Erin Energy announces approval of Farm-Out deal with FAR in The Gambia
Erin Energy Corporation has announced that the Government of the Republic of The Gambia has approved the farm-out agreement with FAR Ltd., an Australian Securities Exchange listed oil and gas company, whereby FAR will acquire an 80% interest and operatorship of Erin Energy’s offshore A2 and A5 blocks in The Gambia.
Erin Energy will retain a 20% working interest in the highly-prospective offshore blocks A2 and A5 in The Gambia;
FAR to fund Erin Energy through the first exploration well;
Erin Energy’s blocks are adjacent and on-trend with FAR’s world-class SNE oil field offshore Senegal;
Blocks A2 and A5 have potential to contain prospective resources in excess of one billion barrels of oil; (on an unrisked best estimated 100%) according to FAR.
As previously disclosed, under the terms of the farm-out agreement approved by the Government of the Republic of The Gambia, FAR will pay Erin Energy a purchase price of US $5.18 million and will carry US $8.0 million of the Company’s share of costs in a planned exploration well to be drilled in late 2018. In addition, if Erin Energy’s share of the exploration well is less than US$8.0, the balance is to be paid in cash to the Company.
Femi Ayoade, Erin Energy’s CEO, commented, “We are pleased to have approval from the Government of The Republic of The Gambia for this transaction and look forward to working with FAR as a partner in this rapidly-emerging and prolific basin. This farm-out highlights our strategy of maximizing our exploration breadth while minimizing exploration risk.”
Blocks A2 and A5 are adjacent and on trend with FAR’s 2014 SNE-1 oil field discovery, which was the industry’s largest offshore oil discovery that year. Since the drilling of the SNE-1 well, FAR has drilled seven 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.
In 2017, Erin Energy and FAR plan to undertake reprocessing and interpretation of 3-D seismic data recently acquired by the Company to further mature identified prospects on Blocks A2 and A5. The Company acquired 1,504 km2 of modern 3-D 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 approximately 2,683 km2 (663,000 acres) within the emerging and prolific Mauritania-Senegal-Guinea-Bissau Basin, and lie approximately 30km offshore in water depths of 50 to 1,200 metres (164 to 3,900 feet).