review of previous extension application

Thought it might be good to post last year's announcement made when the previous extension was granted. It just emphasises the extension's importance in negotiating with JV partners. As others have pointed out, the SP should increase on the lease extension ALONE, should it be granted.



25 November 2008
ASX ANNOUNCEMENT AND MEDIA RELEASE
MINISTER GRANTS EXTENSION AND FAR MOVES TO INCREASE INTEREST IN SENEGAL BLOCKS TO 90%
Offshore Senegal, West Africa
FAR is pleased to announce it has received advice from the Minister of Energy for the Republic of Senegal, dated 20 November, 2008, confirming a one year extension to the First Renewal Period under the Contract for Exploration and Hydrocarbon Production Sharing covering the Rufisque and Sangomar and Sangomar Deep offshore blocks.
Following the grant of the extension, FAR intends, subject to approval by Petrosen (Senegal’s National Oil Company), to increase its working interest to 90 percent and assume Operatorship of the three offshore blocks. The increased interest in the blocks will place FAR in a strong position with the continuing farmout process, briefly interrupted to obtain the extension. Written offers to participate in the drilling of a well have been received from two large international exploration and production companies, with a third offer, from a major, pending.
To enable these offers to be fully considered and a farm-in partner or partners secured to enable the drilling of an exploration well, the co-venturers including FAR and Petrosen, requested the current contractual period of the license be extended by one year.
The successful application for the extension had been based on the following:
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farm in offers have been obtained from industry participants with access to rigs and proven capacity to operate deepwater wells;
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the joint venture has met all their obligations under the first renewal period and have spent US$17 million being twice the minimum amount specified under the Contract;
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in doing so the JV has acquired one of the largest 3D surveys off the northwest coast of Africa covering an area exceeding 2000 square kilometers resulting in a high quality data set that has been processed into a world class seismic volume leading to the identification of several plays and drillable prospects;
•
the work has been accomplished as rapidly as possible but with due care and attention to detail thus resulting in the several offers received.
FAR is seeking to be free carried through the drilling of the first exploratory well.