Drilling starts at FAN-1 well offshore Senegal

Drilling has started on the offshore exploration well, FAN-1, offshore Senegal in which FAR Ltd holds a 15% interest (Cairn Energy PLC 40%, ConocoPhillips 35%, Petrosen 10%).

The well will test a stacked fan structure with the potential to contain approximately 900 million barrels of oil (mmbbls) with approximately 135mmbbls net to FAR.

The well will be drilled using the fifth generation rig, the Cajun Express, which arrived on site Saturday 12th April.

FAN-1 is the first exploration well in a two well programme, offshore Senegal with the wells to be drilled back to back. The first well will be located on the North Fan prospect in 1,500m water depth. This well will be immediately followed by a second exploration well targeting a shelf edge prospect in 1,100m of water (Seefigure 1).

These will be the first deep water (>1,000m) wells drilled in Senegalese waters and the first offshore wells to be drilled for over 20 years.

The two exploration wells will test combined prospective resources of approximately 1.5 billion barrels of unrisked prospective resources (225 mmbbls net to FAR) and FAR retains a 15% working interest in the blocks.

In accordance with the terms of farm out deals completed with Capricorn Senegal Limited (a 100% subsidiary of Cairn) and ConocoPhillips, FAR has successfully secured its share of funding for these two exploration wells.

Based on current well cost estimates, the carry funding and cash payments that FAR has or will receive under the farm out agreements are expected to be in excess of FAR’s share of the combined well costs for the two wells.

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Press Release, April 17, 2014