2010-11-05-2010-10-27

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
94MM
Description

To acquire an 18% interest in Blane Field on the Central Graben of the U.K. continental shelf, gaining 2,154 net BOE/d, 3 MMBOE proved and probable.

Faroe Petroleum Plc, Aberdeen, U.K., (London AIM: FPM) plans to acquire an 18% interest in Blane oil field from ENI UK Ltd. and ENI ULX Ltd., subsidiary of ENI SpA, Rome, (NYSE: E), for US$94.4 million (£60 million) in cash.

Faroe Petroleum will also farm out a 20% interest in three Atlantic Margin exploration licenses to the sellers. These are the Margin Rannva exploration licenses (Faroese licenses 012 and 017 and UKCS license P.1740) which straddle the U.K./Faroe border.

The deal values proved and probable reserves at US$17.50 per barrel equivalent, according to Senergy (GB) Ltd.

Blane oil field (P111-Block 30/3a (Upper), U.K. North Sea) is on the Central Graben of the U.K. continental shelf, extending into the Norwegian sector. The field has been developed as a sub-sea tie-back to the BP-operated Ula platform located in the Norwegian continental shelf and currently comprises two horizontal production wells with gas lift and one water-injection well.

Gross production during September was 11,964 barrels of oil equivalent per day (2,154 net). Remaining proved and probable reserves as of June 30 were 3 million barrels of oil equivalent net to Faroe Petroleum

Upside potential is in the existing reserves through a combination of outperformance of the existing development and the potential for further in-fill drilling.

Joint venture partners in the field are Talisman Resources (43% and operator), Roc Oil (12.5%), Nippon Oil (14%) and Dana Petroleum (12.5%).

The deal will be funded from cash and bank debt drawn against the company's borrowing base facility.

Faroe Petroleum chief executive Graham Stewart says, "Blane is a field we know very well, it is a low risk, low opex operation but with exciting potential upside. Furthermore the transaction is very tax efficient for Faroe Petroleum, providing shelter for both past and future tax losses and eliminating the capital gains tax liability from the sale of Breagh."