FAR Ltd (ASX:FAR) made considerable progress during the half-year ending June 30, 2021, and is well-funded to advance operations to spud Bambo-1 exploration well in The Gambia during the December quarter of 2021.
This well is part of the 2021 work program for the A2 and A5 licences held offshore in The Gambia, where FAR is the operator and has a 50% working interest while Petronas has the remaining 50%.
Promisingly, following the sale of its Senegal interests, the company has no debt, with surplus cash that it has outlined to return to shareholders.
Senegal RSSD Project Sale
On July 7, 2021, FAR completed the sale of its interest in the FAR Senegal RSSD SA in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture to a member of the Woodside group, Woodside Energy (Senegal) BV.
The purchase price was US$45 million, plus a working capital adjustment of around US$167 million to reflect the acquisition effective date of January 1, 2020.
Final completion payment to FAR, after adjustments and remedying of FAR’s defaults under the joint operating agreement, was around US$126 million, which has been received.
Additional future payments to FAR - up to US$55 million - are contingent on future oil price and timing of first oil, which is targeted for 2023.
Net assets decreased during the half-year by $7.09 million to $135 million which was largely driven by the cash outflows related to payments in January 2021 of Senegal RSSD.
Cash at half year-end was $3.3 million with no external borrowings as of June 30, 2021.
Notably, exploration and evaluation assets increased by $1.2 million to $6.9 million predominantly relating to the Bambo-1 well
Bambo-1 well location.
During the period, FAR continued operational preparations for drilling the Bambo-1 well.
A contract for the drillship was executed during the June quarter and rig owner and operator, Stena, has advised the window for mobilisation of the Stena IceMax drillship to Gambia is currently between October 25 and November 7, 2021.
In early July, a bundled services contract with Schlumberger was executed for delivery of the drilling fluids and cement for drilling operations and rental of the wireline services and logging equipment for the well.
FAR expects to award contracts for helicopter services and marine support vessels that will transport crew and equipment to the drillship this quarter.
The Environment and Social Impact Assessment (ESIA) has been approved and a range of secondary level permits are in progress with the regulatory authorities of The Gambia.
Approved budget for the Bambo-1 well is US$51.4 million with US$9.5 million expended to July 31, 2021.
At 50% working interest, FAR’s share of the budgeted well cost is US$25.7 million with US$20.95 million yet to be spent with the company’s share of the well cost to be funded from cash at hand.
FAR is working with a new operator, PetroNor, to finalise the 2022 work program and budget for its operations at Guinea Bissau with approval expected by the end of October.
In addition, the company has completed the interpretation of the Davros Extension multiclient 3D survey, which has provided additional insight on the prospectivity of its exploration permit WA458-P, which is in the prolific oil-producing Dampier Sub-basin along Australia’s North-West Shelf.
Furthermore, FAR is undertaking success case planning in the event of discovery and continuing evaluation of the additional prospects in A2 and A5 (Jobo, Jatto and Marlo) in Gambia as well as reviewing opportunities for additional acreage in a success case.
The company has appointed Patrick O’Connor as the chairman of its Board of Directors.
This board now comprises independent non-executive directors O’Connor and Robert Kaye, together with managing director Cath Norman.