Faroe Petroleum has conditionally acquired a further 13.9935% stake in the Blane Field in the UK North Sea from JX Nippon Exploration and Production (U.K.) for $5.25 million.
The company, focused on UK and Norway, said deal consolidated Faroe’s existing Blane position to in aggregate a 44.5% non-operated interest; high quality 420 API oil, tied-back to Ula (Faroe 20%), one of -Faroe’s key hubs.
The Blane field was discovered in 1989. It started producing oil in September 2007 from a Tertiary Palaeocene Forties sands reservoir with a structural closure.
The field has been developed as a sub-sea tie-back to the Ula platform (Faroe 20%), located on the Norwegian continental shelf (34 kilometers to the north east), and currently comprises two horizontal production wells with gas lift and one water injection well.
It is operated is operated by Repsol Norge AS and the other joint venture partners are Dana Petroleum (BVUK) Limited and Repsol Sinopec Resources UK Limited.
Faroe’s acquisition is expected to complete before the year-end and is subject to UK regulatory approval, the approval of the Blane joint venture partners and the resumption of production after the completion of certain scheduled sub-sea works this summer.
Graham Stewart, Chief Executive of Faroe Petroleum, said: “We are pleased to announce this acquisition, which further increases our stake in this low cost, high quality and long life asset and at a fair value of $5.0 per boe. Raising our stake again in Blane, offers significant upside potential as we realize synergies through Blane’s use of our key Ula hub; increasing net production, reducing average operating costs, increasing profitability and providing access to further reserves potential from the field.
“The transaction is also very tax efficient for us, providing shelter for both past and future tax losses in the UK. Faroe continues to advance a number of key projects in and around the Ula hub area, all of which will serve to extract greater value from this particular deal through improved operating synergies.”