Highlights
- Completion of Senegal RSSD sale to Woodside and sale proceeds of US$126 million received
- Drilling of Bambo-1 well, offshore The Gambia, expected to commence 13 November
- Capital return to shareholders of A$0.80 per share completed, cash at end quarter US$64.7M
Projects update
The Gambia
Blocks A2/A5 (FAR 50% WI and Operator)
Operational and logistics planning for the drilling of the Bambo-1 well in offshore Block A2 are well advanced and the IceMax drillship is scheduled to be in Las Palmas in late October to complete preparations and loading before mobilizing to The Gambia. FAR has been advised that the spud date for the Bambo-1 well is planned for 13 November, 2021.
FAR contracted Exceed’s wells management team in Aberdeen to assist with the planning and execution of the well. All other major contracts for the Bambo-1 drilling project have been awarded, including the contract with Stena for the IceMax and with Schlumberger for bundled services. Contracts for marine support vessels and helicopter services have also been awarded. Most long-lead materials and supplies have been received and are now at several locations in readiness for the
operational phase of the project. The shore base for the project is located at Dakar, Senegal, and is now fully operational and ready to support the upcoming drilling activities.
The well is designed to drill into a series of vertically stacked targets (Figure 2) with a combined estimated recoverable, prospective resource of 1,118 mmbbls (arithmetic sum of the Best Estimates, unrisked, 100% basis with 559 mmbbls net to FAR*) as shown in Table 1 (Refer ASX releases dated 16 June and 21 September 2021).
The approved budget for the Bambo-1 well is US$51M with US$11.4M expended to date. At 50% working interest, FAR’s share of the budgeted well cost is US$25.5M with US$19.8M yet to be spent. FAR’s share of the well cost will be funded from cash at hand.
Outside well preparations for the drilling of the Bambo-1 well, FAR has completed success case planning in the event of a discovery. FAR is also continuing evaluation of the additional prospects in A2 and A5 (Jobo, Jatto and Malo) as well as
reviewing opportunities for additional acreage in a success case. Success in the Bambo-1 well will high grade these other prospects for drilling in the future.
Senegal
Rufisque, Sangomar and Sandomar Deep (FAR 0.0% Working Interest (WI))
On 19 January 2021 the FAR group executed a Sale and Purchase Agreement with Woodside in relation to FAR’s Senegal RSSD asset.
Formal completion of the sale took place on 6 July in Senegal and monies were received by FAR in Australia on 7 July. As consideration for the sale Woodside has paid FAR US$45 million and reimbursed FAR’s share of working capital for the RSSD Project from 1 January 2020 of approximately US$82 million, totalling US$126 million (including deductions for interest charged on outstanding cash calls).
Following the completion of the sale to Woodside, FAR has no remaining interest in the RSSD licences offshore Senegal.
Pursuant to the Sale and Purchase Agreement with Woodside, future payments to FAR, up to US$55 million, are contingent on future oil price and timing of first oil. First oil is targeted for 2023.
Guinea-Bissau (FAR 21.43% WI)
The Sinapa (Block 2) and Esperança (Blocks 4A and 5A) licences in Guinea-Bissau have been extended for 3 years and are valid until 2 October 2023 during which time there is an obligation on the Joint Venture to drill a exploration well. FAR is working with the operator, PetroNor, to finalise the 2022 work program and budget for approval and finalization by the middle of December. FAR remains open to farming down it’s interest prior to drilling a well.
PetroNor and FAR are undertaking a full review of a potential well location for the 2023 program with the Atum Propsect the key drill target (mapped to contain Best Estimate Prospective Resource of 471 mmbbls, gross, unrisked, 235 mmbbls net to FAR*)
The Operator is also undertaking a review of the commerciality of the Sinapa discovery in the offshore shallow water. Sinapa contains 13.4 mmbbls of oil with 2.9 mmbbls net to FAR in 2C contingent resources (Best Estimate*). In addition, there is an estimated 72 mmbbls of propective resource in the West and East Sinapa Prospects that are able to be tied into a potential development at Sinapa (Best Estimate, unrisked, 15.4 mmbbls net to FAR*).
NW Shelf (Australia 100% WI and Operator)
Through its wholly owned subsidiary, Lightmark Enterprises Pty Ltd, FAR has a 100% interest in Petroleum Exploration Permit WA-458-P, which is in the prolific oil-producing Dampier Sub-basin along Australia’s North West Shelf.
Divestment activities for some or all of FAR’s interest in WA-458-P is ongoing. FAR has a “drill or drop” obligation on the licence in early 2023.
Community and Social Projects
During the quarter, FAR, on behalf of The Gambian joint venture partners, continued works on the Ndemban Clinic which is being converted into a COVID-19 testing and treatment center. The project involves the repairs and refurbishment to several buildings and upgrades to the water supply system. The project is now mostly completed, and the clinic has been put into service. Finishing touches to the project will be completed in the next month.
Corporate
On 1 July FAR announced the resignation of non-executive chairman, Nicholas Limb, and non-executive director, Reginald Nelson coincident with the appointment of Patrick O’Connor (non-executive chairman) and Robert Kaye SC (non-executive director) to the FAR board.
Early in the quarter the 1:100 share consolidation approved by shareholders at the Company’s AGM was finalized. FAR now has 99,790,492 shares on issue.
FAR shares recommenced trading on the ASX on 23 July following the sale of the Senegal project. FARs shares had been suspended from trading since September 2020.
Following receipt of the RSSD sale funds on 7 July, the FAR board completed a capital management review, and, taking into account committed exploration costs and working capital requirements, determined that the surplus, being approximately A$80M (at the rate of $A0.80 per share), should be returned to shareholders by way of capital return. Shareholders approved the capital return at a General Meeting held on 15 September and payment was made on 28 September.
Following the end of the quarter, FAR announced on 13 October that the ATO had published a class ruling confirming that no part of the Capital Return will be assessable as a dividend. The Ruling also confirms that qualifying shareholders will be entitled to treat any resulting capital gain as a discount capital gain and that certain foreign resident Shareholders will be entitled to disregard any resulting capital gain or loss.
FAR’s share of the forthcoming Bambo-1 well, contingency, success case options as well as expenditure on other assets and general administration costs will be funded from the remaining cash at hand. FAR estimates a year end cash balance of approximately US$48M with approximately US$6M of Bambo-1 well costs to be paid in Q1, 2022.
The Company has taken steps to reduce overheads and expects quarterly employment, administration and corporate costs going forward to average approximately US$1.25M.
