Faroe Petroleum has agreed to buy UK explorer Roc Oil GB, including its 12.5006% stake in the North Sea Blane field and a 12% interest in the Enoch field, also in the North Sea for up to US$20 million.
Roc Oil GB is a subsidiary of Roc Oil Company. Faroe will pay $17 million, plus a deferred payment of up to $3 million depending on certain performance targets.
Following the deal, Faroe will hold 30.5% interest in Blane and a 13.86% interest in Enoch.
Blane is an established oil field in P111, in Block 30/3a, with "considerable upside potential to increase production, grow reserves and extend field life," according to Faroe. In 2014, gross production from Blane was 4070 boe/d with $17.7/boe average operating costs.
Gross production from Blane in H1 2015 averaged at the lower rate of 2892 boe/d, largely due to unplanned shut-downs, and the field has been producing at approximately 4100 boe/d since it came back on full production 22 August 2015.
The Enoch field is currently suspended and is planned to be brought back on stream, pending resolution of certain technical and commercial matters, says Faroe.
2P Reserves at the effective date of 1 January 2015 as estimated by the company, were 1.60 MMboe and 0.45 MMboe for Blane and Enoch respectively, corresponding to an acquisition cost of between $8.3boe and $9.8/boe.
Blane was discovered in 1989, and is on the Central Graben of the UK Continental Shelf, extending into the Norwegian sector. Production started in September 2007 from a Tertiary Palaeocene Forties sands reservoir with a structural closure. The oil is of high quality with 420 API.
The field has been developed as a sub-sea tie-back to the BP-operated Ula platform on the Norwegian Continental Shelf (34km to the north east) and currently comprises two horizontal production wells with gas lift and one water injection well. Blane is a low operating cost producing field with upside potential in the existing reserves and the potential for further in-fill drilling.
The Enoch field has been developed as a single well subsea tie-back to the Marathon operated Brae field. The field was closed in due to a leak at the subsea well-head, which has since been repaired, and the field is currently planned to be brought back on production during H2 2015.
Graham Stewart, Faroes CEO, says: “Blane offers significant upside potential in the form of increasing reserves and production as well as in extending field life. The transaction is also very tax efficient for us, providing shelter for both past and future tax losses in the UK. We have at this stage chosen not to amend our production guidance for the year but will review this at the time of our Interim Results in September.
“Meantime, drilling operations on the Boomerang and Portrush prospects continue as scheduled, and the company will announce these results when drilling operations are complete, expected in September 2015.”
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