Senegal Approves FAR Farm In Deal with Cairn

FAR Limited  has secured Ministerial approval for its farm in agreement of its 3 offshore Senegal Blocks, to leading UK independent oil and gas company Cairn Energy PLC (Cairn).

The terms of the farm-in deal included:

• FAR being fully funded through a high impact exploration well ‐ expected early 2014

• FAR to be paid approximately US$10 million for back costs

• FAR and Cairn Energy PLC to enter into an alliance offshore Senegal

The farm in exploration well will intersect the Albian and Aptian shelf edge objectives and the “L” prospect has been targeted for drilling. Cairn estimates that the dual objectives of the L prospect have respectively unrisked mean prospective resources of 256 and 182 million barrels of oil on a 100% basis.  Under the terms of the farm-in agreement, executed in March 2013, Cairn will fully fund 100% of the costs of an exploration well and testing to an investment cap of US$80 million. As part of the agreement, Cairn will pay FAR US$9.8 million for past costs incurred on the block of which US$4.8 million is now due following the receipt of Ministerial approval. Cairn acquires a 65% working interest with FAR retaining a 25% interest and Petrosen a 10% interest.

Cairn has secured a long term contract with Transocean for the “Cajun Express”, a deep-water, 5th Generation, dynamically positioned, semi-submersible drilling rig for its multi-well frontier exploration programme in Senegal, Morocco and potentially other areas. The farm in exploration well in Senegal is currently scheduled for early 2014.

FAR’s three contiguous Senegalese blocks – Rufisque, Sangomar and Sangomar Deep – have significant exploration potential. The blocks cover an area of approximately 7,490 km2 within the productive Mauritania‐Senegal‐Guinea‐Bissau Basin. From 2,050 km2 of modern 3D seismic data acquired in the blocks, FAR identified a number of play types and has mapped 11 potentially drillable prospects as well as numerous other leads, many supported by associated seismic amplitude responses.

In addition, FAR and Cairn will enter into an Area of Mutual Interest agreement (AMI) to work together to evaluate and consider applying jointly for exploration opportunities offshore Senegal.

FAR’s Managing Director Cath Norman said: “By securing the prompt approval of the Senegalese Minister for the Cairn farm in agreement, FAR has achieved another milestone towards its ambition of drilling the substantial oil resource potential of these highly prospective offshore blocks.”

“FAR has been active in Senegal, one of Africa’s most politically and economically stable countries, since 2008. This experience has been critical in securing this approval and will enable FAR to play an active role supporting Cairn as operator. Cairn remains on schedule to drill an exploration well in early 2014.”