Shares in Faroe Petroleum lifted more than seven per cent today after the firm upgraded estimates for its key Brasse field following an appraisal programme.
Faroe's stock, which is listed on London's Alternative Investment Market (Aim), was up 7.11 per cent to 84.25p in late afternoon trading.
The oil exploration company announced recoverable resource volumes are now estimated at between 56m and 92m barrels of oil equivalent (boe), up from 43m to 80m boe, at its Brasse well in the Norwegian North Sea.
Work is now underway to take the field to development with first oil in 2020/21. Initial flow rates are expected to be higher than previously thought with predicted delivery rates of more than 30,000 boe per day.
Capital expenditure for the project has been estimated at $550m (£421m).
Graham Stewart, chief executive of Faroe, said the programme "considerably exceeded expectations and further confirms the commerciality of this discovery".
The Brasse field is clearly a very significant and valuable asset, with very attractive economics even at long-term low commodity prices.
The close proximity of the field to existing competing infrastructure combined with its prolific reservoir qualities and shallow water depth ensure this field can be developed expediently, taking full advantage of the current low cost environment.
Analysts at Cenkos said it was excellent news for Faroe: "The company continues to deliver on its long-held strategy of building value with the drill bit."
David Round, analyst at BMO Capital Markets, said the results could have a 10 per cent positive impact on its valuation of Faroe, which, Round said, "makes the current depressed share price look even more out of sync with the company's potential".
The Brasse field discovery was made by Faroe in 2016. The company is operator of the well and owns 50 per cent while Norway-based Point Resources owns the other half.