There was a mixed return at the half-year mark for Faroe Petroleum (FPM) with some hefty exploration write-offs offset by improved production. Faroe is now benefiting from the acquisition of a quartet of oil and gas fields in Norway and the UK. There is clear potential for success on the exploration front and a sharp rise in the price of Brent Crude since the half year-end only adds to the attraction.
Faroe produced an average of 8,581 barrels of oil equivalent per day (boepd), compared with 1,263 boepd in the first half of 2011. Though full-year guidance has been increased to 7,000-8,000 boepd, it implies a slowdown during the second half. This has been partially brought about by an upgrade at the Njord field, together with industrial action at Brage.
The company's operating loss was reduced by 35 per cent to £15.4m, although Faroe would have been in the black if exploration costs hadn’t more than doubled to £53m, largely on the back of write-offs for the T-Rex and Clapton licences. However, Faroe was able to report positive earnings due to a deferred tax credit of £19.6m.
Investec anticipate full-year EPS of 15.1p (2011: 16.9p).
| FAROE PETROLEUM (FPM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 154p | MARKET VALUE: | £327m | |
| TOUCH: | 154-155p | 12-MONTH HIGH: | 179p | LOW: 127p |
| DIVIDEND YIELD: | nil | PE RATIO: | 5 | |
| NET ASSET VALUE: | 111p* | NET CASH: | £87m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 40.1 | -24.0 | -8.60 | nil |
| 2012 | 90.6 | -15.9 | 1.76 | nil |
| % change | +126 | - | - | - |
*Includes intangible assets of £111m, or 52p a share | ||||
