NORTH-Sea focused Faroe Petroleum has sold a stake in a find it made off Norway for $55 million (£40m) in a deal which provided a reward for its decision to maintain exploration activity amid the recent downturn in the industry.

The Aberdeen-based oil and gas firm has agreed to sell a 17.5 per cent interest in the Fenja development to Canada’s Suncor.

News of the deal sent shares in Aim-listed Faroe surging nine per cent.

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The sale will allow Faroe to realise some value from the Fenja development while retaining a 7.5 per cent interest in the project.

Chief executive Graham Stewart said Suncor’s move demonstrated the attractiveness of the plan to bring the field onstream.

“This transaction marks a major milestone for Faroe, which has taken Fenja through exploration and appraisal drilling to predevelopment work and validates Faroe’s business model of generating tangible shareholder returns from its exploration portfolio,” said Mr Stewart.

The sale caps a successful exploration campaign that Faroe completed against an increasingly challenging backdrop.

Fenja contains the Pil and Bue finds which Faroe announced in March and July 2014 respectively.

The operator VNG Norge expects that around 100 million barrels oil equivalent can be recovered from the discoveries.

News of the finds straddled what proved to be a turning point for the industry in June 2014 when Brent crude peaked at $115 per barrel.

The oil price went into freefall in following months as growth in supplies ran well ahead of muted demand.

Brent has recovered some ground since November 2016, when major exporters led by Saudi Arabia decided to curb production to support the market.

It sold for $70/bbl plus last month, compared with a low of less than $30 in the first quarter of 2016.

However, Brent has lost ground in recent weeks following news of big production increases in shale areas of the USA.

Mr Stewart has remained confident over the last three years that Faroe could continue to deliver with the drill bit by focusing on areas it knows well.

It has made other finds off Norway since the crude price plunge started in 2014.

Mr Stewart has noted the cost of drilling has fallen sharply in recent years. Norway will refund 78 per cent of qualifying exploration costs.

The Fenja deal will give Faroe cash that it can invest in developing its portfolio. It will also mean Faroe’s share of the cost of developing Fenja is reduced by around £160m.

Faroe has expressed interest in buying more producing assets in UK waters, partly to make the most of the tax losses it has accumulated.

The company submitted a development plan for Fenja to the Norwegian authorities in December, with partners. They hope to bring Fenja onstream in 2021, with an expected field life of 16 years.

Analysts at Numis Securities said the transaction successfully demonstrated the execution of the explore/appraise/sell business model.

They calculated the sale price equated to around $3.2/bbl for undeveloped reserves representing an “ok rather than high” valuation.

Panmure analysts said: “The fact that Suncor has been willing to step up to the plate in this way should also be positive for the perception of value around Faroe’s other development projects.”

The company is redeveloping the Njord cluster and working to bring the Oda field onstream off Norway.

Suncor said Fenja was a de-risked project that was expected to provide profitable growth in an area where it had existing knowledge, expertise and assets.

Faroe Petroleum shares closed up 8.5p at 99.7p leaving it with a capitalisation of around £365m.