Aberdeen-based explorer Faroe Petroleum it to take on its first operated production in the North Sea through a £35million to take over operated stakes in two southern North Sea gas fields from Tullow Oil.
Faroe will take a 60% operated stake in the Ketch field and a 53.1% operated interest in the Schooner field.
Ketch and Schooner are established gas fields, in Block 44/28b, and Blocks 44/26a and 43/30a, 150km from the Lincolnshire coast, each have “considerable upside potential” to increase production, grow reserves, and extend field life, said Faroe.
2P Reserves in the fields, at 1 January 2014, are estimated at 5.9MM boe net to Faroe, taking the company’s total net reserves to 33.1MMboe.
The acquisition is expected to complete before year-end.
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 via 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.
At 1 January 2014 the remaining Proven and Probable Reserves for the Interests were estimated by the Company to be 34 Bcf of gas and 0.3MM bbl of condensate, equating to 5.9MM boe, net to Faroe.
The estimated average 2014 production from the Interests is expected to be 3000-4000boe/d net to Faroe. This raises Faroe’s guidance for full-year economic production for the year ended 31 December 2014 to 7000-10,000boe/d.
Graham Stewart, chief executive of Faroe Petroleum, says: “This is our first move into operating producing assets. This transaction gives us the opportunity to add value to these fields over time, and both assets offer numerous possibilities and options to grow. Nevertheless, our clear strategic focus on exploration will remain unchanged going forward.”
Tullow Oil said it continues to market its remaining southern North Sea gas assets in the UK and in the Netherlands. This transaction follows the sale of Tullow’s gas assets in Bangladesh and the agreement to sell the Pakistan business in 2013, and is in line with the Company’s strategy of active portfolio management and monetization of assets, said Tullow.
Aidan Heavey, CEO of Tullow, said: “Schooner and Ketch have been critical to Tullow’s success and growth since they were acquired in 2005. During a transformational period of growth for Tullow, they provided important, stable, cash flows which have helped to fund the Group’s successful frontier exploration campaigns. However, we have a clear strategy of constant and active portfolio management and have focused our business on conventional light oil. Sales and farm-down processes continue across Tullow and, although transactions are taking longer than initially expected, we are making good progress in tough but improving market conditions.”
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