Over the last three years, throughout the oil market’s various swings, Faroe Petroleum (FPM) has adopted a cautious and often well-timed approach to capital management. But with net production set to double in the next three years, and capital expenditure stepping up accordingly, the North Sea driller’s balance sheet could soon swing to a net debt position.
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Borrowing capacity does exist: the company has an undrawn $250m (£189m) reserves-based lending facility, and a separate exploration financing facility from the Norwegian government, of which £45m has been used. But drilling at Aerosmith, Fogelberg and Tambar requires cash, for which fixed income investors are being sounded out.
