Faroe Petroleum has augmented its North Sea portfolio by trading a stake in one promising block for an interest in a neighbouring area which contains a discovery.

In a deal that typifies the horse-trading common among investors in the North Sea, Aberden-based Faroe has participated in a cross assignment of interests between investors with stakes in two licenses covering acreage in the Moray Firth off north-east Scotland.

The deal will see Faroe swap a 25% interest in licence P1404, containing the West Halibut prospect, for a 25% interest in license P1459. This contains the Fat Cat prospect, which was discovered by Amoco in 1981 in relatively shallow depths.

Graham Stewart, chief executive of Faroe, said: "This is an exciting prospect, which is large and has been de-risked by a well drilled previously on the same structure, which, despite encountering hydrocarbons, was not tested at the time."

He said Fat Cat lay close to production infrastructure and benefited from a strong and experienced operator, Petro Canada. The Canadian company has had considerable success in the Moray Firth area, It had a 29% stake in the giant Buzzard field when it came into production last January.

As a new seismic survey has already been acquired, the partners expect to decide on the feasibility of drilling on Fat Cat by the end of 2009.

Petro Canada now has 45% stakes in both licences.

Faroe currently has 25% of each licence. First Oil has an option to acquire half of Faroe's interest in both licences in connection with a farm-in agreement on the Wissey gas field.