Australia’s FAR Ltd has announced a farm in agreement for its three blocks offshore Senegal in West Africa to Cairn Energy PLC, a major UK listed oil and gas company.
Pursuant to the farm in agreement, which is subject to Senegalese Government approval, Cairn will operate and carry FAR through an exploration well expected to be drilled in early 2014.
Under the terms of the farm in agreement Cairn is to acquire a 65% working interest (WI) and Operatorship by fully funding 100% of the costs of an exploration well and testing to an investment cap of US$80 million. As part of the farm in agreement, Cairn will pay FAR US$9.8 million for past costs incurred on the block. FAR will retain a 25% Wl.
FAR’s three contiguous Senegalese blocks – Rufisque, Sangomar and Sangomar Deep – have significant exploration potential. The blocks cover an area of approximately 7,490km2 within the productive Mauritania-Senegal-Guinea-Bissau Basin. From 2,050 km2 of modern 3D seismic data acquired in the blocks, FAR has identified a number of play types and has mapped 11 potentially drillable prospects as well as numerous other leads, many supported by associated seismic amplitude responses. In combination, the Senegal blocks have prospective resources of 3.585 billion barrels of oil (unrisked best estimate, 100% basis).
After the carried well, exploration costs will be apportioned Cairn 72.2% (WI 65%) and FAR 27.8% (WI 25%). Petrosen (the Senegal National Oil Company) will continue to hold a carried 10% WI through the exploration phase in accordance with the Production Sharing Contract. In addition, FAR and Cairn will enter into an Area of Mutual Interest agreement (AMI) to work together to evaluate and consider applying jointly for exploration opportunities offshore Senegal.
FAR’s Managing Director Cath Norman said: “We are very pleased to have secured leading independent Cairn Energy as a farm in partner and Operator in our Senegal Project. With this agreement FAR has secured a highly experienced Operator to drill and fund it through the first exploration well to be drilled off the Senegalese coast for some years.
Success on this first exploration well would open up the significant exploration upside potential of FAR’s Senegal blocks in which FAR has identified and matured a very large prospect portfolio. With the Area of Mutual interest agreed with Cairn, FAR is also well positioned to build on and strengthen its existing acreage position in this emerging exploration arena in West Africa where it also holds acreage in neighbouring Guinea Bissau and AGC Profond.”