Suncor to Buy into Norwegian Field

UK-listed Faroe Petroleum said February 12 it has agreed to farm down a 17.5% stake in the Fenja oil and gas development, in the Norwegian Sea, to Canadian producer Suncor for $54.5mn cash

Faroe will retain a 7.5% interest in Fenja – thus aligning its equity at 7.5% across the Greater Njord Area (Njord, Fenja, Bauge and Hyme). The sale will reduce Faroe's future capex by £70mn.

VNG Norge is 30% owner and operator of Fenja; Norwegian independent Point Resources has 45%. The sale to Suncor is expected to complete during H1 2018, said Faroe. [Update: Faroe announced completion of the sale May 17]

Front-end engineering has been completed and the plan for Fenja’s $1.2bn development was submitted for Oslo’s approval in December 2017. Fenja is expected to come on stream in 1Q 2021.  The field will be developed with three oil producer wells, two water injectors and one gas injector that will be converted to a gas producer during the gas blowdown phase at the end of field life.

Germany’s VNG, operator of Fenja, announced last month it is exploring all options, including outright sale, for its upstream subsidiary VNG Norge. Leipzig-based VNG is itself 74.21%-owned by Germany’s third largest power group EnBW.

Suncor said in results February 7 that its net E&P production was 115,200 barrels of oil equivalent/day in 4Q 2017, much of which is focused on Canada, but it is already present in Norway since 2005 notably in the small Oda (previously Butch) oil project operated by Spirit Energy (formerly Centrica) that is due to start production 2019.