Under the terms of the farm-out agreement, CNOOC will be assigned a 55.55% participating interest in the Sinapa and Esperanca licences, with the obligation to fund 55.55% of all expenditures under their respective Agreement for Joint Venture Participation (‘AJVP’) and Joint Operating Agreements (‘JOAs’). CNOOC’s interest will convert to a 50.0% participating interest in each of the licences in the event of a commercial discovery.
Svenska will retain a reduced 23.03% participating interest and shall continue to act as operator while CNOOC, upon conclusion of the upcoming offshore drilling campaign, may elect to assume operatorship. Completion of the farm-out agreement is subject to approval from the Government of the Republic of Guinea-Bissau and customary Joint Venture consents, which under the AJVP,is not subject to pre-emption rights.
Svenska will continue to operate the exploration licences as the JV prepares to drill the first ever deepwater exploration well offshore Guinea-Bissau in the first quarter of 2020. Subject to receiving regulatory approvals, the transaction is expected to close in the third quarter of 2019.
Past offshore exploration in Guinea-Bissau had initially concentrated in shallow waters less than 200m targeting a variety of salt diapiric-related features. Drilling to date has encountered excellent quality reservoir sands across multiple intervals exhibiting abundant oil and gas shows. The Sinapa permit has two discoveries, with light oil having been recovered to surface from both those locations. The most significant of the two being the Sinapa discovery with contingent resources of ~13.4MMbbls of recoverable light oil (unrisked, 2C case, 100% basis).
The Joint Venture is advancing preparations for drilling of the Greater Atum prospect in early 2020, which will be the first offshore exploration welldrilledsince 2007 and the first ever deepwater exploration well offshore Guinea-Bissau. The Greater Atum prospect is a recognised shelf-edge play analogue of the giant SNE oil field offshore Senegal and has a best estimate prospective resource of 471mmbbls (gross, unrisked).
In applying the knowledge gained from its discoveries in Senegal, FAR’s enhanced understanding of the various petroleum systems active in the area led the Joint Venture to identify the potential for a shelf-edge play along the western boundaries of our offshore permits. Focussing on exploration along this play fairway through the MSGBC Basin shelf margin has attracted significant new interest, and this recent entry by CNOOC – a super-major National Oil Company into our permits – is supporting recognition of our exploration strategy offshore Guinea-Bissau.
FAR’s Managing Director Cath Norman said:
‘We look forward toprogressing the Guinea-Bissau acreage now that CNOOC have farmed into the project. Attracting a National Oil Company such as CNOOC shows the confidence that another major company has in FAR’s Guinea-Bissau acreage.CNOOC brings a wealth of technical and operational expertise and experience and we look forward to finalising the details of the future drilling plans that areexpected to begin early 2020.We welcome CNOOC to the Joint Venture and look forward to a long and successful relationship.’