THE Gambia’s government has approved FAR Limited’s February farmout of 40% of two of its offshore leases Blocks A2 and A5 to Malaysian oiler Petronas, though it will retain the same percentage and remain operator of the upcoming well that will appraise the potentially huge Samo prospect.
Helen Clark | 28 August 2018 | Source: Energy News Bulletin
Farther ahead in The Gambia as ministry approves farm-in from funder
Erin Energy has the remaining 20% and, although it is bankrupt is being carried by FAR.
The well is one of the most anticipated of the year according to analysts like Wood Mackenzie, and the junior say it has the potential to dwarf FAR’s already impressive oil finds in nearby Senegal where it has seen significant success.
The farmout has only now been formally approved by the Ministry of Petroleum and Energy and under the terms Petronas will fund 80% of the exploration well costs of Samo-1 to a maximum of US$45 million and will pay FAR a cash considering of $6 million and 80% of non-well back costs.
This was estimated at A$19 million at the end of June this year.
Managing director Cath Norman called the ministry approval a ‘milestone’ and said FAR was looking forward to working with Gambian stakeholders in drilling the nation’s first exploration well in close to 40 years.
The prospect has been independently assessed by RISC and is estimated to hold a best estimate of 825 million barrels across the two target intervals with a chance of geological success of 55%.
FAR has secured the Stena DrillMAX which will begin late in the year in 1000 metre deep water 25 kilometres from FAR’s huge SNE field in Senegal.
In a separate research note yesterday RBC Capital Markets rated FAR at outperform and said “in light of the high geological chance of success, the proximity to the SNE field, the scale of the prospect, the full carry from Petronas and the imminent spud date we feel it is appropriate to add some risked value to FAR for a potential Samo discovery”.
“Current exploration drilling may also increase the resource size. The region attracts big oil, and FAR has key relationships and strong strategic partnerships with operator Cairn Energy and recently CNOOC and Petronas,” RBC said.
Far was up this morning trading at 12.2cps.Back to previous page