Petroleum Africa
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Friday, April 18, 2014
FAR Ltd. reported that one of its partners in Senegal, operator Cairn Energy, has spud the first well on the acreage. The first well in a two-well program, the FAN-1, will test a stacked fan structure with the potential to contain approximately 900 million barrels of oil. The well is being drilled using the Cajun Express which arrived on site April 12.
The FAN-1 well is a pure exploration well and, even if successful, will not be completed as a commercial production well. In the event of a success, the JV may decide to conduct further drilling and evaluation activities. As FAR is not the operator of the Senegalese wells the information flow it receives is dependent on reports provided by the operator. Operations on the FAN-1 well are expected to last approximately two months, and FAR will release reports in collaboration with its partners.
Besides FAR and Cairn holding stakes in the well, other partners include ConocoPhillips and Petrosen, Senegal’s state-run firm.
The FAN-1 will be immediately followed by a second exploration well targeting a shelf edge prospect in 1,100 meters of water. These wells will be the first ever drilled in deepwater Senegal and the first drilled offshore in two decades.
In accordance with the terms of farm-out deals completed in 2013 with Capricorn Senegal (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.
“Our shareholders and the FAR team have been eagerly awaiting the spud of this first Senegalese well and I am delighted to make this announcement. We have high hopes for these two wells which have the potential to be company makers for FAR. The next year is going to be very exciting for our company with five potentially high-impact wells to be drilled in our West and East African exploration permits. Of course exploration has its risks but we are confident that FAR can maximize the value from these two exploration wells. Success in either of these wells opens the door to a large play fairway of follow on drill targets which are very significant for FAR,” said FAR MD Cath Morgan.
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