Faroe shares slump after investors back fundraising

SHARES in Faroe Petroleum slumped by nearly nine per cent after investors backed a fresh shares placing by the North Sea oil and gas company.

Faroe raised £62 million through the placing of 88,500,00 new ordinary shares at 70p each, with details of the successful offer emerging just hours after it was announced to the market late on Thursday.

The company will use the funds to support its US $70.2m (£52.7m) acquisition of five oil and gas producing fields in the Norwegian North Sea from Denmark’s Dong Energy, as well as to bring its key Brasse discovery into production. Brasse is shaping up to be the company’s biggest find.

The assets acquired from Dong are expected to boost Faroe’s production by an estimated 8,000 boepd (barrels of oil equivalent per day) this year, and its aggregate average production to between 15,000 and 17,000 boepd for the year ended December 31.

Faroe chief executive Graham Stewart said: “I am delighted to announce the successful completion of this oversubscribed placing, which has enabled us to acquire a high value portfolio of producing assets in one of our core strategic areas offshore Norway.

“As well as providing the funds for the acquisition, the placing proceeds will allow us to progress our recently announced Brasse discovery towards monetisation.”

Faroe said the placing shares will represent about 24.8 per cent of the issued ordinary share capital in the company following their admission to the Alternative Investment Market (AIM). The company expects the admission to become effective at 8am on Tuesday.

Shares in Faroe closed down 7p, or 8.8 per cent, at 72.75p.