The market reacted positively to full-year figures from Faroe Petroleum (FPM), despite the North Sea driller swinging to a net loss of £55m, against a profit of £14.1m in the previous year. Revenues were flat, as a 12 per cent increase in production was countered by lower realised oil prices. Faroe also booked a £38.5m impairment charge and £132m in exploration write-offs, though the consequent earnings slump was mitigated by a hefty tax credit.
The good news is that Faroe is proceeding with four high-impact wells during 2015, all of which will be located in Norwegian waters where the driller will benefit from a 78 per cent exploration tax rebate. Two of the wells will be follow-up options on last year’s large Pil discovery in the Norwegian Sea. Faroe’s gross exploration and appraisal capital spend for 2015 is estimated at around £100m, but this falls to just £26m post-tax.
Faroe expects to produce 8,000-10,000 barrels of oil equivalent per day (boepd) in 2015, split 58/42 per cent between liquid and gas. The company has softened the impact of falling energy prices by hedging 58 per cent of this year’s output at $89 a barrel for oil and 50p per therm for gas - both rates appreciably higher than current prices.
Peel Hunt gives a risked book value of 123p a share.
FAROE PETROLEUM (FPM) | ||||
---|---|---|---|---|
ORD PRICE: | 79p | MARKET VALUE: | £211m | |
TOUCH: | 78-79p | 12-MONTH HIGH: | 155p | LOW: 58p |
DIVIDEND YIELD: | nil | PE RATIO: | na | |
NET ASSET VALUE: | 92p* | NET CASH: | £33m |
Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2010 | 15.0 | -26.0 | -13.3 | nil |
2011 | 80.0 | 14.0 | 22.3 | nil |
2012 | 159 | -29.0 | -2.4 | nil |
2013 | 129 | 10.0 | 6.6 | nil |
2014 | 129 | -166 | -22.6 | nil |
% change | -0.1 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £128m, or 48p a share. |