The joint venture project, which was the world’s largest conventional oil discovery in 2014, is today recognised as a global tier-one oil field with 2C oil resources in excess of 640 mmbbls.
SNE will deliver FAR a net 13,670 bbls/day of oil production at US$$11 bbl OPEX and the unlevered project internal rate of return (IRR) is in excess of 30%.
FAR managing director Cath Norman said, “Given the strong economics for the development, the value of FAR’s share of the SNE field is forecast to triple in value between now and first oil.
“This is a terrific result for FAR shareholders, especially given this estimate does not take into account the anticipated upside opportunities that are anticipated through the development.”
A key change to previous guidance on total capex for the development has been due to the shift from a leased FPSO (opex) to a purchased FPSO (capex).
As a result, it is likely that a larger proportion of the total capex will be debt-funded.
“The release of the economics for the development of the SNE oil field marks an important milestone for FAR, the Government of Senegal and the RSSD Joint Venture,” Norman said.
“The JV will now progress the final submission of the Development and Exploitation Plan for the SNE Field to the Minister of Energy in Senegal and anticipate approval of the plan by Presidential decree before the end of the year.
“The finalisation of the economics also allows the JV partners to conclude funding arrangements and FAR looks forward to updating shareholders in the coming weeks.
“On successful completion of the financing for the development, FAR will be fully funded through to first oil from SNE in late 2022.”
Formal government approval of the Development and Exploitation Plan (EP) and Final Investment Decision (FID) is anticipated in December 2019 with first oil forecast in late 2022.
Norman said, “FAR’s transition to being an oil producer is an exciting one – and will see FAR become a material Australian listed oil producer from 2023.”