Highlights. Projects update. RSSD Project Senegal

Transcription

1 01 July 30 September 2017 Highlights Hydrocarbons discovered in SNE North-1 well in at least 3 separate intervals The Gambian Government approves acquisition of 80% stake in Blocks A2 & A5 FAR awarded additional equity and improved deep water terms in the Guinea-Bissau Licences Tim Woodall appointed as Non-Executive Director of the FAR Board Cash and term deposits at the end of September quarter totalled $61.9M Projects update RSSD Project Senegal During the quarter, FAR announced another oil discovery offshore Senegal in the SNE North-1 exploration well into the Sirius Propsect, to the north of the world class SNE oil field. The well discovered hydrocarbons at three separate intervals. These intervals include an oil and gas column in the S520 which is the high quality, lower reservoir in the SNE field. At the SNE North-1 location, the S520 is deeper than the SNE field oil-water-contact. Samples of a consistent 35 API oil (lighter than that encountered in the SNE field), water and gas were recovered to surface. Work to determine the extent of the hydrocarbon accumulations is ongoing. The well is located in 900m water depth, approximately 90kms offshore in the Sangomar Deep Offshore Block and 15km north of the SNE- 1 oil discovery well. The well reached a Total Depth (TD) of 2,837m. Drilling operations on the well were again safely and successfully completed ahead of schedule and under budget, following drilling and logging operations. FAR s preliminary analysis indicates: In excess of 24m of gross hydrocarbon column across at least three intervals In excess of 16m of net hydrocarbons in high quality reservoirs A lighter oil type of 35 API Figure 1: Location of the SNE-North-1 well

2 Additional work is being undertaken to establish the potential commerciality of this discovery and to integrate the results with the block wide data gathered to date. The well result has positive implications for further exploration potential to the north along the structural trend containing the SNE field. The joint venture is reviewing the potential for further exploration drilling operations next year within the Rufisque, Sangomar and Sangomar Deep (RSSD) Production Sharing Contract (PSC) area. Rufisque, Sangomar, Sangomar Deep Working Interest FAR 15% Cairn Energy 40% Operator ConocoPhillips* 35% Petrosen 10% *The proposed sale to Woodside is subject to the rights of partners to pre-empt and Senegal Government approval, as FAR has asserted in its arbitration notice to ConocoPhillips A2/A5, The Gambia Early in the quarter (and as reported in the previous quarter), the Government of The Republic of The Gambia in West Africa approved the assignment of an 80% interest in offshore Blocks A2 and A5 in The Gambia to FAR Limited from ERIN Energy Corporation. The farm-in deal requires FAR to fund ERIN up to US$8 million through an exploration well expected to be drilled late in Blocks A2 and A5 are adjacent to and on trend with FAR s world class SNE oil field discovery and have significant exploration potential. The blocks cover an area of approximately 2,682km 2 within the rapidly emerging and prolific Mauritania-Senegal-Guinea- Bissau ( MSGB ) Basin and lie approximately 30km offshore in water depths ranging from 50 to 1,200m (see Figure 2). In combination, Blocks A2 and A5 have potential to contain prospective resources greater than one billion barrels of oil on an unrisked, best estimate, 100% basis*. From 1,504km 2 of modern 3D seismic data acquired in the blocks, FAR has identified large prospects in the shelf edge play south of the world class SNE oil field in Senegal (see Figure 2). FAR has mapped three potentially drillable prospects and leads, the largest being the Sama prospect contiguous with the SNE field. Figure 2: Location of Blocks A2 & A5 During the quarter, FAR completed the transfer of operating duties from Erin Energy and as part of this process opened an office in Banjul, the capital of The Gambia. FAR has five local staff in the Banjul office and is preparing for drilling operations in * Refer to Cautionary Statement in this report (page 6) relating to estimates of prospective and contingent resources Page 2

3 In addition, FAR is reprocessing the existing 3D seismic data over A2 and A5 to integrate with the neighbouring Senegal 3D seismic database to better understand the continuity of the shelf edge play across the border and define the drill location for Block 2, 5 Paying Interest FAR Erin 20% 80% Operator Guinea-Bissau During the quarter, FAR Limited received official confirmation that the increase in equity and amendments to the Guinea-Bissau licences announced on 4 April 2017, have been approved by Government Decree. These changes to Licence terms are consistent with FAR s strategy to focus on the shelf edge areas of the Sinapa and Esperanca Licences which display a similar geological setting to offshore Senegal and FAR s enormous SNE field discovery (refer to Figure 3). Under the revised Licence terms negotiated by FAR and its joint venture partner Svenska Petroleum Exploration AB ( Svenska ), FAR now have a 21.42% participating and paying interest in the permits, an increase from the 15% participating and 21.42% paying interests as previously reported. These changes reflect the fact that Petroguin will no longer have a participating interest in the joint venture prior to a commercial discovery. Upon making a commercial discovery, Petroguin will have a reduced participating and paying interest of 10% and FAR and Svenska will respectively have interests of 19.28% and 70.71%. In addition, the new Licence terms negotiated include more favourable arrangements for deep water investment including a reduction to production royalty rates payable to Government. The joint venture has also been awarded a threeyear extension to the current Licence periods, now ending on 25 November During these Licence periods, the joint venture will drill one exploration well on each Licence with a minimum expenditure commitment for each Licence of US$3 million (gross). Block 2, 4A, and 5A Paying Interest FAR 21.43% Svenska 78.57% Operator Figure 3: Location of FAR Guinea-Bissau blocks Djiffere Block option No update from previous quarter * Refer to Cautionary Statement in this report (page 6) relating to estimates of prospective and contingent resources Page 3

4 L6, Kenya No update from previous quarter Kenya Block L6 Paying Interest Onshore Paying Interest Offshore FAR 24% Operator (1) 60% Operator Pancontinental Oil and Gas 16% 40% Milio Group 60% (1) 1) Subject to the completion of the farm-out agreement with Milio. NW Shelf, Australia FAR received notice of approval of a suspension and extension to the WA-458-P permit period as per the application to NOPTA. As a result of this 24-month extension, permit years 2, 3 and 4 (current permit period) will end on 6 July During this period, FAR will complete the 3D seismic survey over the WA-458-P permit which was delayed due to environmental permitting restrictions. An agreement for the completion of the 242km 2 of 3D seismic has been struck with CGG and expected to commence in the next quarter. If FAR elects to progress to permit years 5 and 6, then these will end on 6 July 2021 and one exploration well will be drilled on the permit. FAR remains in communication with NOPTA regarding the surrender of the WA-457-P permit. WA-457-P, WA-458-P FAR Paying Interest 100% Operator Corporate FAR Limited was pleased to appoint Mr Timothy Woodall as Non-Executive Director of the Board, effective 1 August Tim Woodall brings over 25 years experience in the global oil and gas sector across investment banking and senior executive roles with exploration and production companies. Tim was most recently founder and Managing Director of Miro Advisors (an independent corporate advisory firm) following his role as CEO of RISC (an oil and gas technical consulting firm). Prior to these roles, Tim was Chief Financial Officer of Energy Partners (a New Orleans-based E&P company); Executive Director of the Energy Division at UBS's London office where he originated and executed M&A and capital raising transactions for European oil and gas clients; and a Director in Credit Suisse s New York oil and gas team. Prior to his time overseas, Tim worked with Woodside Energy and Santos. Tim has a Bachelor of Economics from the University of Adelaide, is a Fellow of the Australian Society of CPA s and a graduate member of the Australian institute of Company Directors. * Refer to Cautionary Statement in this report (page 6) relating to estimates of prospective and contingent resources Page 4

5 Management Comment and events post end of quarter This quarter continued to deliver good news for FAR as we completed the 2017 drilling program offshore Senegal with the eleventh successful well and the third discovery in the RSSD acreage outside the SNE oil field. The SNE North-1 well completed the drilling program for 2017 as the JV now prepares to undertake the work necessary to bring the SNE field into FEED at the beginning of 2018, submit the development plan for Government approval in early Q and aims for the Final Investment Decision (FID) in early Just prior to the end of the quarter FAR and its JV partners spudded the SNE North-1 well, located 15 km north of the SNE-1 discovery well and forming the most northerly location yet tested, in the highly successful SNE play. The well was located in 900m water depth and drilled to a total depth of approximately 2,800m. The well was another discovery and marked the 11 th successful well offshore Senegal to date and the fourth discovery, the others being SNE, FAN and FAN South. To maintain the 100% success rate with the drill bit over the 3 years of drilling is an outstanding result for the JV. Operations at all wells drilled in the 2017 campaign progressed extremely well and exceeded expectations. SNE North-1, along with the other wells in the program, was drilled ahead of schedule, under budget and safely. Notices of discovery were submitted to the Government of Senegal for the two new 2017 discoveries made with the FAN South-1 and SNE North-1 wells. The JV will make a submission to the Government for an evaluation program and period for these discoveries as allowed for by the Production Sharing Contract (PSC) for the RSSD blocks. Both discoveries are within tie-back range to the planned development over the SNE field and hence, current plans are that future evaluation of these discoveries will be undertaken with an eye to tying to SNE in later phases of the field development. This will optimise capital expenditure and prolong the producing life of the field. The budget for the Senegal project for 2018 was agreed during the quarter and will largely consist of field development and engineering studies to FID and the compilation of the development plan for submission and total US$84m gross (US$14m net to FAR, approximately AU$19m). The majority of FAR s 2018 budget, as per previous years since our oil field discoveries, will be spent on the Senegal project. The funds raised in Q2 of this year will leave us in a well-funded position for 2018 and into Outside Senegal, FAR is very pleased to have received Government approval for the farm-in to the A2/A5 blocks offshore The Gambia. Subsequently, the handover of operatorship of the blocks has gone smoothly and FAR has opened an operations office in Banjul. Drill preparations are underway and FAR is on target to achieve a Q spud date for an exploration well. In addition, FAR is very pleased to welcome Tim Woodall to the board as a non-executive director. Tim s experience in transactions and banking in the oil and gas sector will add strength to the FAR board. FAR s pre-emptive rights arbitration case is progressing as expected and updates will be provided as material information becomes available. We look forward to releasing the results of the RISC audit of the Senegal project and resources for A2/A5 over the 4 th quarter of the year and releasing more details of the SNE development timetable, cost and activities as the JV progresses towards FID in early * Refer to Cautionary Statement in this report (page 6) relating to estimates of prospective and contingent resources Page 5

6 Disclaimers *Prospective Resource Estimates Cautionary Statement - 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. Prospective and Contingent Resources - All contingent and prospective resource estimates presented in this report are prepared as at 27/2/2013, 11/3/2014, 5/2/2014, 13/04/2015, 13/4/2016, 23/08/2016 and 7/2/2017 (Reference: FAR ASX releases of the same dates). The estimates have been prepared by the Company in accordance with the definitions and guidelines set forth in the Petroleum Resources Management System, 2007 approved by the Society of Petroleum Engineers and have been prepared using probabilistic methods. The contingent resource estimates provided in this report are those quantities of petroleum to be potentially recoverable from known accumulations, but the project is not considered mature enough for commercial development due to one or more contingencies. The prospective resource estimates provided in this report are Best Estimates and represent that there is a 50% probability that the actual resource volume will be in excess of the amounts reported. The estimates are unrisked and have not been adjusted for both an associated chance of discovery and a chance of development. The 100% basis and net to FAR contingent and prospective resource estimates include Government share of production applicable under the Production Sharing Contract. Competent Person Statement Information - The hydrocarbon resource estimates in this report have been compiled by Peter Nicholls, the FAR Limited exploration manager. Mr Nicholls has over 30 years of experience in petroleum geophysics and geology and is a member of the American Association of Petroleum Geology, the Society of Petroleum Engineers and the Petroleum Exploration Society of Australia. Mr Nicholls consents to the inclusion of the information in this report relating to hydrocarbon Contingent and Prospective Resources in the form and context in which it appears. The Contingent and Prospective Resource estimates contained in this report are in accordance with the standard definitions set out by the Society of Petroleum Engineers, Petroleum Resource Management System. Forward looking statements - This document may include forward looking statements. Forward looking statements include, are not necessarily limited to, statements concerning FAR s planned operation program and other statements that are not historic facts. When used in this document, the words such as could, plan, estimate, expect, intend, may, potential, should and similar expressions are forward looking statements. Although FAR Ltd believes its expectations reflected in these are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual results will be consistent with these forward-looking statements. The entity confirms that it is not aware of any new information or data that materially affects the information included in this announcement and that all material assumptions and technical parameters underpinning this announcement continue to apply and have not materially changed. * Refer to Cautionary Statement in this report (page 6) relating to estimates of prospective and contingent resources Page 6

7 Top 10 shareholders (as at 30 October 2017) Shareholder Units % 1. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 788,898, CITICORP NOMINEES PTY LIMITED 761,671, FARJOY PTY LTD 514,463, J P MORGAN NOMINEES AUSTRALIA LIMITED 357,962, MR REX SEAGER HARBOUR 91,741, MR OLIVER LENNOX-KING 75,647, BNP PARIBAS NOMS PTY LTD <DRP> 73,191, NATIONAL NOMINEES LIMITED 66,802, TOAD FACILITIES PTY LIMITED 67,528, HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED A/C 2 34,823, TOTAL 2,832,731, * Refer to Cautionary Statement in this report (page 6) relating to estimates of prospective and contingent resources Page 7

8 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Appendix 5B +Rule 5.5 Mining exploration entity and oil and gas exploration entity quarterly report Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16 Name of entity FAR Ltd ABN Quarter ended ( current quarter ) September 2017 Consolidated statement of cash flows 1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation Current quarter Year to date (9 months) - - (14,225) (21,245) (b) development - - (c) production - - (d) staff costs (860) (3,079) (e) administration and corporate costs (620) (1,362) 1.3 Dividends received (see note 3) Interest received Interest and other costs of finance paid Income taxes paid Research and development refunds Other (provide details if material) Net cash from / (used in) operating activities (15,423) (25,253) 2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment - (46) (b) tenements (Gambia Farm-in payments) (5,242) (7,386) (c) investments - - (d) exploration and evaluation (7,869) (25,145) + See chapter 19 for defined terms 1 September 2016 Page 1

9 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report Consolidated statement of cash flows 2.2 Proceeds from the disposal of: (a) property, plant and equipment Current quarter Year to date (9 months) - - (b) tenements (see item 10) - - (c) investments - - (d) other non-current assets Cash flows from loans to other entities Dividends received (see note 3) Other payment for performance bond Net cash from / (used in) investing activities (13,111) (32,577) 3. Cash flows from financing activities 3.1 Proceeds from issues of shares - 80, Proceeds from issue of convertible notes Proceeds from exercise of share options Transaction costs related to issues of shares, convertible notes or options - (3,412) 3.5 Proceeds from borrowings Repayment of borrowings Transaction costs related to loans and borrowings Dividends paid Other (provide details if material) Net cash from / (used in) financing activities - 76, Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period 91,266 46,978 (15,423) (25,253) (13,111) (32,577) - 76,588 (842) (3,846) 61,890 61,890 + See chapter 19 for defined terms 1 September 2016 Page 2

10 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts Current quarter Previous quarter 5.1 Bank balances 2,356 12, Call deposits 47,134 51, Bank overdrafts Other Term deposits 12,400 27, Cash and cash equivalents at end of quarter (should equal item 4.6 above) 61,890 91, Payments to directors of the entity and their associates Current quarter $A' Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item Include below any explanation necessary to understand the transactions included in items 6.1 and Payments to related entities of the entity and their associates 7.1 Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item 2.3 Current quarter $A' Include below any explanation necessary to understand the transactions included in items 7.1 and See chapter 19 for defined terms 1 September 2016 Page 3

11 Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end Amount drawn at quarter end 8.1 Loan facilities Credit standby arrangements Other (please specify) Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well. 9. Estimated cash outflows for next quarter 9.1 Exploration and evaluation 21, Development Production Staff costs Administration and corporate costs Other (provide details if material) Total estimated cash outflows 22, Changes in tenements (items 2.1(b) and 2.2(b) above) Tenement reference and location Nature of interest Interest at beginning of quarter Interest at end of quarter 10.1 Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced 10.2 Interests in mining tenements and petroleum tenements acquired or increased + See chapter 19 for defined terms 1 September 2016 Page 4

12 Compliance statement Appendix 5B Mining exploration entity and oil and gas exploration entity quarterly report 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed. Sign here:... Date: 31 October 2017 (Company secretary) Print name: Peter Thiessen Notes 1. The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report. 2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report. 3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity. + See chapter 19 for defined terms 1 September 2016 Page 5