Faroe Petroleum has shown faith in the exploration potential of the UK North Sea by agreeing to buy into acreage East of Shetland after focusing recent investment on Norway.

Aberdeen-based Faroe is farming in to a well targeting prospects it is thought may contain up to around 100 million barrels in total.

The oil and gas firm leading well operations, Azinor Catalyst, expects to start drilling on the licence concerned this month.

Aim-listed Faroe will fund 25 per cent of the expected $15m cost of the well, its first in the UK for years.

The well will target the Plantain prospect and appraise the Agar find made by Azinor in 2014.

The farm in provides a notable endorsement of the exploration credentials of Azinor Catalyst, which is a relative minnow.

Private equity-backed Azinor continued acquiring UK licences throughout the downturn triggered by the slump in the crude price between summer 2014 and early 2016.

The firm expected to capitalise on the resulting fall in the cost of services such as drilling support.

Edinburgh’s Cairn Energy farmed in to the licence containing Plantain and Agar in June.

Faroe Petroleum chief executive Graham Stewart said the company is pursuing a highly selective UK exploration strategy. This involves focusing on opportunities close to existing production facilities, which could be developed relatively quickly.

He added: “The Agar Plantain well represents a good opportunity to leverage our extensive Norwegian exploration expertise and track record onto the United Kingdom Continental Shelf, and in a cost-effective manner, taking advantage of continuing low rig rates.”

Faroe won a UK exploration licence in May.

It has six wells scheduled in Norway, where explorers get generous tax breaks.

Azinor Catalyst’s managing director Nick Terrel said the London-based company was delighted to welcome Faro into the licence. He said Faroe’s move underlined the significant potential of the prospect.

Faroe will acquire a 25% interest in the Agar Plantain well and a 12.5% stake in the licence containing the prospects. Azinor will retain 12.5% of the licence with Cairn on 25% and Apache on 50%.