2007 saw substantial business growth and field development investments for Atlantic Petroleum — with first oil expected this summer as the Chestnut and Ettrick fields come on stream after months of weather related delays.

To the sound of first oil flowing, international upstream oil and gas company Atlantic Petroleum will celebrate its 10-year anniversary at some point in 2008.

The landmark achievement for Atlantic Petroleum will represent a day of significance for many Faroese shareholders — this is a company essentially rooted in the Faroes, with origins in local initiative and investment.

Starting from scratch to reach revenue generation through hydrocarbon production a decade later, means huge resources have been invested into obtaining the industry expertise necessary and gaining the financial power required for success in oil and gas.

The big moment was set to arrive last year when, alas, extreme winter weather conspired to defer the date month after month, quarter after quarter.

A March 2008 update on the Chestnut field in the UK sector of the North Sea — Atlantic Petroleum has a 15-percent stake in the P.354 license, operated by Venture — made clear that commissioning work and subsea tie-in activity on Chestnut was ongoing; “however progress on these activities is slower than anticipated therefore first oil from the Chestnut Field is anticipated during the third quarter of 2008, with a ‘stretch’ target of second quarter 2008.”

A positive piece of news was added to the story, however, with signs of higher reservoir levels than expected. Thus, through new technical subsurface work, “a potentially significant upside to the field” had been identified south to the Chestnut wells.

As to the Ettrick field in UK licenses P.272 & P.317, in which Atlantic Petroleum holds a 8.27 percent share: Development of the field was, by February, “on track with first oil expected mid 2008.” At that point some 82 percent of the development effort had been completed, with Atlantic Petroleum’s expected share of the total development cost coming to 260 million dkk (34.9m eur).

“Work is also ongoing to determine whether the North Ettrick and Jarvis discoveries can be tied into the Ettrick development,” the company added.

According to the Annual Consolidated Financial Statements, total assets amounted to 411m dkk (55.1m eur) at year-end 2007, while the financial year’s cash investments in exploration, development and acquisition activities reached 220m dkk (29.5m eur).

In addition to participating in one exploration well and one appraisal well last year, Atlantic Petroleum farmed into the UK Marten discovery, however the year’s most significant investments were related to Chestnut and Ettrick development and production assets at 156m dkk (20.9m eur). The company’s total investments in these fields amounted to 313m dkk (42m eur) at the end of 2007 with half the amount invested in the previous year.

Meanwhile 2008 investments directly related to Chestnut and Ettrick field development were set to decrease as completion approached.

Likely to become the first year in the black as a result from Chestnut and Ettrick production, 2008 was expected to see a profit of about 100m dkk (13.4m eur) after tax, before deduction of unsuccessful exploration costs and exchange differences.

“We are disappointed that operational delays are putting back the date for Chestnut first oil,” chief executive Wilhelm Petersen commented. “However,” he said, “the considerable upside identified to the south of the currently drilled wells could add significant value to the project, so we are looking forward to finalizing subsurface work on this.”

In the Faroes, Atlantic Petroleum holds a 40-percent share in Licenses 013 & 014, which contain the Stella Kristina and Marselius leads. In this context, seismic data acquired in 2006 is being processed, interpreted and tied to data from the Brugdan well of License 006, in which Atlantic Petroleum holds 0.025 percent with the option of increasing the share to 1.2905 percent. “Our strategy here is to mature the understanding of the geology before farming out a portion of our holdings in the two licenses,” Mr Petersen said.

In early 2007, Atlantic Petroleum purchased 11 percent of Ireland’s Standard Exploration License 2/07, which includes four discoveries — Hook Head, Ardmore, Helvick, and Dunmore — plus further exploration structures, the company said. An appraisal well on Hook Head drilled later “confirmed a significant oil accumulation, with good quality oil recovered from target reservoir zones.”

On the outlook, the Atlantic Petroleum vowed to “increase exploration and farm-in activities by taking more and larger steps. In order to be in a better position to follow the Group’s growth strategy in the short term, a share capital increase is being considered to take place during the course of 2008.”

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