Pan-North Sea Independent

Funding the Future

Oil and Gas UKBreakfast Briefing - 23 August 2016

Faroe has developed a geographically focussed exploration-led and

production-backed strategy which is delivering exceptional results

Outstanding, diversified full-cycle portfolio of assets High quality large exploration acreage position in Norway Ongoing fully-funded, multi-well, sustainable drilling programme Several significant discoveries maturing towards development Material, well balanced and tax efficient production – generating cash Strategically well positioned

Balance sheet strength Robust balance sheet, with strong cash position, low gearing and

significant debt facility

Benefiting significantly from 78% tax refund incentive for Norwegian

exploration

Faroe’s world class sub-surface competence is at the heart of our

success

Faroe is robust and well positioned for growth in a low commodity

price environment

Faroe is well capitalised and on track to become a leading independent E&P player in the North Sea

Faroe overviewIntroduction

2

Faroe’s growth modelBuilding core value and scale

3

Maintain significant portfolio of Prospective Resources Participate in Licence Rounds – excellent track record of awards Proactive approach to farm-ins/farm-outs

Grow 2C Contingent Resources High-graded, high-quality programme of E&A wells Optimum working interests and good success rate (1 in 3) Low finding costs of c$1.5/boe

Grow 2P Reserves Progress discoveries to FDP sanction Participate prudently in robust development projects Swap 2C contingent for 2P reserves where appropriate

Grow Profitable Production Exploit market opportunities through acquisitions & swaps Invest in our producing fields where appropriate

Prudent financial management Ensure balance sheet strength at all times

Production and Development assetsBuilding production base and growing reserves

Diversified production base (50:50 Norway/UK and 50:50 oil/gas) with infill and near-field upside potential to boost production

Lowered opex and long life assets

2P Reserves almost doubled since last year from 30.6 to 57.4mmboe

Strong balanced production, well performing assets, low opex per boe

Brage

(Faroe: 14.26%)

Oil field in Norwegian North Sea – Wintershall-operated

Two successful infill wells in 2015 – new programme being planned

Butch

(Faroe: 15%) Development project in Norwegian North Sea – Centrica-operated

FEED project ongoing - FDP submission planned for end of 2016

Njord/Hyme/ Snilehorn

(Faroe: 7.5%)

Oil and gas field in the Norwegian Sea – Statoil-operated

Production suspended in June - Njord Future project underway

Pil

(Faroe: 25%) Oil and gas field in the Norwegian Sea – VNG-operated

Feasibility confirmed for both subsea satellite and stand alone solutions

Ringhorne East

(Faroe: 7.8%) Oilfield in Norwegian North Sea - Exxon-operated

Low operating cost, stable production

Blane

(Faroe: 30.5%) Oilfield in Central Graben UK - Repsol-operated

Low operating cost, stable production

Schooner & Ketch

(Faroe: 60%)

Gas fields in the UK Southern Gas Basin – Faroe-operated

Stable gas production – gas sold into the UK market

Total: 57.4 mmboe

4

Brage

NjordAreaPil

RinghorneEast

ButchBlane

Schooner& Ketch

Butch (Norway) – development plannedExcellent value creation opportunity

Butch oil field (Faroe 15%), operated by Centrica

Southern North Sea, 66m water depth

Close to infrastructure - Ula and Gyda

Excellent quality reservoir, light oil

Development project – planning work ongoing

Project passed concept selection in H2 2015

Selected concept:

Subsea tie-back to Ula via Oselvar

Two production wells and one water injection well

2P Reserves of 42 mmboe (gross)*

Expected on stream in 2019 - plateau production of approx. 35,000 boepd gross (5,250 boepd net to Faroe)

Front End Engineering and Design project on track

Subsea and drilling costs major part of capex – to benefit from reduced market rates

FDP submission currently planned for end 2016

5Exciting material sub-sea oil field development will benefit from significantly lower capex

* CPR Jan 2016 (Senergy)

Greater Njord Area Strategic position – material value potential in GNA

GNA has yet to be produced reserves in excess of 300mmboe

Njord/Hyme/Snilehorn over 200mmboe gross (Faroe over 15mmboe net)

Pil/Bue/Boomerang 80-200mmboe gross (Faroe 20-50mmboe net)

Njord Future Project: Njord, Hyme, Snilehorn

Njord facility to be refurbished and upgraded

‒ Production stopped June 2016

FDP scheduled for early 2017

First production targeted for 2020/21

Pil, Bue and Boomerang (Faroe 25%) – 2014 and 2015 Faroe discoveries

Reserve range from 80 to 200mmboe gross

Faroe 25% in area equates to 20 to 50mmboe net

Pil development maturing towards concept selection

‒ Njord and Draugen identified as possible export routes

‒ Competitive dynamic around export routes can be leveraged to achieve low cost development

Potential for significant further resource additions through follow-on exploration

Njord – Statoil operated Draugen – Shell operated

6Significant value creation opportunity with material reserves – benefits from reduced costs

CPR Jan 2016 (Senergy)

Recent Faroe transactionAcquisition of Norwegian production portfolio – creates new hub for Faroe

7

Transaction overview:

Faroe has agreed to acquire a package of assets from DONG Energy for cash consideration of $70.21mm, effective 1 Jan-16 1

Package includes tax balances of $109mm with a tax value of $84mm (undiscounted)

2015 unit opex of $19/boe for the package 2

Investment programme in hub area being planned to realise material upside and extend field life

Ula Tambar Oselvar Trym Total

Faroe W.I. 20.0% 45.0% 55.0% 50.0%

Operator BP BP Faroe Faroe

2P Reserves*

8.3mmboe

6.4mmboe

1.3mmboe

3.8mmboe

19.8mmboe

2C Resources*

7mmboe

2mmboe

--2

mmboe11

mmboe

2016 4 mthsProduction

2,200 boepd

2,593boepd

1,125boepd

4,064boepd

9,982 boepd

$7,033per boe

2016 4 months production

$3.5per boe

2P Reserves

$2.3per boe

2P + 2C Resources

* CPR Jun 16

1 Acquisition subject to the waiver of pre-emption rights, governmental approvals and other third party consents2 Calculated by Faroe based on information made available by Dong. Excludes insurance costs

Very active programme – fully funded with significant upside potential

E&A Drilling activityHigh quality, flexible exploration, appraisal and infill programme

8

All exploration wells are in Norway – benefiting from 78% tax rebate incentive

Further attractive exploration well opportunities are being matured like Rungne, Frisbee and Yoshi

Faroe continues to build its portfolio of exploration licences organically

‒ 5 APA exploration licences won in Norway in January 2015 and a further 6 in January 2016

Economic robustness is a crucial element of pre-commitment screening work

committed

expected

possible

Prospect Equity

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Brasse 50 %

Brasse sidetrack 50 %

Njord NF2 7.5%

Dazzler/Bonè 20 %

Oshun 20 %

Dobby 7.5%

Aerosmith/Iris 20 %

Fogelberg appraisal 25 %

Cassidy 15 %

South East Tor 85 %

2016 2017 2018

31/7-1 A

31/7-1

Brage

Oseberg

South

Located in Greater Brage area – Faroe core hub

Faroe-operated well (Faroe 50%)

Good quality Jurassic reservoir sandstones, analogues to the effective reservoir at the Brage producing field

Gas and Oil

Preliminary analysis indicate oil and gas in Brasse to be of similar quality to the oil and gas produced at the Brage field

33 deg API oil

Size of the Brasse discovery

In aggregate oil equivalents: 43-80 mmboe

Funded 78% by Norwegian State under tax incentive scheme

Well cost to Faroe under £3m (post tax)

Recent significant new oil field discovery by Faroe - BrasseMid-Norway

9

Funding the future

10

11

Leverage in a low oil price environment

Many North Sea E&P players raised substantial amounts ofdebt prior to the decline in oil prices in mid-2014, capitalisingon a buoyant pricing environment to fund development andexpand production with minimal dilution

However, gearing up at $100+ pricing means many are nowover levered

Significant risk identified among North Sea players

Excessive debt levels have created significant issues for someof these companies, including:

- covenant breaches and covenant renegotiations with banks

- constrained access to equity and debt capital withadditional debt being unsustainable and declining marketcapitalisations meaning using equity to pay down debtbecomes unfeasible

- limited balance sheet flexibility to fund sanctioned projects

Leverage among North Sea E&P players

Source: Companies’ financial statements, Reuters Eikon

561%

502%

347%

189%

99%69%

-28%-60%-100%

0%

100%

200%

300%

400%

500%

600%

Net debt/equity value

11.7x

8.1x

4.6x

3.5x 3.3x2.3x

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

Net debt/ EBITDA

Leverage of comparable North Sea companies

Net debt to EBITDA multiples

Source: Companies’ financial statements, Reuters Eikon

12

Leverage among North Sea E&P players

-100

200

500

800

1,100

1,400

1,700

2,000

2,300

2,600

2,900

USD m

Net Debt Equity Value

0.0

1.2

2.4

3.6

4.8

6.0

7.2

8.4

9.6

10.8

USD bn

Source: Companies’ financial statements, Reuters Eikon

Equity and enterprise value of comparable North Sea companies

Value curve for E&PSources of finance for each phase

13

Exploration Appraisal Development Production

Value growth

Capital required

• Equity• Cashflow (if any)• Private Equity• Norwegian tax*• Seed Capital

• Equity• Cashflow (if any)• Private Equity• Norwegian tax*• Specialist finance• Contractor finance

• Equity• Cashflow (if any)• Private equity• Bank RBL• Bond• Contractor finance• Commodity finance

• Equity• Cashflow • Private Equity• Bank RBL• Bond• Contractor finance• Commodity finance

* Norway only (pre-development)

High risk Low riskLow riskMedium risk

Sources of financeIssues to consider

14

Status of capital markets

Equity – currently somewhat challenging – waxes and wanes however – «good deals always get funded» - US needs bigger companies Debt – RBL banks «open», but less so for new clients and weaker portfolios; Bond market currently closed (unless >12-14% coupon)

Listed vs private

Different appeal to different sources Listed companies «may» offer liquidity, but regulated, AIM market not universally popular among investors – regarded as «spivvy» Private companies offer investors limit liquidity but greater control Challenge for equity investors of real equity growth potential and exit routes Risk of non payment/default for debt providers (RBL, bonds etc.) Many companies have performed badly and some have gone bust This impacts availability of finance to large degree (risk aversion)

Nature of opportunity

Geography » exploration » appraisal » development » production » late life » abandonment Different appeal to different sources

Current trends

Current reluctance for capital markets to fund development (with exception of PE), preferring (profitable) production, and even limited exploration New starts currently seem limited to PE backers

Risk appetite

Has become more challenging in recent times, except among counter-cyclical players (bargain hunters, seeking distress/corporate exit)

Commodity price

Massive impact on today’s capital markets; no let up in sight (yet)

Portfolio balance

Debt providers see portfolio balance and risk diversification Equity providers also seek this but in some cases prefer heavy exposure to single assets

Commerciality

Commerciality of assets becoming key – not only on opex basis but full cycle (to achieve real returns)

Summary and outlookStrategically well placed for growth - financially and operationally robust

Solid and proven business model delivering sustainable value growth, through drill-bit and transactions

Exploration-led strategy continues - underpinned by production and Norwegian tax rebate – recent Brasse discovery

Balanced and diversified portfolio - world-class technical team

Financially robust and operationally strong at low commodity prices

Robust balance sheet, prudent financial management

Production-generated cash flow – benefit from low unit opex

Forward programme is material yet relatively low cost and benefits from Norwegian State refund

Continuing high potential E&A programme in Norway on track, fully funded: Brasse ongoing and Njord North Flank to drill

Capex in 2016 est. £32m (post tax):

Progressing Butch and Pil towards development decisions

Progressing Njord Future Project

Planned growth

Strong balance sheet ensures we are positioned to pursue multiple routes to create value

Actively pursuing growth in 2P and value near term through potential acquisition/consolidation opportunities

Strength in new era, high upside, funded programme & exciting growth opportunities 15

Differentiators

Excellent asset monetisation track record

Production field operator

Financial strength and prudenceExcellent exploration track record -

multi-well programmeExperienced management

& clear strategy

Strong Norway position

16

Graham StewartChief Executive Officer

• Instrumental in founding Faroe Petroleum in 1998

• Over 25 years’ experience in oil and gas technical and commercial affairs

• Previously finance director and commercial director at Dana Petroleum 1997 to 2002

• Experience with Schlumberger, DNV Technica, Petroleum Science & Technology Institute

• Offshore Engineering degree (Heriot-Watt University) and MBA (University of Edinburgh )

Helge Hammer Chief Operating Officer

• Joined Faroe Petroleum in 2006

• Over 25 years’ technical & business experience, incl. Shell (Norway, Oman, Australia and Holland)

• Managing Director of wholly owned Norwegian subsidiary, Faroe Petroleum Norge AS

• Previously Asset Manager and Deputy Managing Director at Paladin Resources

• Economics degree (Institut Français du Pétrole, Paris)

• Petroleum Engineering degree (NTH University of Trondheim)

Jonathan Cooper Chief Financial Officer

• Joined Faroe Petroleum as Chief Financial Officer in July 2013

• Former Finance Director of Gulf Keystone Petroleum and Sterling Energy and CFO of Lamprell plc

• Former Director of the Oil and Gas Corporate Finance Team of Dresdner Kleinwort Wasserstein

• Broad range of experience from mergers and acquisitions, public offerings and financing

• Chartered accountant by training having qualified with KPMG

• PhD Mechanical Engineering (University of Leeds)

Executive team

17

These materials do not constitute or form any part of any offer or invitation to sell or issue or purchase or subscribe for any shares in Faroe Petroleum plc (the “Company”) nor shall they or any part of them, or the fact of their distribution, form the basis of, or be relied on in connection with, any contract with the Company relating to any securities. Any decision regarding any proposed acquisition of shares in the Company must be made solely on the basis of public information on the Company. These materials arenot intended to be distributed or passed on, directly or indirectly, to any other persons. They are available to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any other purpose.

No reliance may be placed for any purpose whatsoever on the information contained in these materials or on their completeness. Any reliance thereon could potentially expose you to a significant risk of losing all of the property invested by you or the incurring by you of additional liability. No representation or warranty, express or implied, is given by the Company, its directors or employees, or their professional advisers as to the accuracy, fairness, sufficiency or completeness of the information, opinions or beliefs contained in these materials. Save in the case of fraud, no liability is accepted for any loss, cost or damage suffered or incurred as a result of the reliance on such information, opinions or beliefs.

Certain statements and graphs throughout these materials are “forward-looking statements” and represent the Company’s expectations or beliefs concerning, among other things, future operating results and various components thereof, including financial condition, results of operations, plans, objectives and estimates (including resource estimates), the Company’s anticipated future cash-flow and expenditure and the Company’s future economic performance. These statements, which may contain the words “anticipate”, “believe”, “intend”, “estimate”, “expect” and words of similar meaning, reflect the directors’ beliefs and expectations and involve a number of risks and uncertainties as they relate to events and depend on circumstances that will occur in the future. Forward-looking statements speak only as at the date of these materials and no representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. The Company expressly disclaims any obligation toupdate or revise any forward-looking statements in these materials, whether as a result of new information or future events.

If you are considering buying shares in the Company, you should consult a person authorised by the Financial Conduct Authority who specialises in advising on securities of companies such as Faroe Petroleum plc.

Disclaimer

18