Faroe Petroleum Plc Regulatory News (FPM)

18 May 2007 07:01

Faroe Petroleum PLC18 May 2007 18 May 2007 Faroe Petroleum plc ("Faroe Petroleum", or "Faroe") Multi-License Farm-out Agreement with Idemitsu - West of Shetland Faroe Petroleum, the independent oil and gas company focusing on exploration,appraisal and production in the Atlantic Margin, the North Sea and Norway, ispleased to announce that it has entered into its first Atlantic Margin farm-outagreement. The agreement, which involves four high impact exploration wells,was reached with Idemitsu E&P UK Limited, a subsidiary of Idemitsu Kosan Co. Ltd("Idemitsu"), one of Japan's leading energy and petrochemical companies. Thissignificant step is in line with Faroe Petroleum's strategy of farming-out themajority of drilling costs to reduce its cost exposure whilst retaining materialremaining interests. The arrangements extend over the following four UK West of Shetland licences,three of which are situated along the prospective Corona Ridge on the same trendas the significant Chevron-operated Rosebank Lochnagar discovery (currentlyunder appraisal): Licence Partners Post farm-in equity Faroe IdemitsuP.1190 Tornado OMV(operator), Dana 10.0% 10.0%P.1192 Cardhu Shell (operator), BP, 5.0% 5.0% ChevronP.1196 Lagavulin Chevron (operator), OMV 10.0% 10.0%P.1165 Talisker Chevron (operator) 12.5% 12.5% The agreement provides for a significant cost carry for Faroe Petroleum throughthe remaining work programme under the initial term, including the drilling ofone exploration well on each licence, should such decision be taken by therespective joint ventures. This farm-in represents the first step of Idemitsu'sstrategic entry into the UK. The Idemitsu group of companies, established in 1911, focuses on the import,export, refining and distribution of petroleum, oil and gas exploration, coalmining, petrochemical plants and product sales. The group employs 4,500 peopleworld-wide, with 2006 performance of $28billion gross turnover and $347millionof net profits, and has a market capitalisation of some $3.8billion. It startedits upstream business in 1971, and has well-established exploration andproduction assets in Norway and Southeast Asia. The farm-out agreement is contingent on joint venture partner consents beinggranted and approval from the UK Department of Trade and Industry. Graham Stewart, Chief Executive of Faroe Petroleum, commented: "This is an important step in Faroe Petroleum's Atlantic Margin strategy offarming out high cost exploration wells in a timely manner to secure asignificant free carry, from an initially high licence equity position.Idemitsu has recognised the potential of our strategic Atlantic Margin portfolioposition, which we have carefully built to include 13 licences, and we aredelighted to have reached agreement with them for the first of our AtlanticMargin farm-outs. Idemitsu has committed substantial capital through thisfour-licence farm-in, and we look forward to a very successful relationshiptogether." Osamu Kamimae, Executive Officer of Idemitsu Kosan said: "We are very pleased to have signed this agreement with Faroe Petroleum, whichgives us access to a package of highly prospective and material explorationopportunities. Faroe Petroleum is well established in the Atlantic Margin areawhile, crossing the border, we have had very successful experiences in theNorwegian territorial sea. We look forward to working with them." - ends - Enquiries: Faroe Petroleum plcGraham StewartTel: 01224 652 810gstewart@faroe-petroleum.com Financial DynamicsBilly CleggTel: 0207 269 7157billy.clegg@fd.com This information is provided by RNS The company news service from the London Stock Exchange