The company is also expected to drill the Samo-1 well in late 2018, which will be the first exploration well offshore The Gambia since 1979.
Both projects are progressing well, supported by buoyant oil prices which recently hit multi-year highs on renewed US sanctions against major crude exporter Iran amid an already tightening market.
SNE oil field offshore Senegal
FAR is progressing pre-development activities at the SNE oil field, offshore Senegal, along with joint venture operator Cairn Energy (LON:CNE) and others.
FAR has a 15% interest in the 350-square kilometre SNE field, which is estimated to contain 640 million barrels of oil.
The project has passed through the concept select stage and tenders have been released for the floating vessel and subsea infrastructure equipment.
Final investment decision expected by mid-2019
The development concept being considered by the joint venture is a standalone floating production storage and offtake (FPSO) facility offshore Senegal with subsea wells and infrastructure.
The project will be designed to allow flexibility for anticipated subsequent development phases with subsea tiebacks from other reservoir intervals and fields.
FAR is targeting an initial production rate of about 100,000 barrels of oil per day (bopd) and estimates up to 25 wells in the initial development phase.
The joint venture aims to submit the SNE Field Evaluation Report to the Senegal government by the end of June 2018 and the Exploitation Plan for development in September 2018.
FAR is targeting a final investment decision in mid-2019 and first oil between 2021 and 2023.
Offshore petroleum licences in The Gambia
FAR is the operator and has an 80% working interest in the highly prospective petroleum licences, A2 and A5 blocks offshore The Gambia, where they will be drilling the Samo-1 exploration well scheduled for late 2018 in the Samo prospect.
FAR estimates the Samo prospect to contain a best estimate, prospective resource of 825 million barrels of oil with a 55% chance of success (CoS).
The high chance of success is due to the adjacent discovery at SNE which is on trend and shares many similarities with the Samo prospect and the confidence FAR has developed in exploring in the play fairway which is yet to experience a dry well.
The company is making steady progress at the project and has awarded a contract to drill the Samo-1 well using the Stena DrillMAX drillship.
The deal has been finalised at a very attractive operating day rate in line with 2017 rates when the Stena DrillMAX successfully completed FAR’s 2017 drilling campaign offshore Senegal.
FAR has signed a farm-out deal with PETRONAS which will fund 80% of the total well costs of the Samo-1 exploration well up to a maximum total cost of US$45 million and pay other consideration to FAR of US$8.6 million.
As a result, FAR will remain operator through the drilling of the Samo-1 well and retain a 40% working interest.
The PETRONAS deal will formally close on receiving The Gambia government’s approval, which is expected in the June 2018 quarter.
Significantly, the farm-out to a company of the calibre of PETRONAS is a testimony to the quality of the Gambian opportunity.
Oil surges past US$70
The crude oil price recently rose to three-year highs past US$70 after US President Donald Trump revealed plans to withdraw from the Iran nuclear deal.
FAR’s share price has been increasing along with the oil price and is trading near 12-month highs of 10 cents.
Well-funded for exploration
FAR has entered the June 2018 quarter with a healthy cash position of $40 million.
The company has estimated a net spend of only $100,000 this quarter, as it is expecting an inflow of $18.1 million from the settlement of the PETRONAS deal.