Faroe, Petoro in Norwegian asset transfer

Offshore staff

ABERDEEN. UK -- Faroe Petroleum has agreed to swap its 30% interest in the Maria discovery in the Norwegian Sea for various Norwegian production interests owned by Petoro. The latter manages the Norwegian state’s direct financial interests in oil and gas assets on the Norwegian continental shelf.

Maria, in production licenses PL475BS and PL475CS, was discovered by Wintershall last July. Concept screening studies are under way, and Wintershall is working towards a field development plan submission in 2012/2013. An appraisal well is due to be drilled in the northern part of the structure later this year.

Petoro will take on Faroe’s estimated £280 million ($458 million) net capital investment requirement for the development. In exchange, Faroe will receive:
• A 7.5% interest in the Njord field and Njord Unit (excluding the Noatun discovery) in the Norwegian Sea, along with 7.5% of PL348 and PL348B near Njord containing the Gygrid development project and an exploration prospect
• A 14.2% interest in the Brage field and Brage Unit in the Norwegian North Sea, along with 13.4% of the Brage Sognefjord field
• A 7.8% interest in the Ringhorne East field and 3% in the Jotun field and Jotun Unit, both operated by ExxonMobil (block 25/8).
Senergy (GB) estimates that at Jan. 1 2011, these assets contained 2P reserves net to Faroe of 14 MMboe in the producing fields and 1.2 MMboe of contingent resource in the undeveloped Gygrid field, with upside potential in the producing fields.

The interests should generate average production this year of 7,300 boe/d.

At Njord, Petoro has agreed to transfer necessary gas transportation capacity to allow Faroe to export its equity gas without paying a premium. New production will be generated by the approved North West Flank development, and by the Gygrid development project, for which a field development plan is pending. A well could be drilled on the Snilehorn exploration prospect.

At Brage, a new 4D seismic survey will be performed this year designed to help firm up new infill targets. The Arran exploration well is currently being drilled.

Jotun field is close to Ringhorne. The field has been developed with an FPSO, and started production, but is now in the tail-end phase of production.

Petoro will retain the principal abandonment and decommissioning liabilities for the Petoro Assets, capped at around $111 million pre-tax.


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