Interesting commercial assessment from independent analyst Peter Strachan on Sama in Energy News.
SEISMIC data over a prospective target of 500 million barrels-plus at FAR’s Sama prospect in The Gambia is getting potential farminees “very excited” to participate, independent analyst Peter Strachan said.
FAR has shifted its focus to farming down some of the 80% interest the Melbourne-based junior holds in two Gambian exploration blocks directly next t o and to the south, along trend form its 15%-held 640MMbbl-plus SNE oil discovery.
The junior has met with Gambian officials and government, and has now established an office in The Gambia to coordinate activities as it runs a data room for potential dance partners.
Polarcus 3D seismic purchased in October last year confirmed the Sama prospect and FAR farmed into blocks A2 and A5 in The Gambia in March this year as operator, after the company identified he area as part of regional studies in 2013 and 2014.
About 1504sq.km of 3D seismic data was acquired in 2015, with reprocessing planed before drilling next year.
In Sama, the same play type as SNE, FAR has access to the same, prolific source kitchen, the same upper/400 series reservoirs and thickening 400 series sands to the south, and thus rates the prospect as a "high chance of success".
Sama's reservoirs have already been penetrated by 10 wells from the Rufisque, Sangomar and Sangomar Deep (RSSD) joint venture with Cairn Energy.
Strachan calculates that a retained 32% interest in a 500MMbbl discovery in Gambia would be worth nearly 28cps to FAR, if oil has an in situ value of US$8.40/bbl, with more upside to come if oil price rise as widely expected.
He noted that when ConocoPhillips was negotiating to sell its 35% stake in the SNE field to Woodside Petroleum, Brent was about $40 and below, and had risen to about $45 by the time the deal was announced.
Yet despite an estimated cash breakeven oil price of $35 for an SNE field development, it was not a viable or commercial proposition at $40, Strachan said.
Since then Brent has risen by more than 50% or $24/bbl, so Strachan says a net present value for the oil resources of over $10/bbl is currently likely to be a more accurate value market.
FAR is in the middle of independent arbitration to determine if ConocoPhillips acted in good faith when it sold tis interest to Woodside, and whether there was an adequate first right of refusal process offered to the Melbourne junior.
Yet even with that going on, Strachan said there's very little downside for FAR.
Costs are capped in that process in which FAR has invested and a decision is final with no resource available, so Strachan does not see any downside for the junior from this point, only upside if it is awarded some form of compensation from the tribunal.
FAR managing director Cath Norman was in Senegal last week meeting with Macky Sall, who has been Senegal's president since 2012, to "strengthen [the company's] long-standing relationship" in-country.
Cairn's exploration director Eric Hathorn added to the positive sentiment last month when he told Africa Oil Week that the JV was progressing toward first oil at SNE by 2021-23 with up to 1Bbbl of recoverable hydrocarbons.
"Senegal has moved from being a frontier basin to an emerging basin with a clear path to commerciality," Hathorn said, adding that the development of the country's oil sector "will benefit the people in Senegal."
Cheers BF.
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