The exploration well in the UK Atlantic Margin to the west of the Shetland Islands was drilled in 1,567m of water depth and will be plugged and abandoned.
Hydrocarbons and a working petroleum system have been confirmed, however no workable reservoir system was discovered at this location.
Faroe Petroleum holds a 10% interest in the well, which is operated by Chevron.
Faroe Petroleum chief executive Graham Stewart said Lagavulin was a true high risk frontier exploration well, offering material upside in a success case.
"Whilst the outcome of the well is a disappointment, the presence of hydrocarbons has however now been proven and offers encouragement to continue our deep water exploration plans in the region," Stewart said.
