Faroe Petroleum eyes USD100 million debt financing

Faroe Petroleum eyes USD100 million debt financing

Faroe Petroleum plc has revealed that it making preparations for a possible USD100million debt funding. Spurred on by a successful period of exploration and appraisal work the growing offshore oil group is holding meetings with a number of fixed income investors – specifically it has mandated Danske Bank, DNB Markets and SEB to help facilitate the process – and it could lead to an issue of unsecured bonds.

The debt raise would be underpinned by Faroe’s production base which now amounts to some 13,000 to 15,000 barrels of oil equivalent per day.

“Whilst there can be no certainty that a debt transaction will follow the Company’s investor meetings, any debt raised will support the company’s stated goal of increasing materially its profitable production,” the company said in a statement.

The UK and Norwegian North Sea-focused explorer secured new banking facilities in December 2016: a $250 million reserve lending facility which remained undrawn at the end of the first half and a one billion Norwegian Krone (£92.5 million) facility to finance the majority of exploration and appraisal costs on the Norwegian Continental Shelf.

Faroe noted in first-half results it ended the period with £117.6 million in unrestricted cash.

The company said its current producing assets are expected to deliver net production of between 13,000 and 15,000 barrels of oil per day in the 2017 year.

The explorer adds it has a number of “high-quality development projects” on the Norwegian Continental Shelf.

Sometime in August Faroe commenced drilling at the Goanna licence in the Norwegian North Sea and the Iris/Hades (Aerosmith) exploration well and Fogelberg appraisal well are scheduled for the end of the year and the beginning of 2018 to take advantage of “low drilling costs and Norwegian tax incentives”.