The Gambian petroleum ministry has given the go-ahead for Malaysian oil and gas giant Petronas to team up with FAR Limited (ASX: FAR) in the drilling of a deepwater well off the West African nation.
Australian junior explorer FAR today announced The Gambian government’s approval of the terms of a farm-out deal made in February, in which Petronas would earn a 40% stake in offshore blocks A2 and A5 by funding 80% of the costs of drilling the Samo-1 exploration well.
Now that the deal has been approved, the partners can move forward with plans to drill the well, which FAR anticipates will spud early in the 2018 fourth quarter.
Petronas’ agreement to fund the Samo-1 well costs are capped to an amount of US$45 million. The state-owned major is also expected to pay FAR about A$19 million, made up of a cash consideration of US$6 million plus 80% of non-well back costs.
Under the agreement, FAR’s interest in the blocks would pare back to 40%, while US-based oil and gas company Erin Energy Corporation would retain its existing 20% stake.
Samo-1 location confirmed
Last week, FAR announced it had finalised the well location for the upcoming Samo-1 exploration well.
It will be the first well to be drilled offshore The Gambia for 40 years and will be located about 112km offshore in a water depth of about 1017m.
The Samo prospect has been assessed to contain a best estimate, unrisked prospective resource of 825 million barrels of oil.
It lies immediately to the south and along trend from the giant SNE oilfield in Senegal. This trend has seen nine successful exploration and appraisal wells to date.
The well site was selected following reprocessing and interpretation of 3D seismic data, along with detailed mapping of the Samo prospect and detailed well engineering.
FAR has contracted the Stena DrillMAX drillship to drill Samo-1, with spudding scheduled for early in the fourth quarter. The well is expected to take about 40 days to drill.
FAR Board changes
Earlier this week, FAR announced the resignation of executive director Ben Clube from the board and soon from the company.
The company told the market on Monday that following a review of the board composition, it was decided that “the independence of the board is best served by the managing director being the only executive on the board”.
The board will now comprise the managing director and its three existing non-executive directors, with no immediate plans to appoint further directors.
FAR shares rose 1.67% to A$0.122 on today’s news by midday trade.