Yahoo Finance ‘Fully funded’ Faroe Petroleum to raise $100m as sale talks loom
Faroe Petroleum plans to bolster its fully funded balance sheet with a $100m (£76m) bond issuance ahead of talks to sell a stake in its growing North Sea portfolio.
The ambitious operator is one of the few North Sea minnows to emerge from the oil market downturn cash-rich and debt free, but it now plans to take advantage of strong investor appetite in the bond market to bolster its balance sheet while marketing its projects to potential partners.
The plans emerged just six weeks after Graham Stewart, Faroe’s boss, said the group’s development programmes are fully funded in the near term despite the company carrying no debt.
Mr Stewart denied that the deal-hungry company would use the bond to fuel further acquisitions in the North Sea but said the financial flexibility could help strengthen the company’s bargaining position as it seeks out new partners for its fields.
“It’s all about having the best position of financial strength,” he said.
Earlier this year Faroe struck a deal with oil giant Nexen which agreed to take over operations and an 80pc stake in Faroe’s Corrib gas field off the Irish coast in return for meeting the costs of developing the project.
A similar deal could be on the cards for Faroe’s other major projects which include the Brasse and Freja fields in Norwegian waters.
Faroe is taking advantage of low services costs in the North Sea basin after the oil crash but plans to sell stakes in its growing portfolio of projects to build on its momentum.
In the meantime Faroe will use the cheap debt to progress work on its growing portfolio of North Sea projects rather than using the group’s still untouched £250m reserve-based lending (RBL) facility offered by its lenders. The group also had £118m in cash in the middle of the year.
“An RBL is fine – and we will use ours but it’s quite useless for development,” Mr Stewart said.
Faroe will hold fixed income investor meetings from next Wednesday with a view to issue a $100m senior unsecured bond with a 5 year tenure in the coming weeks.
