Shares in Faroe Petroleum (FPM) might have nudged up on the publication of full-year results, but the profit-and-loss account will have disappointed some investors. Much was already baked in following a February trading update, but a £61.5m pre-tax loss and a steep decline in operational cash flow were further dampened by higher than expected administrative and net interest charges.
Even with hedges in place, 2016 was never going to be a glittering year for Faroe's bottom line. And while the company benefits from Norway's tax rebate policy - which pays back 78p for every £1 spent on exploration - a delay in the timing of receivables meant that the reported tax credit slipped to £28.7m, quite a bit below market predictions. Still, there was additional compensation in the form of 24.7m new barrels of contingent resources from the Brasse discovery. Even better, proven and probable reserves were up 42 per cent at the end of the year.