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Faroe teams up with Shell, Spirit to develop UK, Norwegian blocks

Faroe Petroleum PLC said Jan. 16 that it has entered into partnerships with subsidiaries of Royal Dutch Shell PLC and Spirit Energy Ltd. to develop four U.K. and Norwegian blocks before Faroe becomes a delisted private company.

The blocks include the U.K. block 30/14a, U.K. block 30/14b, Norwegian block 1/6 and Norwegian block 1/9.

The consortium was awarded Norwegian block 1/9, or production license 969, following the recent APA licensing round and plans to issue a drill decision this year.

Faroe will own a 45% stake in all of the blocks, while Shell will have a 40% interest and Spirit will hold 15%. The deal is still subject to terms and conditions, including the deal completion of the U.K. block 30/14a acquisition from TOTAL SA's Total Oil U.K. Ltd.

Faroe will serve as contract operator of the four licenses until a final well decision is given and Shell assumes operatorship.

Faroe was the subject of a takeover by Norwegian firm DNO ASA, which offered Faroe shareholders 160 pence per share. The offer undervalued Faroe by 22% to 48% compared to an assets estimate released by Gaffney, Cline & Associates, which valued the company at 186 pence to 225 pence per share, or $879 million to $1.08 billion. Faroe disclosed this month that DNO plans to delist the company after it acquires all of the company's shares.