Continental Focus, International Reach

FAR Gives Nod to CNOOC/Svenska Deal

Wednesday, August 7, 2019

FAR Limited gave its approval for Svenska Petroleum Exploration to transfer 55.55% participating interest in the highly prospective Sinapa and Esperanca petroleum licenses offshore Guinea-Bissau, to CNOOC West African Petroleum E&P.

FAR will retain its 21.42% participating interest in each of the licenses.

Under the terms of the farm-out agreement, CNOOC will be assigned a 55.55% participating interest in the Sinapa and Esperanca licenses, with the obligation to fund 55.55% of all expenditures under their respective Agreement for Joint Venture Participation (AJVP) and Joint Operating Agreements (JOAs). CNOOC’s interest will convert to a 50.0% participating interest in each of the licenses in the event of a commercial discovery.

Svenska will retain a reduced 23.03% participating interest and shall continue to act as operator while CNOOC, upon conclusion of the upcoming offshore drilling campaign, may elect to assume operatorship. Completion of the farm-out agreement is subject to approval from the Government of the Republic of Guinea-Bissau and customary Joint Venture consents, which under the AJVP, is not subject to pre-emption rights.

Svenska will continue to operate the exploration licenses as the JV prepares to drill the first ever deepwater exploration well offshore Guinea-Bissau in Q1 2020. Subject to receiving regulatory approvals, the transaction is expected to close in Q3 2019.

Past offshore exploration in Guinea-Bissau had initially concentrated in shallow waters less than 200 meters targeting a variety of salt diapiric-related features. Drilling to date has encountered excellent quality reservoir sands across multiple intervals exhibiting abundant oil and gas shows. The Sinapa permit has two discoveries, with light oil having been recovered to surface from both those locations. The most significant of the two being the Sinapa discovery with contingent resources of around 13.4 million barrels of recoverable light oil.

The JV is advancing preparations for drilling of the Greater Atum prospect in early 2020, which will be the first offshore exploration well drilled since 2007 and the first ever deepwater exploration well offshore Guinea-Bissau. The Greater Atum prospect is a recognized shelf-edge play analogue of the giant SNE oil field offshore Senegal and has a best estimate prospective resource of 471 million barrels.

FAR’s Managing Director Cath Norman said, “We look forward to progressing the Guinea-Bissau acreage now that CNOOC have farmed into the project. Attracting a National Oil Company such as CNOOC shows the confidence that another major company has in FAR’s Guinea-Bissau acreage. CNOOC brings a wealth of technical and operational expertise and experience and we look forward to finalizing the details of the future drilling plans that are expected to begin early 2020. We welcome CNOOC to the Joint Venture and look forward to a long and successful relationship.”