The government of The Gambia has approved FAR Limited’s acquisition of 80 percent interest in offshore Blocks A2 and A5 from Erin Energy Corporation.
To remind, FAR bought 80 percent interest and operatorship of Erin Energy’s two offshore blocks, close to the SNE discovery offshore Senegal, back in March 2017.
Under the terms of the agreement, the stake in the blocks was acquired by a wholly owned subsidiary of FAR, for an upfront payment of $5.18 million and will fund up to $8.0 million of Erin’s share of the cost of an exploration well. If Erin’s share of the well costs is less than $8.0 million, the remaining amount will be paid in cash. Erin will retain a 20 percent working interest in the blocks.
FAR said on Monday that the acquisition was a significant expansion of the company’s exploration portfolio in the rapidly emerging offshore Mauritania-Senegal-Guinea-Bissau (MSGB) Basin in West Africa.
The blocks cover an area of approximately 2,682 square kilometers and lie approximately 30 kilometers offshore in water depths ranging from 50 to 1,200 meters. A2 and A5 blocks are adjacent to FAR’s SNE oil field discovery, and the company believes they have significant exploration potential with prospective resources of more than one billion barrels of oil.
From 1,504 square kilometers of modern 3D seismic data acquired in the blocks, FAR has identified large prospects similar to the “shelf edge” plays FAR is targeting in Senegal and has mapped three potentially drillable prospects and leads.
FAR added that it, in cooperation with Erin, itexpects to undertake 3D seismic reprocessing and interpretation during 2017 to mature prospects for drilling in late 2018.
FAR’s share of the cost of the exploration well is expected to be between $25 and $30.0 million. Drilling of the well will satisfy the current period work commitments for both A2 and A5 blocks. FAR added that it had issued a parent company guarantee in favor of the government of The Gambia in accordance with the Blocks A2 and A5 license terms.
The well has to be drilled before December 31, 2018, or a later date if the current license periods are extended. The well can be carried out in either Block A2 or Block A5.
FAR Managing Director Cath Norman said: “FAR is very grateful to have received formal approval from the Government of the Republic of The Gambia for this assignment of interest to FAR. Our discoveries immediately to the North in offshore Senegal provide significant encouragement for the future discovery of oil and gas in Blocks A2 and A5 in The Gambia.
“The significant prospectivity that we have identified in Blocks A2 and A5 are analogous play types to those successfully drilled by FAR in Senegal providing high potential to create value for both the people of The Gambia and FAR shareholders.”