FAR has benefitted from the lower costs of drilling and a highly efficient drilling program compared to the initial discovery wells we drilled in 2014.
As a result of this success, the Senegal joint venture has secured the Ocean Rig Athena for a fourth well to be drilled in the current campaign offshore Senegal.
Spud of SNE-4 well
The SNE 4 well, which is 5 km south-east of the SNE-1 discovery well, was spudded over the weekend to appraise the eastern extent of the field where it is aiming to:
– intersect a key reservoir in the oil leg,
– acquire reservoir information from all units to investigate lateral variability/connectivity and
– increase the contingent resource base. The SNE-4 well is located in 940m water depth and will be drilled to a total depth of 3,020m TVD. It will be drilled and logged and is expected to take approximately four weeks to complete.
This further appraisal well in the SNE field will assist in progressing towards confirming the commercial viability of the field.
Funding of FAR’s exploration and appraisal program
To fund the exploration and appraisal of FAR’s offshore Senegalese permits the company recently raised A$60 million from institutional and sophisticated investors.
These funds put FAR in a strong financial position with sufficient capital to meet all its expected obligations for the next phase of evaluation which may include an additional two contingent wells. The timing and budget for further wells remains subject to a decision by the joint venture but FAR is positioned for further drilling immediately after SNE-4 to retain the benefits of continuity with the Ocean Rig Athena and its drilling management team given their outstanding performance to date. The capital raising also introduced a number of new, large, local and international institutional shareholders to the FAR share register. The share issue was heavily oversubscribed and allowed FAR to continue its strategy to strengthen the company’s share register. Attracting a growing number of major institutional shareholders who are aligned with FAR’s long term growth objectives is vital if FAR is to extract full value from the success it is achieving through exploration and appraisal.
The Board remains very mindful of the interests of all of our shareholders in the raising of capital.
The Board considers it is vital that FAR maintains sufficient capital so the company can add further value from its exposure to the exciting exploration and appraisal opportunities in Senegal. The capital raise was completed at a 6.6% discount to the company’s last close price on 12 April (9.1 cents) and an 11.2% discount to the 5 day volume weighted average price to 12 April 2016. Given the tough market conditions, it was very pleasing that FAR did not have to deeply discount the share price to complete the capital raising.
Senegalese success to date
The success of the SNE field appraisal has by far exceeded FAR expectations. To date, the appraisal well program has supported a 93 mmbbl increase (20%) in the 2C contingent resource estimate for the field to 561 mmbbls. The independent assessment of SNE contingent resources was carried out by RISC of Perth (see ASX release 13 April 2016). RISC’s assessment did not incorporate core data collected from these two wells. Ths core data, together with the results of BEL-1 and SNE-4 should support a further review of the contingent resource estimates going forward.
The latest successful well was the BEL-1 well which, in addition to appraising the SNE field, drilled into the upper Buried Hills play that until BEL-1, was undrilled (see ASX announcement of 12 April 2016). At the SNE Field level, BEL-1 confirmed approximately 100m of gross oil column, good quality sands and correlation of the principal reservoir units.
In the Buried Hills play, gas was discovered and the presence of good reservoirs and regionally extensive seals in this play type were confirmed. With the discovery of gas in these good quality, shallow reservoirs, the BEL-1 well results along with the latest 3D seismic, will be incorporated into FAR’s assessment for potential down-dip oil in shallower reservoirs across the Senegal blocks including the Djiferre permit.
By drilling deeper into the SNE field with the BEL-1 well, FAR also gained vital information on the size and extent of the reservoirs in SNE and accordingly moved a step closer to a statement on the field’s commercial viability.
FAR’s success through exploration and appraisal creates its own unique set of challenges, not the least of which is the need to raise the necessary capital to build and capture the potential value of our Senegal assets, maintain the company’s position within the joint venture and to meet its obligations.
FAR looks forward to updating shareholders on decisions made regarding future work program and results of the SNE-4 well in the near future.
FAR Management visit to the Ocean Rig Athena Whilst in Senegal for joint venture management meetings, Managing Director Cath Norman, fellow director and Chief Operating Officer, Ben Clube and FAR’s country manager Mme Goyne Seye recently visited the Ocean Rig Athena with representatives from Cairn Energy and Petrosen.
The performance of the drilling Ocean Rig Athena has been simply outstanding. The rig has continually performed ahead of schedule and under budget giving shareholders of all the joint venture partners excellent value.
The visit was highly informative and as expected, the crew maintains a high level of professionalism and safety and are to be commended. The sea state conditions offshore Senegal are largely benign year round and there were many comments made by the crew about the contrast to drilling in Arctic conditions and on unsuccessful wells.
FAR Community involvement in Senegal In the last two weeks, FAR is proud to have commenced its 2016 community program with the donation of soccer balls to a regional football league. Mme Gogne Seye joined dignitaries and members of the local communities in the presentation of the balls and some photographs follow. FAR also participates in joint venture sponsored community projects that includes English language training for students at the Institute of Earth Sciences in Dakar and providing finance to the Hunger Project that supports a women led microfinancing project in country.
FAR celebrates its tenth year of involvement in Senegal this year and continues to enjoy a very good relationship in country with all stakeholders. This good relationship was instrumental in seeing the smooth transition of operator duties to Cairn Energy and cleared the way for the three year extension to the PSC for the appraisal of our discoveries. After being seconded to the operator on a part time basis, FAR welcomes Mme Seye back to FAR full time in 2016.
FAR Annual General Meeting
Finally I would like to invite shareholders to attend FAR’s AGM in Melbourne on Friday May 13 and help us commemorate our 10 years in Senegal. As well as meeting our team based here in Australia, Mme Gogne Seye from Dakar, Mark Jenkins (FAR’s representative from Nairobi) and Igor Effimoff (FAR’s representative in Houston who was key to FAR’s entry to Senegal in 2006) will also be in Melbourne for the meeting and will be happy provide some insights into the company’s activities regionally.
On behalf of FAR, I thank you for your ongoing support and leave you with some photographs from a recent FAR trip to Senegal.