FAR Ltd. has concluded negotiations for the revision of terms for the Sinapa and Esperanca License with Guinea-Bissau’s state-run oil and gas firm Petroguin. Under the revised terms negotiated by FAR and its JV partner Svenska Petroleum Exploration, FAR will now have a 21.42% participating and paying interest in the permits. This is an increase from the 15% participating and 21.42% paying interests as previously reported.
The changes reflect the fact that Petroguin will no longer having a participating interest in the JV 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 have interests of 19.28% and 70.71% respectively.
In addition, the new license terms negotiated include more favorable arrangements for deepwater investment including a reduction to production royalty rates payable to government.
These changes are consistent with the JV’s new strategy to focus on the shelf edge areas of the Sinapa and Esperanca which display a similar geological setting to offshore Senegal and FAR’s enormous SNE field discovery.
In recognition of this new strategy and to provide adequate time to further evaluate the newly acquired 3D seismic data offshore Guinea-Bissau, the JV has been awarded a three-year extension to the current license periods, now ending on November 25, 2020.
During the license periods the work obligation is to drill one exploration well on each license with a minimum expenditure commitment for each of $3 million.