,7 Mar 2012 15:33
http://www.iii.co.uk/articles/27282/wednesdays-aim-news-oil-and-gas
Faroe Petroleum (FPM) has discovered oil, "but not in commercial quantities", on the T-Rex and Bolan exploration prospects in the Norwegian Sea.
The company will not carry out production testing. Both prospects are situated next to the Statoil-operated producing Smørbukk oil fields.
While chief executive Graham Stewart said that he was "disappointed" with the results, he pointed out that the well did provide "very important new data and information" which would allow further evaluation and de-risking of the exploration province in which Faroe has a number of licences.
The next exploration wells scheduled for the second quarter of 2012 are North Uist (where Faroe has a 6.25% interest), Clapton (where Faroe is operator with a 40% interest) and Cooper (where Faroe has a 30% interest).
Broker FoxDavies said today's update was being viewed "as a step further towards the de-risking of the block resources", while Leila Reddy, analyst at Panmure Gordon, said that the company continued to offer "an attractive risk-reward proposition", given its portfolio of exploration assets complemented by producing asset and a fully-funded drilling programme. Panmure had a 'buy' recommendation on the stock.
Sam Wahab, analyst at Seymour Pierce, warned that following the disappointing result at Kalvklumpen last month, this would be viewed as another setback in the company's 2012 drilling campaign, and decreased his price target on the company to 291p.
However, he maintained his 'buy' recommendation, pointing out that Faroe had enjoyed a 67% success rate in 2011, far exceeding the industry average. "The company has a further four wells to drill this year targeting 113 million barrels of oil equivalent, which if successful, could represent material upside for investors," he added.
NOTE: There is more to FPM than the drilling. DYOR and GL
Sign In
Follow the stocks
