Faroe Petroleum, an independent oil and gas company said it sold a 17.5 per cent interest in offshore Norway’s Fenja development to Canada’s Suncor Energy for US54.5 million.
The Norway and UK-focused company will retain a stake of 7.5 per cent, which will align its equity at 7.5 per cent across the Greater Njord area, including Njord, Fenja, Bauge and Hyme.
The sale will to reduce Faroe’s future capital expenditure on Fenja to approximately £70 million, based on the operator’s gross projected development cost of NOK 10.2 billion, Faroe said in a statement. It will also help maintains Faroe’s strong balance sheet and fully funded position across its portfolio of Norwegian field developments, it added.
“Suncor’s acquisition of a 17.5 per cent stake in Fenja from Faroe confirms our belief in the attractiveness of this project. We look forward to working together with Suncor as the Fenja project progresses to first oil,” said Graham Stewart, CEO of Faroe Petroleum.
Faroe took Fenja through exploration and appraisal drilling to predevelopment work. It said the sale validates Faroe’s business model of generating tangible shareholder returns from its exploration portfolio. “Having held a significant interest in PL586 from its discovery, Faroe has now generated cash returns through a partial-monetisation while still giving shareholders exposure to future cash flows from a continuing interest in this high quality project,” Stewart said.
As detailed in the Plan for Development and Operation (PDO) submitted on 19 December 2017, the operator, VNG Norge AS, expects total gross recoverable reserves from the Fenja development of approximately 97 million barrels of oil equivalent (72 per cent of which is oil), Faroe said.
The transaction has a 1 January 2018 effective date and remains subject to the usual and customary conditions including regulatory approval of the transfer and approval of the Fenja PDO by the Norwegian Ministry of Petroleum and Energy. The sale is expected to complete during the first half of 2018.