FAR Ltd (ASX:FAR) has taken another step towards drilling the oil & gas resource potential offshore The Gambia after securing government approval for a farm-out to major global oil industry player PETRONAS.
The Ministry of Petroleum and Energy has approved the assignment by FAR Gambia Ltd of a 40% interest in petroleum licences for offshore blocks A2 and A5.
Under the terms of the farm-out agreement executed in February 2018, PETRONAS will fund 80% of the exploration well costs of the Samo-1 well up to a maximum total gross cost of US$45 million.
FAR’s managing director Cath Norman said, “By securing the approval of The Gambian Ministry of Petroleum and Energy, FAR has achieved another milestone towards its objective of drilling the substantial oil resource potential of the highly prospective blocks A2 and A5 in The Gambia.
“We again thank the Gambia Ministry of Petroleum and Energy, the Gambia National Petroleum Company (GNPC), the Government of the Gambia and our broader Gambian stakeholders.
“We look forward to working with them to drill Gambia’s first exploration well since 1979 with our coventurer, PETRONAS.”
In addition to the well costs, PETRONAS will pay FAR cash consideration of US$6 million plus 80% of non-well back costs.
Proceeds are subject to reconciliation and were estimated to be A$19 million at June 30, 2018.
The farm-out will see PETRONAS acquire a 40% working interest with FAR retaining 40% of its original 80% interest as well as operator status.
PETRONAS and FAR plan to drill the Samo-1 well in late 2018 targeting a prospective resource of 825 million barrels of oil.
The A2 and A5 blocks are along trend from the SNE oil field in Senegal.
To carry out this work, FAR has secured a contract with a subsidiary of Stena Drilling which will provide and operate the Stena DrillMAX drillship.
This is a state of the art, dual mast, dynamically positioned, deepwater drillship with a rig crew that has extensive international and regional West African experience.
The Samo-1 well location has been selected to test the Samo prospect, which is immediately to the south and along trend from the giant SNE oil field in Senegal.
This trend has so far seen nine successful exploration and appraisal wells at a 100% success rate.
The well will be in approximately 1,017 metres water depth and 112 kilometres offshore in the highly prospective Mauritania-Senegal-Guinea-Bissau-Conakry (MSGBC) Basin.
Another prospect identified
In addition, FAR has identified and mapped another prospect, Bambo, which is northeast of Samo.
The company continues to interpret the seismic data in this highly prospective area with a view to revealing additional prospects and leads for future drilling.
FAR has advised that executive director Ben Clube has resigned from the board.
Following a review of board composition, it has been decided that the independence of the board is best served by the managing director being the only executive on the board.
Consequently, the board now comprises three non-executive directors and the managing director.
Clube will also shortly be leaving the company.
“In his various executive capacities, he has made a significant and important contribution to the commercial development of the company and displayed outstanding skill and dedication,” the company said in a statement.
“We thank him for his contribution to FAR’s success and we wish him well in the future.”