reported a GBP122.3 million pretax loss in 2015, narrowing from the GBP165.8 million loss booked in 2014.
The narrowed loss came mainly as a result of exploration and evaluation costs falling to GBP89.5 million from GBP139.4 million the year before and thanks to a rise in other income to GBP13.9 million from GBP5.0 million.
Revenue for the year dropped to GBP113.0 million from GBP128.8 million, and impairments for the year were slightly higher at GBP45.1 million compared to the GBP38.5 million booked in during the previous year. That led its gross loss to widen to GBP32.0 million from only a GBP12.5 million loss in 2014.
The fall in oil prices was the main cause for the decline in revenue during the year, partly offset by a rise in net production to 10,530 barrels of oil equivalent per day from 9,106 barrels, split 58% oil and condensate and 42% gas, and a 30% fall in operating costs to only USD23 per barrel from USD33.
However, net production this year will fall to the region of 7,000 to 9,000 barrels of oil equivalent per day, of which 55% will be oil and condensate whilst the other 45% will be gas. Faroe said 80% of its gas production in 2016 and 50% of gas production in 2017 is hedged at 45.0 pence per therm.
In addition, 22% of all oil production in the first half of 2016 is hedged at USD50 per barrel.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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