JOHANNESBURG (miningweekly.com) – Dual-listed Erin Energy Corporation has entered into a definitive farm-out agreement with ASX-listed oil and gas company FAR, which will acquire an 80% interest and operatorship of Erin’s offshore A2 and A5 blocks in The Gambia.
Erin Energy will retain a 20% working interest in both blocks.
FAR will pay Erin Energy $5.18-million and will carry $8-million of the company’s share of costs in a planned exploration well to be drilled in late 2018.
Erin interim CEO Jean-Michel Malek noted that the company was excited to have attracted into its offshore assets in The Gambia a partner with a reputation for success in this rapidly-emerging and prolific basin.
“This partnership will allow us to keep a significant stake in these highly-prospective blocks with no additional capital investment required through the first exploration well, while also strengthening the balance sheet and allowing us the ability to consider additional growth opportunities. This farm-out highlights our strategy of increasing our exploration breadth while reducing exploration risk.”
Blocks A2 and A5 are adjacent and on trend with FAR’s 2014 SNE-1 oilfield discovery, which was the industry’s largest offshore oil discovery that year. Since the drilling of the SNE-1 well, FAR has drilled five successful appraisal wells on the SNE field and increased the field’s best case 2C contingent recoverable oil resource to 641-million barrels on a 100% basis, according to FAR internal estimates.
Erin Energy and FAR now plan to undertake reprocessing and interpretation of three-dimensional (3D) seismic data recently acquired by the company to further mature identified prospects on Blocks A2 and A5.
The company acquired 1 504 km of modern 3D seismic data and has identified prospects on the blocks, which are similar to the shelf edge play FAR is targeting in its offshore Senegal blocks.
The A2 and A5 blocks cover an area of 2 683 km2 within the emerging and prolific Mauritania-Senegal-Guinea-Bissau basin and lie 30 km offshore in water depths of 50 m to 1 200 m.
The agreement is subject to approval by the government of The Gambia.