Faroe Swaps Norwegian Assets with Equinor

AIM-listed Faroe Petroleum and Norwegian state-controlled Equinor have swapped assets in a cash-free deal in the Norwegian Sea, they said December 5. Equinor said the net effect for it will be a stronger position in the prolific Njord area, "which we believe continues to have considerable upside potential," and less exposure to non-operated assets.

Faroe is swapping interests in the Njord, Hyme redevelopment and Bauge development assets in return for interests in four production assets on the Norwegian Continental Shelf: Alve, Marulk, Ringhorne East and Vilje. The deal only needs consent from the Norwegian authorities and will take effect January 1, it said.

Faroe, which is fighting off a hostile takeover bid from Norway's DNO, said the deal adds 7-8,000 boepd in 2019 and materially reduces its operating expenditure per barrel of oil equivalent (boe), as well as allowing it to make the most of its tax position in Norway. Once the deal is complete, it says it will consider the potential merger and acquisition opportunities and returning capital to shareholders from its strengthened balance sheet.

CEO Graham Stewart said the transaction "immediately rebalances our asset mix towards production after a series of exploration successes and resultant development projects." It will bring forward its fully-funded production target, while strengthening further its financial position in advance of reaching investment decisions on our new Iris/Hades and Agar discoveries. We are now confident in our ability to deliver in excess of 50,000 boe/d in the medium term."

Effect of transaction on Equinor's stakes