Faroe Petroleum Enters into Iceland’s Offshore Sector

Faroe Petroleum Awarded Exploration Licences in Iceland

Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in the Atlantic margin, the North Sea and Norway, has announced provisional exploration licence awards in the Dreki area on the Icelandic Continental Shelf in the Icelandic 2nd Licensing Round.

The licences are extensive, encompassing seven licence blocks located to the south of the Jan Mayen Ridge, which in turn is located inside the Arctic Circle to the north east of Iceland. The new offshore licence is located to the south of the Jan Mayen Island, on a ridge which forms part of the Jan Mayen microcontinent. This microcontinent lies between the conjugate margins of both East Greenland and the Norwegian Continental Shelf, where several giant oil and gas fields have been developed. Recent samples taken from the seabed within the northern part of the new licence area have indicated the presence of both Mesozoic sedimentary rocks and a working hydrocarbon system. These are key components associated with many of the oil accumulations found in offshore fields in Norway and the UK.

Faroe Petroleum has mapped several very large structures within the licence area and is very excited to get the opportunity to explore and derisk these prospects with our proposed work programme. Faroe’s team have significant relevant experience from the UK, Faroes and Norway, which will be brought to bear in exploring these important new licences.

The Ministry of Petroleum and Energy in Norway has confirmed its intention to participate in the award covering Blocks IS6708/8,9,10,11,12 via the State‐owned oil company Petoro AS, with a 25% participating equity interest, as provided for under the terms of an agreement between Iceland and Norway. This participation is subject to ratification by the Norwegian Parliament.

Faroe Petroleum will be operator of these provisionally awarded licences with a 67.5% interest in Blocks IS6708/8,9,10,11,12 together with Petoro (25%) and Iceland Petroleum (7.5%) and a 90% interest in Blocks IS6708/1,2 together with Iceland Petroleum (10%), which are located outside the Norway/Iceland cooperation area.

Graham Stewart, Chief Executive of Faroe Petroleum, commented: “We are very pleased to announce our entry into Iceland’s offshore, which represents an important extension of our frontier exploration portfolio in the UK west of Shetlands, Norwegian Sea and Norwegian Barents Sea. As with our Norwegian Barents Sea licences, this new Icelandic Jan Mayen Ridge licence has significant hydrocarbon potential, and is located in ice‐free waters. We look forward to working with the Icelandic Government and our partners, in progressing these  important opportunities.

“In the meantime we await the results of our North Uist well (6.25%, west of Shetland) and look forward to our forthcoming 2013 exploration programme which will commence shortly with the Norwegian South Rodriguez well followed by the Darwin well located in the Norwegian Barents Sea in Q1 of next year.”

Press Release, December 4, 2012

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