1 Oct 2018 09:50
Edison Investment Research Limited Edison InvEdison issues initiation on Faroe Petroleum (FPM)estment Research Limited: 01-Oct-2018 / 09:49 GMT/BST London, UK, 1 October 2018 Edison issues initiation on Faroe Petroleum (FPM) Faroe has successfully established a 98mmboe reserve base through an exploration-led organic growth strategy. Norwegian exploration tax incentives, combined with recent success at Iris/Hades, underpin finding costs of c $1/boe (post-tax) and have delivered a portfolio of development projects with point-forward IRRs ranging from 21% to 41% at $70/bbl. With a RENAV of 185.2p/share, we believe that the market is not fully valuing the risked value of Faroe's upcoming seven-well E&A programme that targets net un-risked prospective resource of 144mmboe, or is not fully taking into consideration the positive cash flow impact of tax depreciation carry-forwards/consolidation in Norway. Based on current debt availability, we believe Faroe is fully funded for current development commitments at an oil price down to $40/bbl. Our RENAV of 185.2p/share is based on a long-term oil price of $70/bbl and 10% WACC, which rises to 215.0p/share assuming an 8% WACC. Key investment risks include service cost inflation, potential for underestimation of decommissioning liabilities and asset integrity.Click here to view the full report. All reports published by Edison are available to download free of charge from its websitewww.edisoninvestmentresearch.com About Edison: Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison is not an adviser or broker-dealer and does not provide investment advice. Edison's reports are not solicitations to buy or sell any securities. For more information please contact Edison: Sanjeev Bahl, +44 (0)20 3077 5700Carlos Gomes, +44 (0)20 3077 5700Elaine Reynolds, +44 (0)20 3077 5713oilandgas@edisongroup.comLearn more at www.edisongroup.com and connect with Edison on:LinkedIn https://www.linkedin.com/company/edison-investment-research Twitter www.twitter.com/Edison_Inv_ResYouTube www.youtube.com/edisonitv Dissemination of a CORPORATE NEWS, transmitted by EQS Group.The issuer is solely responsible for the content of this announcement. |
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