FAROE - North Sea License 440S

Project Status

As of August 2010, Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and undeveloped field opportunities in the Atlantic margin, the North Sea and Norway, has reached an agreement, subject to approval from the Norwegian authorities, to increase its interest from 20 to 40% and obtain the operatorship of Norwegian license PL440S.

A well has been committed on the PL440S license, which will target the Clapton Prospect and is expected to be drilled in late 2011 or early 2012. 

This APA license, awarded in 2006, is located in a very prolific area close to the giant oil fields Ekofisk, Valhall and Eldfisk, which contain 6 to 7 billion barrels of oil equivalent (boe) reserves. 

The Clapton Prospect is formed on the edge of a salt induced structure referred to as the Mode Dome which was previously explored in the 1980s. The main targets in the structure are the Upper Cretaceous Hod, Tor and Ekofisk formation, which is a proven reservoir in the Central Graben both in Norway and UK and contains good flow properties through the matrix as well as secondary fracture network development.

The agreement is subject to the approval of the Ministry of Petroleum and Energy in Norway.

As of end November 2010, Faroe has signed a rig contract securing the Maersk Guardian jack-up rig to drill the Clapton prospect in late 2011 or early 2012. Earlier this month, Faroe was approved by the Norwegian authorities and its license partners as the operator of license PL440S where the Clapton exploration well has been committed.

Faroe Petroleum recently raised £60m net through a placing of new shares. This ensures the Company is well funded to take forward its exploration program including the Clapton well. In addition in Norway, the Company benefits significantly from the Norwegian tax regime under which 78% of exploration and appraisal-related expenditure is reimbursed in the following tax year, which in turn is supported by the Company's revolving credit facility with Bank of Scotland.

Faroe Petroleum has been given the nod by Norway’s authorities to drill an exploration well at its Clapton prospect in the southern North Sea.

The explorer will deploy Maersk Drilling’s 1986-built jack-up Maersk Guardian to drill the 2/18-18S well in a water depth of 69 metres depth in Production License 440S, with drilling expected to start at the end of this month.

The well is expected to take between 58 and 142 days to drill, depending on the outcome.

The Norwegian Petroleum Directorate has granted Faroe Petroleum Norge a drilling permit for well 2/8-18 S. (Topco)