FAR provides progress report after completion of drilling program... in Gambia, Senegal, Guinea Bissau

Key facts

• Completion of the Bambo drilling program, offshore Gambia
• Cash and cash equivalents at end of period US$55.6 million
• The ATO's decision confirms the return on capital valuation of US$80 million, in line with expectations.
• Update of projects

Gambia- Blocs A2/A5

During the quarter, FAR completed drilling and appraisal operations for the Bambo-1 well and the Bambo-1ST1 sub-well in Block A2, offshore The Gambia.

Bambo-1 was initially drilled to a depth of 3216m MDBRT (depth measured below the rotary table) and wireline logging data was obtained. The Bambo-1 well was then plugged and the Bambo-1ST1 (side-track) well was drilled to a depth of 3317m MDBRT, after which wireline logging was completed (see FAR ASX announcement of December 23, 2021).

Although no mobile oil has been interpreted, drilling and logging data obtained from the main well and the lateral well indicate that several target intervals in the well had oil shows, confirming that a prolific oil source is present in the area. Samples were recovered from several levels. The presence or absence of oil will be confirmed by laboratory analysis.

The lateral well was planned to be drilled to final total depth through all target reservoirs and also to intersect the main well's zones of interest in a different location that will provide additional data and to sample potential oil. Interpretation of the cuttings and wireline logging information indicates that these zones were loaded with oil in rather poor quality reservoirs and in traps that may have been drilled, leaving behind residual oil in the reservoirs.

The lateral well also intersected oil shows in the Soloo Deep units that the initial well or other wells in the area had not yet encountered. The oil shows encountered were persistent over several hundred metres, confirming access to the prolific oil-bearing kitchen, which may open up additional physical exploration and development space in Blocks A2 and A5. Interpretation and integration of this data is ongoing.

Drilling operations on the Bambo-1 well and the Bambo-1ST1 side-track well were completed safely and within the amended budget. The well and side-track were then plugged and abandoned in accordance with the planned well abandonment program.

FAR is the operator and holds a 50% interest in the A2 license, offshore The Gambia, in which the Bambo well was drilled. The well fulfills the minimum work obligation of drilling an exploration well for the initial exploration periods for the A2 and A5 licenses.

FAR remains very encouraged by the data collected from the Bambo drilling program and its implications for potentially significant oil accumulations in Blocks A2 and A5 offshore The Gambia, which FAR currently holds under license with its partner, Petronas. FAR is accelerating the evaluation of the well results and hopes to announce a revised exploration plan for the area in the coming months.

Senegal
Rufisque, Sangomar and Deep Sangomar

Following completion of the sale to Woodside, FAR no longer has an interest in the RSSD licenses offshore Senegal (see FAR's ASX announcement of July 7, 2021). Pursuant to the sale and purchase agreement with Woodside, FAR may receive future payments of up to US$55 million from the first oil production from the Sangomar field, expected in 2023. These payments are contingent upon the future oil price being above US$58 per barrel.

Guinea-Bissau 

The Sinapa (Block 2) and Esperança (Blocks 4A and 5A) licenses in Guinea-Bissau have been extended for 3 years and are valid until October 2, 2023, during which time the joint venture has an obligation to drill an exploration well. FAR is working with the operator, PetroNor, to finalize the 2022 work program and budget for approval and finalization. FAR remains open to the idea of reducing its interest before drilling a well.

PetroNor and FAR are conducting a comprehensive review of a potential well location for the 2023 program, with the Atum Prospect being the primary drilling target (mapped to contain the best estimate of prospective resources of 471 mmbbls gross, unrisked, 101 mmbbls net to FAR).

The operator is also undertaking a review of the commerciality of the Sinapa shallow water discovery. Sinapa contains 13.4 mmbbls of oil, including 2.9 mmbbls net of FAR in 2C contingent resources (best estimate). In addition, there is an estimate of 72 mmbbls of prospective resources in the West and East Sinapa prospects that can be tied back to potential development of Sinapa (best estimate, unrisked, 15.4 mmbbls net to FAR).

Corporate

Shareholders approved a return of capital of A$0.80 per share at a general meeting held on September 15 and payment was made on September 28. On October 13, 2021, FAR announced that the ATO had issued a class decision confirming that no part of the return of capital will be taxable as a dividend. The ruling also confirms that eligible shareholders will be entitled to treat any resulting capital gain as a discounted capital gain and that certain foreign resident shareholders will be entitled to disregard any resulting capital gain or loss.

FAR had US$55.6 million of cash at the end of the period (including US$1.1 million of restricted cash held in the Gambia joint venture account). During the period, FAR completed drilling operations on the Bambo drilling program (including the Bambo-1 and Bambo-1ST1 lateral wells). FAR's share of the Bambo program is expected to be US$28.8 million, of which US$15.3 million is expected to be paid in Q1.

Following the previous quarterly report, the company has taken additional steps to reduce costs and expects employment, administrative and corporate costs for the next quarter to be US$0.82 million.

FAR's strong cash position allows it to consider its options for the future, not limited to its current portfolio of oil assets.