London, UK – FAR Limited (FAR) an independent Africa-focused oil and gas explorer disclosed Monday that the company has received approval from the Ministry of Energy and Petroleum in Kenya for its first farm in deal on its highly prospective onshore and offshore Kenya exploration permit, Block L6, located in the Lamu basin.
Under the terms of the farm-in with Milio E&P Limited and Milio International (Milio), FAR will be fully funded through the drilling and testing of a high impact onshore exploration well in Block L6 expected to spud in 1H 2015.
FAR will also be fully funded through the acquisition, processing and interpretation of a regional onshore 621 mile (1,000 kilometer) 2D seismic survey. This is expected to confirm a number of prospects in onshore L6 as drill targets. This seismic program is expected to commence in April 2014.
FAR retains a 24 percent interest in the onshore part of Block L6. FAR also preserves its 60 percent interest in the highly prospective offshore part of Block L6 which FAR has estimated to contain substantial prospective resources. FAR is also currently in discussions with parties to farm-in to drill an offshore well in Block L6.
Block L6 is located to the north of major east coast Kenyan population centres and infrastructure. In the event the Milio funded exploration well in 2015 is a discovery, FAR plans to fast track an onshore development in order that production could contribute to Kenya’s near term growing energy requirements and supply major power generation projects planned by the Kenyan Government.
Cathy Norman, FAR Managing Director said:
“We are pleased that the Cabinet Secretary for the Ministry of Energy and Petroleum has approved our recently announced farm out agreement for Block L6, Kenya. We believe this deal, which FAR has secured funding for an onshore exploration well following a seismic survey, will evaluate the significant potential of the onshore part of Block L6 and unlock the potential of the wider Lamu basin in which FAR has a large acreage position.
FAR has now completed three farm-out deals within the last 12 months and as a consequence is fully funded through three high impact exploration wells in the near future. Next month FAR expects to start drilling the first of two company making offshore wells in Senegal which are together targeting over 1.5 billion barrels of unrisked prospective resources. FAR’s farm in partners in Senegal are ConocoPhillips and Cairn Energy PLC”.
FARM IN AGREEMENT
Under the terms of the farm-in agreement between Flow Energy Pty Ltd, a wholly owned subsidiary of FAR (FAR), Pancontinental Oil & Gas NL (PCL), Afrex Ltd a subsidiary of PCL (Afrex), and Milio International Limited and Milio E&P Limited (Milio), each of FAR, PCL and Afrex agree, subject to certain conditions, to transfer certain rights in respect of the onshore area of Block L6.
The current participating interests in the Block L6 Production Sharing Contract (PSC) are FAR 60 percent, Afrex 24 percent and PCL 16 percent. When all conditions precedent are met, Milio will have a 60 percent interest in the onshore part of Block L6. FAR will retain a 24 percent interest in the onshore area and PCL and Afrex combined will retain a 16 percent interest. FAR will retain a 60 percent participating interest in the prospective offshore part of Block L6 and PCL and Afrex together will retain a 40 percent interest.
FAR remains Operator of the Block L6 Production Sharing Contract.
Milio International is a prominent international petroleum logistics, marketing, trading, exploration and production company based in Dubai that is rapidly expanding its commercial footprint in East Africa. Milio is continuing to expand its strategic presence in Kenya through significant investment in a number of high impact projects. Milio holds a controlling interest in Block L20 which is located immediately to the west of Block L6.
BLOCK L6 KENYA
FAR has an interest in 2 Kenya permits Block L6 and Block L9. Both are located in the Lamu Basin offshore and onshore Kenya, north of recent world scale, natural gas discoveries totalling around 100 trillion cubic feet (Tcf), off the coasts of Mozambique and Tanzania. Growing interest in the Lamu Basin’s exploration potential is reflected in the fact that up to 7 wells are planned to be drilled over the next 12 to 18 months. Drilling results in the Lamu basin to date have been encouraging.
In the offshore section of the L6 permit FAR (currently 60 percent interest and operator) has acquired and processed an extensive airborne gravity gradiometry and magnetic survey coupled with a 2D seismic program. In 2012 the joint venture completed 300 square miles (778 square kilometers) of 3D seismic in Block L6 where FAR was the first company to acquire 3D seismic over the highly prospective offshore Micoene reef play currently being drilled by BG Group with the Sunbird-1 well in Block L10A. The results of this well are expected to be known by the end of 1Q 2014.
FAR has identified a number of oil and gas play types and prospects and assessed that the combined unrisked prospective resources for Block L6 are 3.75 billion barrels of oil or 10.23 Tcf of gas (respectively 2.25 billion barrels or 6.14 Tcf of gas net to FAR).
FAR has also matured 3 offshore prospects (Tembo, Kifaru and Kifaru West) in the Block L6 which have prospective oil equivalent resources of 327, 178 and 130 million barrels on an unrisked best estimate 100 percent basis respectively (196, 107 and 78 million barrels net to FAR).
With respect to the prospective resource estimates contained within this report, it should be noted that the estimated quantities of Petroleum that may potentially be recovered by the future application of a development project may relate to undiscovered accumulations. These estimates have an associated risk of discovery and risk of development. Further exploration and appraisal is required to determine the existence of a significant quantity of potentially moveable hydrocarbons.