Negotiations have concluded with the National oil company of Guinea-Bissau, Petroguin, to revise the terms of both the Sinapa and Esperanca Licences to which FAR Limited has interests. Under the revised Licence terms negotiated by FAR and its joint venture partner Svenska Petroleum Exploration AB (Svenska), FAR will now have a 21.42% participating and paying interest in the permits, an increase from the 15% participating and 21.42% paying interests as previously reported. These changes reflect the fact that Petroguin will no longer have a participating interest in the joint venture prior to a commercial discovery. Upon making a commercial discovery, Petroguin will have a reduced participating and paying interest of 10% and FAR and Svenska will respectively have interests of 19.28% and 70.71%.
In addition the new Licence terms negotiated include more favourable arrangements for deep water investment including a reduction to production royalty rates payable to Government. These changes to Licence terms are consistent with the joint venture’s new strategy to focus on the shelf edge areas of the Sinapa and Esperanca Licences which display a similar geological setting to offshore Senegal and FAR’s enormous SNE field discovery.
In recognition of this new strategy and to provide adequate time to further evaluate the newly acquired 3D seismic data offshore Guinea-Bissau, the joint venture has been awarded a three-year extension to the current Licence periods, now ending on 25 November 2020.
During these Licence periods the work obligation is to drill one exploration well on each Licence with a minimum expenditure commitment for each Licence of US$3 million (gross). These changes in the terms of the Licences have been agreed and signed by Petroguin and remain subject to Government Decree.
FAR Managing Director, Cath Norman, said:
“The expression that it never rains, it pours can certainly be said of FAR this past week. We are very pleased that negotiations between Petroguin, Svenska and FAR have been successfully concluded after some months. The FAR and Svenska joint venture has previously mapped a 470mmbbls prospect* called Atum on the Guinea-Bissau shelf edge in a play similar to the large SNE discovery made by FAR and its Senegal partners in 2014.
The changes in Licence terms give FAR a larger equity interest in Atum and the other prospects mapped to date in our Guinea-Bissau Licences and more importantly gives us an increased share and improved commercial terms in any deep-water discoveries that are made. These changes also give FAR greater options for funding exploration drilling in Guinea-Bissau in the future.
It is testimony to the close working relationship that FAR and Svenska have with Petroguin, that these agreed Licence changes including the 3 year extensions, provide a strong basis to proceed with deep water exploration work program and investment. We look forward to working with Svenska and Petroguin leading up to drilling our first exploration well offshore Guinea-Bissau.”
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