FAR To Seek Other Partners for Senegal Licenses
Shell Exploration Company B.V. (Shell) has advised First Australian Resources (FAR) of its decision not to exercise an Option in respect of Sangomar Offshore, Rufisque Offshore and Sangomar deep Offshore Blocks ("Licenses") in Senegal, West Africa.
The decision by Shell follows the completion of a Shell funded CSEM Data Acquisition and Geophysical Evaluation Program over part of the License Area where a number of drilling prospects have already been identified by FAR and its partner Petrosen.
Shell is required to deliver a technical report resulting from the Geophysical Evaluation Program no later than 21 September 2009 at which time further details will be released.
Following Shell's decision, FAR will be paid US$3 million within ten business days and in addition recoup approximately $US0.5 million in past expenditures.
FAR will retain its 90 percent interest in the Licenses and Petrosen will hold the remaining 10 percent. FAR will continue as Operator and retain full authority to use the technical report and CSEM data for all purposes including the purpose of seeking an alternative farm in partner.
FAR is now free to commence discussions with other potential farmin partners and to facilitate this process will seek an extension to the current License period that expires on 22 November 2009.
The License in respect of Sangomar Offshore, Rufisque Offshore and Sangomar Deep Offshore, was issued in July 2004. FAR farmed into the License area in January 2006 by contributing to a 2,050 square kilometer 3D seismic program.
In November 2008, FAR was granted a one-year extension to the current exploration term. During the first quarter 2009, FAR concluded an Agreement with Shell to conduct a CSEM Data Acquisition and Geophysical Evaluation Program and increased its interest in the Licenses (aggregating 7,491 square kilometers) to 90 percent and assumed operatorship. The CSEM acquisition was completed on 26 May 2009 and was followed by processing and evaluation performed by Shell with a technical report to be delivered by 21 September 2009.
Commenting on the announcement, FAR's executive Chairman Michael Evans said:
"Naturally we are disappointed by Shell's decision not to proceed further; however, armed with our earlier 3D survey results and the CSEM study (as soon as it becomes available) we intend to commence marketing the opportunity to other potential partners. Our strong balance sheet, large interest in the Licenses (90 percent) and Operator status afford FAR considerable leverage and room to negotiate favorable terms. Our ability to attract partners and the potential of the Licenses was ably demonstrated by our introduction of Shell to the Senegal License area."
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