Faroe Petroleum plans to bolster its absolutely funded steadiness sheet with a $100m (£76m) bond issuance forward of talks to promote a stake in its rising North Sea portfolio.
The formidable operator is without doubt one of the few North Sea minnows to emerge from the oil market downturn cash-rich and debt free, however it now plans to benefit from robust investor urge for food within the bond market to bolster its steadiness sheet whereas advertising and marketing its initiatives to potential companions.
The plans emerged simply six weeks after Graham Stewart, Faroe’s boss, stated the group’s growth programmes are absolutely funded within the close to time period regardless of the corporate carrying no debt.
Mr Stewart denied that the deal-hungry firm would use the bond to gasoline additional acquisitions within the North Sea however stated the monetary flexibility might assist strengthen the corporate’s bargaining place because it seeks out new companions for its fields.
“It’s all about having one of the best place of economic energy,” he stated.
Earlier this yr Faroe struck a take care of oil large Nexen which agreed to take over operations and an 80laptop stake in Faroe’s Corrib fuel discipline off the Irish coast in return for assembly the prices of growing the mission.
An identical deal might be on the playing cards for Faroe’s different main initiatives which embody the Brasse and Freja fields in Norwegian waters.
Faroe is making the most of low providers prices within the North Sea basin after the oil crash however plans to promote stakes in its rising portfolio of initiatives to construct on its momentum.
In the meantime Faroe will use a budget debt to progress work on its rising portfolio of North Sea initiatives fairly than utilizing the group’s nonetheless untouched £250m reserve-based lending (RBL) facility supplied by its lenders. The group additionally had £118m in money in the course of the yr.
“An RBL is ok – and we’ll use ours however it’s fairly ineffective for growth,” Mr Stewart stated.
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Faroe will maintain mounted revenue investor conferences from subsequent Wednesday with a view to problem a $100m senior unsecured bond with a 5 yr tenure within the coming weeks.
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