Faroe Petroleum Plc Regulatory News (FPM)

16 Nov 2007 07:01

Faroe Petroleum PLC16 November 2007 16 November 2007 Faroe Petroleum plc ("Faroe Petroleum", "Faroe" or the "Company") Package Farm-out Agreement with CIECO - Faroe and West of Shetland Faroe Petroleum, the independent oil and gas company focusing principally onexploration in the Atlantic Margin, the North Sea and Norway, is pleased toannounce that it has entered into a farm-out agreement with CIECO Explorationand Production Limited ("CIECO") involving two high impact exploration wells inthe Atlantic Margin. CIECO is a subsidiary of the Japanese trading conglomerateITOCHU Corporation. This follows the previous Atlantic Margin farm out toIdemitsu E&P UK Ltd earlier this year and is in line with Faroe Petroleum'sstrategy of farming-out the majority of drilling costs to reduce its costexposure whilst retaining material remaining interests. In the Faroes, CIECO is farming into 12.5% of the Eni operated Anne Marie 005licence, where an exploration well will target one of several structuralprospects. The licence is operated by Eni and, in May 2006, the joint venturecommitted to drill a well on the licence, which is to be drilled before July2009. The agreement with CIECO provides for a significant cost carry for FaroePetroleum, leaving the Company with 12.5% of the licence equity. In the UK, Faroe Petroleum has granted CIECO an option on terms which are veryattractive to the Company, to farm into 2.5% of the Shell operated P.1192licence located on the Corona Ridge, close to Chevron's successful Rosebank/Lochnagar discovery. A decision is expected to be taken by the joint venture inthe near future with regard to drilling the Cardhu prospect. These transactions are contingent upon joint venture partner consents beinggranted and the respective approval from the Faroese Ministry of Trade andIndustry and the UK Department of Business, Enterprise and Regulatory Reform. Graham Stewart, Chief Executive of Faroe Petroleum, commented: "This is a further important step in Faroe Petroleum's Atlantic Margin strategyof farming out high cost exploration wells to secure a significant free costcarry, from an initially high licence equity position. CIECO has recognised thepotential of our strategic Atlantic Margin portfolio position, and we aredelighted to have reached agreement with them and we look forward to a verysuccessful relationship together." - Ends- Enquiries: Faroe Petroleum plcGraham StewartTel: 01224 652 810gstewart@faroe-petroleum.com Financial DynamicsBilly CleggTel: 0207 269 7157billy.clegg@fd.com Notes on Itochu The ITOCHU Corporation is one of Japan's largest companies with revenues of£45bn in 2006, a market capitalisation of £8bn and 43,000 employees and datesback to 1858 when the Company's founder Chubei Itoh commenced linen tradingoperations. Since then, ITOCHU has evolved and grown over 150 years into a sogoshosha, engaging in domestic trading, import/export, and overseas trading ofvarious products such as textiles, machinery, information andcommunications-related products, metals, products related to oil and otherenergy sources, general merchandise, chemicals, and provisions and food. Inaddition, ITOCHU has made multifaceted investments in insurance agencies,finance, construction, real estate trading, and warehousing as well asoperations and businesses incidental or related to those fields. http://www.itochu.co.jp/ ITOCHU, through its subsidiary CIECO, currently has worldwide production ofaround 55,000 boepd with operations in the UK, Azerbaijan, Sakhalin, Algeria,Australia, Indonesia, and the Gulf of Mexico. In the UK, Cieco first acquiredproduction in 1992, and in addition to the Hudson field currently has productionfrom the Alba and Caledonia fields as well as interests in the Melvillediscovery. This information is provided by RNS The company news service from the London Stock Exchange