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north211

In submarine oil exploration, the derisking factor follows the progression of exploration work in 2D siesmic, 3D seismic and to exploration well drilling, production testing.

Basically the more advanced the work being done, the more probability the prospect can reach a stage where an exploration well can be considered a good risk.

Farmin would generally priced at cost spent, cost needed to be spent for the next stages and a buy-in money compensation depending on how advance is the project and the leverage the company has.

In Seychelles case, I am not sure if there will be a farmin at all at this stage but if there is one, I would expect the payment being the 2D cost (about $7m), some money upfront and commitment to spend for 3D (probably about $35m needed) in exchange for a percentage of the permit and an option for next stage if targets are found that is worth drilling a $40-60m exploration well.

The leverage issue will be played in the hands of the potential farmin partners: i.e. permit expiring, SEPEC willingness to issue free permit (meaning permits can still be obtained from SEPEC to any oil majors). The only obvious advantage is that 2D work has been done. That's why I would expect $5-$10m being the cost plus quantum.
The quantum may be bigger if WHN is farming out 100%, in which case a high monetary term may be offered for a total take over of the project. For a company like WHN, it could be the best exit strategy.

In any case, all of the above speculation may come to nothing if there is no one wanting to take the risk in Seychelles at all.

JIMO

DYOR