Bitter war of words as Norwegians aim to boost North Sea presence

DNO first took a 28% stake in Faroe in April last year, in the first sign it would ultimately look to acquire the company.

The Oslo-based explorer is seeking a greater presence closer to home, having made a return to the North Sea in 2017 after a six-year hiatus focusing on the Middle East. Although based in Aberdeen, Faroe’s major activity is in Norway.

In November DNO lodged its first offer for the company at £1.52 per share and the two have been locked in a bitter war of words ever since.

In a series of statements DNO has criticised the company’s performance and the decisions of its management team.

The Norwegians have attacked Faroe’s recent exploration disappointments with Cassidy and Brasse East.

It also questioned the wisdom of Faroe’s recent asset swap deal with Equinor, involving a handover of stakes in development assets in exchange for older producing fields.

Faroe chief executive Graham Stewart has said the accusations are “unfounded” and intended to damage the reputation of the board and the support of shareholders.

Yvonne Telford, analyst at consultancy Westwood Global, said DNO may have what it takes to become a more “dominant player” in the North Sea.

She said: “The acquisition of Faroe Petroleum adds production and a very attractive package of development and E&A opportunities, which is likely to be what attracted DNO to Faroe in the first place.

“The 160 pence per share price reflects a fair market value based on a long-term oil price assumption of $65 to $70 per barrel but the E&A opportunities could give substantial upside if successful.

“With additional financial capacity, we hope to see DNO build on what Faroe has established to become a more dominant player in the North Sea.”