Well done to Faroe team! The Brasse appraisal was drilled in super quick time based on my expectations. I had mid June pen’d in, so today’s news is a welcome surprise.
The company said, “The appraisal well successfully penetrated the oil-water contact on the flank of the Brasse field and encountered approximately 8.5 metres of gross oil-bearing Jurassic reservoir above the oil water contact. Preliminary results based on extensive coring, wireline logs and pressure data show that the well has encountered oil in a sand rich reservoir of very good quality.” END.
Full rns is below. The company will now perform a DST. This will hopefully provide the company and in due course, ‘the market’ with flow rates which will help define the commercial story for Brasse which is already…. very commercial! Assuming they gain decent flow rates, today’s data should move the resource figurs up a decent notch.
Faroe’s share price has fallen from 109p levels which was achieved this year with oil prices near $57pb. The fall to mid 80p levels looks a little overdone considering today’s news but more imprtantly the hedges at $54pb and the near 50:50 mix in the production of Gas/oil.
Faroe is not your typical ‘oil’ focused company and is very much an oil and gas business. The exploration tax credits that come via the Norwegian gov make wells like these very cheap indeed. Faroe is a bit of a freak E&P in today’s climate. They have cash in the bank, no debt and a massive folio of resource targets many of which are bordering on reserve status. And if that’s not compelling, throw in the circa 15kboepd production and the picture is complete.
On a side note; Delek (israel based business) bought Ithaca Energy out for 120p a share in 2017 after initially taking a 21%+ interest in the shares at a price of approx 54p. In Dec 2016, Delek bought Dana’s 13.8% stake in Faroe at a price of around 89p a share. Today, it is possible to buy in cheaper than Delek and that’s with Brasse news added in. That said, DST news still pending and data is only preliminary at the moment.
Faroe is part of thesharehub top ten for 2017.
13th June 2017
Faroe Petroleum plc
Brasse appraisal well preliminary results and commitment to Drill Stem Test
Faroe Petroleum, the independent oil and gas company focusing principally on exploration, appraisal and production opportunities in Norway, the UK and Atlantic Margin, is pleased to announce the results of the Brasse appraisal well in the Norwegian North Sea (Faroe 50% and operator, Point Resources 50%).
The Faroe-operated Brasse appraisal well (31/7-2S) has been drilled to a total depth of 2,450 metres, targeting a seismic anomaly approximately two kilometres to the southeast of the main discovery well (31/7-1 announced July 2016). The appraisal well successfully penetrated the oil-water contact on the flank of the Brasse field and encountered approximately 8.5 metres of gross oil-bearing Jurassic reservoir above the oil water contact. Preliminary results based on extensive coring, wireline logs and pressure data show that the well has encountered oil in a sand rich reservoir of very good quality. Preliminary analysis confirms the same oil-water contact as in the 31/7-1 discovery well and side-track and indicates good pressure communication within the reservoir.
The joint venture has now committed to perform a Drill Stem Test (“DST”) for further confirmation of well productivity, investigation of reservoir distribution and to provide important additional information for development project planning. Advanced pressure gauges, which communicate with surface after the well has been plugged and abandoned, will be installed in the 31/7-2S appraisal well to provide long term pressure monitoring of the reservoir.
The joint venture will shortly decide on whether to drill a potential side-track to the current well (31/7-2S). The joint venture will also decide on whether to drill a potential second appraisal on the Brasse discovery later this year, dependent upon further analysis of the 31/7-2S well and DST results. Evaluation work on the recently awarded prospective Brasse Extension area (Faroe 50% and operator) also continues, ahead of a potential decision to drill in 2018. An update of the Brasse oil and gas resources estimates will be announced following completion of the ongoing Brasse appraisal drilling and testing operations.
The Brasse discovery is located within tie-back distance to existing infrastructure: 13 kilometres to the south of the Brage field platform, in which the Company holds a 14.3% working interest and 13 kilometres to the south east of the Oseberg Field Centre.
Graham Stewart, Chief Executive of Faroe Petroleum commented:
“We are very pleased to announce the results of this important appraisal well which firms up the southern extent of the Faroe-operated Brasse field. This well proves the presence of excellent hydrocarbon bearing reservoir to the south of the original discovery and data gathered and yet to be gathered from the forthcoming DST will provide key information as we continue to progress towards development sanction. Importantly, preliminary analysis of the well results confirms Brasse as a commercial discovery.
“Brasse is a significant project for Faroe and the region and it also highlights Faroe’s ability to continue to add significant value through low-cost drilling in our core areas.
“While continuing with an exciting ongoing exploration programme in Norway, Faroe is also actively investing in pre-development and development of several of our own discoveries, each of which has the potential to transform the value of the Company in the coming years.”