Faroe Petroleum is making excellent progress developing its portfolio of 48 licences in the Atlantic Margin, North Sea and Norway. First production from the Wissey gas field in August should add significantly to revenues and, while the producing Minke field suffered a mechanical glitch, chief executive Graham Stewart expects a further four North Sea gas fields to be brought onstream between 2009 and 2010.
Faroe has interests in four wells being drilled, with potentially four more by the end of the year and several more in the near-term. A number of them have the capacity to transform the group's prospects and all are financed through cash resources, farm-in finance, credit facilities and growing gas sales.
Norway remains of keen interest to management, reflecting its high prospectivity and favourable 78 per cent exploration tax rebate. In addition to the Marsvin well currently being drilled, Faroe expects to participate in several more before the end of the year, which Mr Stewart believes "have the potential to add material resources". Faroe is applying to become a licence operator in Norway, which would greatly enhance its ability to control its cash flow.
Broker Daniel Stewart expects a full-year pre-tax loss of £2.7m, with EPS of 0.7p.
| FAROE PETROLEUM (FPM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 135p | MARKET VALUE: | £142m | |
| TOUCH: | 135-136p | 12-MONTH HIGH: | 210p | LOW: 118p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 91p* | NET CASH: | £32.1m | |
| Half-year to 30 Jun | Turnover (£000) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 49.0 | -1.45 | -0.80 | nil |
| 2008 | 687 | -2.06 | -0.30 | nil |
| % change | +1302 | - | - | - |
*Includes intangible assets of £39.4m, or 38p a share | ||||
