Faroe Petroleum plc (Faroe) has reported revenues of GBP2.3 million for the year-end 2008, compared with revenues of GBP0.96 million in the previous year. It reported loss for attributable to equity holders of the parent of GBP20.6 million for the year-end 2008, compared with the loss for attributable to equity holders of the parent of GBP1.7 million in the previous year.

Highlights

Activity

Successfully drilled and tested two wells on Breagh gas field, proving up significant reserves and commercial flow rates

Topaz field development approved in February 2009 – development well was successfully drilled

Production from three gas fields, Schooner, Minke and Wissey (on stream in August 2008), with four more, Topaz, Orca, Trym and Breagh progressing towards development

Awards of 11 new licences: eight in Norway, two in the Faroes and one in the UK, all in strong partnerships

Cross assignment with Petro-Canada for interest in Fat Cat discovery, UK North Sea

Acquisition of interest in South East Tor oil discovery in Norway

Swap of stake in Glenshee with DONG for stake in 2009 Glenlivet well, both West of Shetlands

Financial

Turnover of GBP2.3 million (2007: GBP1.0 million) from UK gas production, expected to increase significantly in 2009

Loss after tax of GBP20.6m (2007: GBP1.7 million), after exploration expenses of GBP20.0m (2007: GBP3.7m) including write-offs of unsuccessful exploration wells previously announced

Cash of GBP16.7 million (2007: GBP63.4 million) – reflecting significant capital investments made in 2008, including the acquisition and development of Wissey and Topaz and the drilling and completion of 8 exploration, appraisal and development wells

Secured GBP25 million reserve base debt facility with Societe Generale – largely undrawn

Increased credit facility for exploration in Norway to NOK500 million with HBOS and Barclays

Strategy

Diversified portfolio of exploration, appraisal, development and production assets across the Atlantic Margin, North Sea and

Norway

Pursuing sustainable portfolio drilling programme with carefully controlled investment in each well balanced relative to its risked value potential

Continuing to add to exploration portfolio through new license rounds in Norway with very low entry cost and tax advantages

Actively building tax efficient production portfolio for cash flow generation

Outlook

Active drilling programme with at least 7 firm wells scheduled for 2009/10, including two in Norway and five in the Atlantic margin – all to be funded from existing resources and cash flow

Topaz gas field expected to come on stream in summer

Trym field development plan expected to be approved in first half of 2009

Orca field development plan expected to be submitted this year

Further commercial transactions being pursued to enhance programme and portfolio value

Progress towards development of the substantial Breagh gas field expected in summer

John Bentley, chairman of Faroe Petroleum, commented:

2008 was Faroe Petroleum’s busiest year to date, demonstrating the benefits of our strategy notably through successes of the significant Breagh gas field appraisal, and commissioning of the Wissey gas field. Faroe Petroleum has firmly established itself as a leading independent explorer in the Atlantic margin and also has the largest exposure to Norwegian exploration among all AIM quoted oil and gas companies. We have an excellent team, a strong balance sheet, an exciting drilling programme, and a growing production base. These strong features stand the Company in good stead to grow significantly in value and achieve our goal of becoming one of the leading independent E&P companies in the North Sea.