The government of Gambia has approved Erin Energy’s farm-out agreement with FAR Ltd. for blocks A2 and A5. Under the agreement FAR will acquire an 80% stake and operatorship of the two blocks offshore Gambia.
Erin will retain a 20% interest in the block and the farm-out agreement calls for FAR to fund Erin Energy through the first exploration well.
Erin Energy’s blocks are adjacent and on-trend with FAR’s SNE oil field offshore Senegal. The blocks have the potential to contain prospective resources in excess of one billion barrels of oil according to FAR.
FAR will pay Erin Energy a purchase price of $5.18 million and will carry $8 million of the company’s share of costs in a planned exploration well to be drilled in late 2018. In addition, if Erin Energy’s share of the exploration well is less than $8 million, the balance is to be paid in cash to the company.
Femi Ayoade, Erin Energy’s CEO, commented, “We are pleased to have approval from the Government of The Republic of The Gambia for this transaction and look forward to working with FAR as a partner in this rapidly-emerging and prolific basin. This farm-out highlights our strategy of maximizing our exploration breadth while minimizing exploration risk.”
Source: Petroleum Africa