The Government of The Republic of The Gambia has approved the assignment by FAR Gambia of a 40% interest in petroleum licences for offshore Blocks A2 and A5 to a subsidiary of Malaysia’s Petronas.
Under the terms of the farm-out agreement executed in February 2018, Petronas will fund 80% of the exploration well costs of the Samo-1 well up to a maximum total gross cost of $45 million, FAR said on Tuesday.
Earlier this month, following reprocessing and interpretation of 3D seismic data, detailed mapping of the Samo Prospect and detailed well engineering, FAR selected its final well location for the Samo-1 well.
In addition to the well costs, Petronas will pay FAR cash consideration of $6 million plus 80% of non-well back costs. The proceeds are subject to reconciliation and were estimated to be A$19 million at June 30, 2018. Petronas acquires a 40% working interest with FAR retaining 40% of its original 80% interest.
FAR’s Managing Director, Cath Norman, said, “By securing the approval of The Gambian Ministry of Petroleum and Energy, FAR has achieved another milestone towards its objective of drilling the substantial oil resource potential of the highly prospective Blocks A2 and A5 in The Gambia.
“We again thank the Gambia Ministry of Petroleum and Energy, the Gambia National Petroleum Company (GNPC), the Government of the Gambia and our broader Gambian stakeholders and look forward to working with them to drill Gambia’s first exploration well since 1979 with our coventurer, Petronas.”
FAR has secured a contract with a subsidiary of Stena Drilling who will provide and operate the Stena DrillMAX drillship to drill the Samo-1 well in late 2018. FAR estimates the Samo prospect contains prospective resources of 825mmbbls oil (best estimate, recoverable, 100%, unrisked).
FAR has identified and mapped an additional prospect (Bambo) and continues to interpret the seismic data in this highly prospective area with a view to revealing additional prospects and leads for future drilling.