Faroe Petroleum has announced the results of the Rungne exploration well 30/6-30 in the Norwegian North Sea in which it has a 40% working interest. The well encountered 86m of gross water-bearing reservoir in the primary Oseberg formation target and a 56m gross gas/condensate column in the Middle Jurassic Ness formation sandstones. The preliminary company estimate of recoverable gas and condensation is 2.7–17mmboe, which is unlikely to be commercial in isolation. Assuming the removal of Rungne from our RENAV, our valuation falls from 185.2p/share to 179.3p/share (-3%) based on a $70/bbl long-term oil price. We estimate a post-tax well cost net to Faroe of c $2m.
Written by
Faroe Petroleum |
Rungne uncommercial discovery |
Well result |
Oil & gas |
14 November 2018 |
Share price performance
Business description
Analysts
Faroe Petroleum is a research client of Edison Investment Research Limited |
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Faroe Petroleum has announced the results of the Rungne exploration well 30/6-30 in the Norwegian North Sea in which it has a 40% working interest. The well encountered 86m of gross water-bearing reservoir in the primary Oseberg formation target and a 56m gross gas/condensate column in the Middle Jurassic Ness formation sandstones. The preliminary company estimate of recoverable gas and condensation is 2.7–17mmboe, which is unlikely to be commercial in isolation. Assuming the removal of Rungne from our RENAV, our valuation falls from 185.2p/share to 179.3p/share
(-3%) based on a $70/bbl long-term oil price. We estimate a post-tax well cost net to Faroe of c $2m.
Year end |
Revenue (£m) |
PBT* |
Cash from operations (£m) |
Net debt/ (cash) (£m) |
Capex (£m) |
12/16 |
94.8 |
(61.6) |
55.4 |
(60.9) |
(79.4) |
12/17 |
152.9 |
(21.0) |
133.9 |
(43.3) |
(144.2) |
12/18e |
236.3 |
62.3 |
173.6 |
(43.8) |
(225.7) |
12/19e |
225.0 |
37.7 |
173.7 |
44.7 |
(263.8) |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, share-based payments
Faroe Petroleum has a 25% interest in the Agar/Plantain exploration well being drilled by Azinor Catalyst; results are expected shortly. The Plantain exploration well will target Eocene Frigg sands, which were proven by the Agar discovery well, 9/14a-15A, in 2014 and by the 24/9-12S Frosk oil discovery made by AkerBP in Norway in January 2018. Faroe identified that the seismic anomaly present in Frosk continued on Plantain and Agar. Agar and Plantain are estimated to hold combined mid-case prospective resources of 60mmboe, with an upside case of 98mmboe. In addition, Faroe expects to drill the Brasse East and Cassidy exploration wells this year. Further details can be found in our recent initiation report.
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Disclaimer
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Disclaimer
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Avon Rubber’s FY18 report demonstrates the success of the new business strategy, delivering growth across both divisions. The product portfolio has been updated and the company is winning contracts in new geographies. The company has also taken action to address its business structure and production footprint. We see continued opportunity for organic growth supported by selective bolt-on acquisitions.