FAR signs second farm-in on Senegal assets
PERTH (miningweekly.com) – ASX-listed oil and gas developer FAR has signed a second farm-in deal over its offshore Senegal oil exploration permits, this time with giant ConocoPhillips.
The ConocoPhillips deal, which was still subject to government approval, comes shortly after FAR announced a farm-in agreement with the UK’s Cairn Energy.
Following the two farm-in agreements, FAR would have secured funding for a two-well offshore campaign, which amounted to an investment of some $190-million.
“This second farm-in is further significant recognition of the value of our offshore Senegal permits. ConocoPhillips brings world-class financial and technical strength to our Senegal joint venture,” said FAR MD Cathy Norman.
“It also has significant deep-water development expertise in the event of a discovery,” she added.
Norman noted that drilling of the two exploration wells, which was targeting around one-billion barrels of unrisked prospective resource, would take FAR a significant step closer to evaluating the exploration potential of its Senegalese acreage.
“Success in either of these two wells will likely have a profound impact on the value of FAR,” she said.
Under the transaction, ConocoPhillips would earn a 10% working capital position in the project by providing the funding necessary to carry through a second exploration well.
The funding would be provided through a combination of cash payments and well cost carry payments, and was expected to fund FAR’s 15% working interest on the exploration well.
The Cairn farm-in, in turn, would see the UK firm fund 100% of the costs of an exploration well and testing to an investment cap of $80-million. In addition, Cairn would pay FAR $9.82-million for past costs incurred on the block.
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