Sign up Australia
Proactive Investors - Run By Investors For Investors

FAR prepares to drill for oil offshore The Gambia, backed by oil major PETRONAS

The Samo prospect in Block A2 is assessed by FAR to contain prospective resources of 825 million barrels of oil.
The Stena DrillMAX drillship to be used to drill the Samo-1 exploration well
The Stena DrillMAX drillship will be used to drill the Samo-1 exploration well

FAR Limited’s (ASX:FAR) high rating of the Samo oil prospect offshore The Gambia is shared by oil major PETRONAS, which is farming-in to the project in a deal worth up to US$53.6 million.

The world-class company is buying 40% of FAR’s 80% working interest in the Samo-1 exploration well by paying for 40% of total well costs to a cap of US$45 million.

It will also pay cash consideration of about US$8.6 million excluding its 40% share of ongoing operational and well costs until completion.

Industry expert Wood Mackenzie has ranked the Samo-1 well as one of the key wells to watch around the globe for 2018. The well will be drilled in the second half of the year.

READ: FAR advances opportunities in Senegal and The Gambia as oil price hits multi-year highs

FAR will remain operator through the drilling of the planned Samo-1 well, which is scheduled to begin by the end of 2018, and retain 40% working interest.

The farm-in agreement assigns PETRONAS a 40% interest in each of the highly prospective offshore petroleum licences, Blocks A2 and A5.

“Testimony to quality of opportunity”

Managing director Cath Norman said, “It is a testimony to the quality of the Gambian opportunity that FAR was able to farm-out to a company of the calibre of PETRONAS and we look forward to working with them going forward.

“The deal will formally close on Government of The Gambia approval, which is expected to by the end of the June quarter.”

FAR is the operator and has a 40% working interest in the A2 and A5 petroleum licences with PETRONAS holdings 40% and Erin Energy 20%.

55% chance of success

The Samo prospect in Block A2 is assessed by FAR to contain a best estimate (P50) prospective resource of 825 million barrels of oil with a 55% chance of success.

This high success chance is due to the adjacent discovery at SNE, in the neighbouring waters offshore Senegal, which is on trend and shares many similarities with Samo.

The Samo prospect is believed to be an extension of the SNE trend.

It is also attributable to the confidence FAR has developed in exploring in the play fairway, which is yet to experience a dry well.

First exploration well offshore since 1979

The company is making steady progress in preparation for the Samo-1 well, which will be the first exploration well offshore The Gambia since 1979.

It has awarded a contract to drill the Samo-1 well using the Stena DrillMAX drillship.

Attractive drilling contract

This has been finalised at a very attractive operating day rate in line with 2017 rates.

Stena DrillMAX is a state of the art, dual mast, dynamically positioned, deepwater drill ship with a rig crew that has extensive international and regional West African experience.

The vessel is a harsh environment dynamically positioned DP class 3 drillship capable of drilling in water depths up to 3,000 metres and at drilling depths to 10,700 metres.

“We are delighted to have secured the Stena DrillMAX,” Norman said, “as it was our rig of choice given it completed a highly successful, efficient and under budget drilling campaign for our Senegal joint venture in 2017.

“The FAR drilling management team consists of several personnel involved with the Senegal joint venture’s previous drilling campaigns,” she said.

“FAR was recently described as possibly Australia's best oil explorer for 10 years and we hope to add to our discovered, recoverable resource base with the Samo-1 exploration well.”

Healthy cash position

The company ended the March quarter with a healthy cash position of $40.38 million, which was ahead of forecast by $6 million, largely as a result of slowed expenditure in Senegal.

“A net spend of $100,000 is expected this quarter because we are expecting an inflow of $18.1 million from settlement of the PETRONAS farm-in,” Norman said.

View full FAR profile View Profile

FAR Ltd Timeline

Newswire
April 05 2017

Related Articles

Checking oil samples in front of tanks at Ungani project
May 07 2018
Cash on hand should gain momentum as production increases towards the target rate of 3,000 bopd.
oil wells
March 21 2018
"As a result, we have identified more than a dozen prospects, each of which has the potential to hold more than 20mln and 400mln barrels individually.
oil and gas operations
May 01 2018
It was a year of portfolio building and progress for the onshore UK-focused minor, punctuated by improved production volumes and a number of acquisitions with value-adding potential

No investment advice

The information on this Site is of a general nature only. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions. You acknowledge and understand that neither the Company, its related bodies corporate, the information providers or their affiliates will advise you personally about the nature, potential value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter. You should read our FSG and any other relevant disclosure documents and if necessary seek persona advice prior to making any investment decision.

You understand and agree that no Content (as defined below) published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person.

You understand that in certain circumstances the Company, its related bodies corporate, the information providers or their affiliates may have received, or be entitled to receive, financial or other consideration in connection with promoting, and providing information about, certain entities on the Site and in communications otherwise provided to you.

You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate. From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

Before you act on any general advice we provide, please consider whether it is appropriate for your personal circumstances.

© Proactive Investors 2018

Proactive Investors Australia PTY LTD ACN:132787654 ABN:19132787654.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use