Acquisition of a Further Interest in UK Producing Blane Field
Friday 28 July 2017
Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in Norway and the UK, is pleased to announce the conditional acquisition of a further 13.9935% interest in the Blane Field in the UK North Sea (“Blane Interest”) from JX Nippon Exploration and Production (U.K.) Limited (”JXN”) for a total consideration of $5.25 million (the “Acquisition”).
Blane was discovered in 1989, and is located on the Central Graben of the UK continental shelf, extending into the Norwegian sector. Production commenced in September 2007 from a Tertiary Palaeocene Forties sands reservoir with a structural closure. The field has been developed as a sub-sea tie-back to the Ula platform (Faroe 20%), located on the Norwegian continental shelf (34 kilometres to the north east), and currently comprises two horizontal production wells with gas lift and one water injection well.
The 13.9935% interest in the Blane Field is derived from a 17.0653% interest in UK Licence P111 covering Block 30/3a (upper).
The Acquisition is expected to complete before the year-end and is subject to UK regulatory approval, the approval of the Blane joint venture partners and the resumption of production after the completion of certain scheduled sub-sea works this summer.
The Acquisition consideration of $5.25 million, prior to working capital adjustments from the effective date of 1 January 2017, is to be funded from existing cash resources.
The Blane Field is operated by Repsol Norge AS and the other joint venture partners are Dana Petroleum (BVUK) Limited and Repsol Sinopec Resources UK Limited.
Graham Stewart, Chief Executive of Faroe Petroleum, commented:
“We are pleased to announce this Acquisition, which further increases our stake in this low cost, high quality and long life asset and at a fair value of $5.0 per boe. Raising our stake again in Blane, offers significant upside potential as we realise synergies through Blane’s use of our key Ula hub; increasing net production, reducing average operating costs, increasing profitability and providing access to further reserves potential from the field. The transaction is also very tax efficient for us, providing shelter for both past and future tax losses in the UK. Faroe continues to advance a number of key projects in and around the Ula hub area, all of which will serve to extract greater value from this particular deal through improved operating synergies.”