Faroe Petroleum has signed an agreement to sell 17.5% working interest in the Fenja development in PL586 in the Norwegian Sea to Suncor Energy Norge.
The $54.5m transaction is expected to cut Faroe’s future capital expenditure on Fenja to around £70m.
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Following the transaction, Faroe will retain a 7.5% stake in Fenja.
Faroe Petroleum CEO Graham Stewart said: “This transaction marks a major milestone for Faroe, which has taken Fenja through exploration and appraisal drilling to predevelopment work and validates Faroe’s business model of generating tangible shareholder returns from its exploration portfolio.
“Having held a significant interest in PL586 from its discovery, Faroe has now generated cash returns through a partial-monetisation, while still giving shareholders exposure to future cash-flows from a continuing interest in this high-quality project.”
The divestment will allow the company to maintain a strong balance sheet, in addition to ensuring funding across its portfolio of Norwegian field developments.
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By GlobalDataWith the proposed sale, Faroe will be able to align its remaining interest in Fenja with its existing 7.5% working interest in the Greater Njord Area.
The field is operated by VNG Norge and is estimated to have total gross recoverable reserves of around 97 million barrels of oil equivalent.
Scheduled to complete during the first half of this year, the transaction is conditional upon customary conditions, including regulatory approval of the transfer and approval of the Fenja plan for development and operation (PDO) by the Norwegian Ministry of Petroleum and Energy.
The PDO was submitted on 19 December last year.
In a separate deal, Suncor has signed a $730m deal to acquire Mocal Energy’s 5% stake in the Syncrude joint venture in Fort McMurray, Alberta, Canada, increasing its interest from 53.74% to 58.74%.
