Faroe’s founder plans new oil exploits after takeover

The outgoing head of UK oil explorer Faroe Petroleum, which this week surrendered to a hostile takeover by Norwegian group DNO, plans to start a venture that could buy up assets in the North Sea.

Graham Stewart, who founded Faroe in 1998, said he did not see himself “hanging up my boots any time soon”. He would be “surprised” if he and other members of the Faroe management team did not start another exploration and production business, he added.

“There are assets out there to buy and there are exploration wells to drill and we’ve got some very good relationships and we’ve learned a lot of lessons over the years,” Mr Stewart said. 

“We could reach quite a high level in a shorter time now we know how to do it . . . and we are all dead keen on it.” 

A number of new companies, such as private equity-backed Chrysaor and Neptune Energy, led by former Centrica boss Sam Laidlaw, have quickly risen to prominence in the North Sea, as the oil majors continue to sell off assets in the region and focus their investments elsewhere.

Speaking to the Financial Times after a bitter hostile takeover battle for Faroe concluded on Wednesday, Mr Stewart said it would be “most natural” to exploit his knowledge of UK and Norwegian waters, although he has also spent some time in west Africa. 

Aberdeen-based Faroe capitulated to a takeover by DNO after the Norwegian group tabled a final, higher offer of 160p a share — up from 152p — and raised its stake beyond 52 per cent. DNO had pursued Faroe since November.

Mr Stewart, whose shares and share options in Faroe are worth more than £12.5m, said he was surprised DNO turned hostile and that it was “quite a challenge” when “you meet someone who has a different rule book”. 

The takeover tussle became increasingly acrimonious and DNO had threatened to remove Faroe board members who continued to block the deal. 

However, Mr Stewart, who announced on Friday that he and the senior members of his team would be leaving the company, said the Faroe board and management would be “honourable in defeat” and “do everything we can to smooth this process through”. 

He said he was proud the board had succeeded in forcing DNO to increase its offer, even though the final price was still below what many analysts estimated the company was worth. The final offer values Faroe at £641.7m.

However, Faroe was always “going to struggle” against a cash bid, particularly when the oil price was so volatile, Mr Stewart said.