The government of Guinea-Bissau has approved FAR Limited’s equity increase and change in terms for the country’s offshore licenses.
The Australian oil and gas company informed on Friday it has received official confirmation that the increase in equity and amendments to the Guinea-Bissau licenses announced on April 4, 2017, have been approved by Government Decree.
These changes to license terms are consistent with FAR’s strategy to focus on the shelf edge areas of the Sinapa and Esperanca Licenses which display a similar geological setting to offshore Senegal and FAR’s enormous SNE field discovery, FAR explained.
In early April, negotiations concluded with the National Oil Company of Guinea-Bissau, Petroguin, to revise the terms of both the Sinapa and Esperanca Licences to which FAR has interests.
Under the revised license terms negotiated by FAR and its joint venture partner Svenska Petroleum Exploration, FAR now has a 21.42% participating and paying interest in the permits, an increase from the 15% participating and 21.42% paying interests.
These changes reflect the fact that Petroguin will no longer have a participating interest in the joint venture prior to a commercial discovery. Upon making a commercial discovery, Petroguin will have a reduced participating and paying interest of 10% and FAR and Svenska will respectively have interests of 19.28% and 70.71%.
In addition, the new license terms negotiated include more favorable arrangements for deep water investment including a reduction to production royalty rates payable to government. The Joint Venture has also been awarded a three-year extension to the current license periods, now ending on November 25, 2020.
During these license periods, the Joint Venture will drill one exploration well on each license with a minimum expenditure commitment for each license of $3 million (gross). These changes in the terms of the licenses have been now been approved by Government Decree.
FAR Managing Director, Cath Norman, said: “We are very pleased to have concluded the approval process to ratify the increase in equity and change in terms for the Guinea-Bissau licenses. FAR has previously mapped a 470mmbbls prospect called Atum on the Guinea-Bissau shelf edge in a play similar to the large SNE discovery made by FAR and it’s Senegal partners in 2014.
“It is testimony to the close working relationship that FAR and Svenska have with Petroguin, that these agreed license changes including the 3 year extensions, provide a strong basis to proceed with deep water exploration work program and investment. FAR looks forward to working with Svenska and Petroguin leading up to drilling our first exploration well offshore Guinea-Bissau.”