Ophir announced that a Heads of Agreement (Agreement) has been entered into with ASX-listed FAR Limited (FAR). The Agreement enables FAR to immediately acquire a 10% interest in the AGC Profond PSC offshore Senegal and Guinea Bissau and gives Ophir the right to acquire a 25% interest in FAR's three Senegalese licenses.
AGC is 'L'Agence de Gestion et de Coopération entre la Guinée-Bissau et le Sénégal' which is a joint commission with sovereign status set up by the governments of Guinea-Bissau and Senegal to administer the maritime zone between the two countries.
Under the Agreement FAR will earn a 10% interest in the AGC Profond PSC by contributing 15% of the cost of the first exploration well capped at a gross expenditure of US $32 million. Following completion of the first well, or upon reaching the cap amount, FAR will then pay its pro-rata share of all joint venture costs according to the provisions of the PSC and Joint Operating Agreement.
On July 19, 2010 Ophir announced that one of its operating subsidiaries had signed a contract with A.P. Moller - Maersk A/S for the use of the dynamically positioned ultra deepwater semi-submersible drilling rig Maersk Deliverer to drill one well on behalf of the AGC Profond joint venture during Q1 2011. The Maersk Deliverer will drill the Kora prospect which has an Upper Cretaceous primary reservoir objective. The Kora prospect is a four way dip closed structure and is one of several such structural closures within the AGC Profond PSC. The most likely (P50) unrisked gross resource for the Kora prospect is estimated to be 553MMbbl1.
Despite exploration success to the north in Mauritania, and more recently to the south offshore Sierra Leone with Anadarko's Venus discovery, the deepwater basins of Senegal and Guinea Bissau are as yet undrilled. The Kora well will therefore be an important first test of the deepwater petroleum system for this region.
The Agreement gives Ophir the ability to acquire a 25% interest in three exploration blocks in Senegal currently operated by FAR. The Rufisque Offshore, Sangomar Offshore and Sangomar Offshore Deep blocks cover an area of 7,490sq km and include several deepwater prospects that the Ophir exploration team have analysed previously. Ophir must elect to exercise these acquisition rights within 60 days of completing the Kora-1 well. Ophir will be nominated as Operator of all three blocks. If, after drilling a well in the Senegal blocks, Ophir elects to remain as a participant in the Senegal joint ventures Ophir has agreed to pay FAR a 50% uplift on its pro-rata share of well costs capped at a gross cost of US $32 million.
The agreement is subject to a number of conditions including the completion of fundraising by FAR and regulatory approval by the relevant authorities - the AGC joint authority and the Republic of Senegal.
Ophir's Managing Director Dr Alan Stein commented, "We are pleased to enter into an agreement with FAR which gives Ophir the option to substantially expand its exploration footprint in Northwest Africa following the completion of the Kora-1 exploration well in early 2011. The agreement provides for valuable collaboration across our combined interests in the region and we look forward to working with FAR over the coming months."
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