Faroe Petroleum has completed the acquisition of a 53.1% operated interest in the Schooner field and a 60% operated interest in the Ketch field in the UK southern North Sea gas basin from Tullow Oil.
Both fields are in Blocks 44/26a and 43.30a, about 150km from Theddlethorpe Gas Terminal on the English coast. Remaining proved and probable reserves are about 5.9MMboe net to Faroe, with average economic production for the first six months net to the company was about 3700boe/d.
Graham Stewart, Chief Executive of Faroe Petroleum, said: “The completion of this acquisition broadens our production base further and both boosts and diversifies our oil and gas production portfolio.
“Schooner and Ketch are good quality producing fields, well known to the company and which offer upside potential in the form of increasing reserves, production and field life. The transaction is tax efficient for us, providing shelter for both past and future tax losses in the UK and is in line with our strategy to grow our production portfolio to continue the efficient funding of Faroe’s ongoing exploration and appraisal program.”
Ketch was discovered in 1984, and Schooner in 1987, with first gas from Schooner in 1996 and Ketch in 1999. Both fields, developed by then-operator Shell, are multi-well developments with "normally unmanned" platforms, currently managed by a third party duty holder.
Gas is exported via the Caister Murdoch facilities to the Conoco-operated Theddlethorpe Gas Terminal where it is sold into the National Grid.
The initial consideration payable for the acquisition of the Interests is £35 million. Further consideration of up to £10 million will be paid to Tullow if up to 10 Bcf gross (6 Bcf net to Faroe) of incremental gas is produced from a specific reservoir compartment on the Schooner field recently developed by the 2013 SA11 well.
Faroe has identified several potential areas for investment in these assets, in order to further enhance reserves and value and to extend field life, certain of which are the subject of contingent royalties.