According to chief executive Graham Stewart, Faroe Petroleum (FPM) performed “ahead of expectations” in the first half of 2017. Considering the 14,800 barrels of oil equivalent produced a day (boepd) each generated an average operating netback of $19 (£14), one of those expectations might have been for a half-year profit. As it was, a 97 per cent hike in post-tax exploration and appraisal capital expenditure to £7.3m, together with weak prices, took the gloss off a material upturn in accounting production.
Nonetheless, Mr Stewart still has plenty of measures to back up his assertion. Four new licences were awarded in Norway, another was successfully farmed out in Ireland, and a further 14 per cent of the Blane oil field was acquired for the equivalent of just $5 a barrel.
There have been important developments since the period ended. A side-track well at the Brasse discovery gave Faroe confidence to increase its recoverable resource volume range from 43-80m barrels of oil equivalent (mmboe) to 56-92mmboe. Drilling at the Goanna prospect was less successful, uncovering water but no hydrocarbons, although the exploration and appraisal focus now shifts to the Aerosmith and Fogelberg wells.
On average, analysts forecast pre-tax profit of £13.7m and adjusted EPS of 4.7p in 2017, rising to £48.8m and 11p next year.
| FAROE PETROLEUM (FPM) | ||||
| ORD PRICE: | 98.5p | MARKET VALUE: | £361m | |
| TOUCH: | 98.3-98.8p | 12-MONTH HIGH: | 115p | LOW: 69p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 65p* | NET CASH: | £118m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 23.1 | -35.9 | -4.85 | nil |
| 2017 | 80.1 | -6.1 | -0.80 | nil |
| % change | +247 | - | - | - |
| Ex-div: | n/a | |||
| Payment: | n/a | |||
| *Includes intangible assets of £118m, or 32p a share. | ||||
