Faroe Petroleum has agreed a two year extension to its NOK 500m revolving credit facility with Bank of Scotland (approximately £55m) to finance its ongoing Norwegian exploration and appraisal programme.

This credit facility ensures the Company's exploration and appraisal activity in Norway continues to take full advantage of the attractive economic opportunities presented to explorers by the Norwegian Government. Faroe Petroleum benefits significantly from the Norwegian tax regime under which exploration-focused companies recover 78% of exploration and appraisal-related expenditure in the following tax year. Under the terms of the revolving credit facility, 75% of Faroe’s exploration, appraisal and supporting expenditure in Norway will be supported by the bank facility thereby effectively quadrupling the capital available for investment in the Company’s Norway activities.

Graham Stewart, Chief Executive of Faroe Petroleum, said, “The extension of this facility ensures that Faroe Petroleum will continue to leverage Norway’s state contribution towards exploration and appraisal expenditure, through its constructive tax regime. Norway is a core area for Faroe Petroleum with the potential to create exceptional value for our shareholders, with two firm wells in Norway planned for 2010 alone.

“We are also very pleased to extend and grow our long term working relationship with the Bank of Scotland.”

Mark Munro, Associate Director, Bank of Scotland Oil & Gas said,"We are delighted to continue and increase our support to Faroe Petroleum for their exciting exploration programme in Norway. This facility strengthens the ongoing partnership between Bank of Scotland and Faroe Petroleum, and illustrates the Bank's continuing commitment to supporting customers and our willingness to harness the significant potential which exists in Norway's Oil and Gas sector."

Tags: Faroe Petroleum