Overlook the oil price - never a brilliant idea when investing in oil companies - and Faroe Petroleum (FPM) had a good 2015. Even accounting for hedging gains, the North Sea driller only managed to sell at an average of $47 (£33) a barrel of oil equivalent, down from $71 in 2014. But a weaker Norwegian krone, higher production volumes and efficiencies combined to bring down costs by a massive 30 per cent to just $23 a barrel. That may not match the 44 per cent drop in costs achieved by peer Ithaca Energy (IAE), but the improvements still helped to boost net operating cash flow from £71.4m to £92.6m.
Last year's main highlights, however, were all about the exploration portfolio. Faroe's proved and probable (2P) reserves increased by 88 per cent, thanks to the reclassification of contingent resources in the Pil and Butch oil fields. Meanwhile, the exploration programme - which added a net 3m-8m barrels of oil after September's successful drilling at the Boomerang well - was delivered under budget, and caused only a tiny drop in the net cash position.
Prior to these results, analysts at Peel Hunt were forecasting an adjusted pre-tax loss of £20.9m this year, giving a loss per share of 7.6p, against a profit of £9.1m and 3.3p a share in 2015.
FAROE PETROLEUM (FPM) | ||||
|---|---|---|---|---|
| ORD PRICE: | 66p | MARKET VALUE: | £177m | |
| TOUCH: | 65.5-67p | 12-MONTH HIGH: | 92p | LOW: 43p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 72p* | NET CASH: | £68.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 |
| 2015 | 113 | -122 | -19.7 | nil |
| % change | -12 | - | - | - |
*Includes intangible assets of £73.5m, or 27.3p a share | ||||
