the option question

Basically my question is related to the rejection of the option by Shell .

SHELL ELECTS NOT TO EXERCISE OPTION ON SENEGAL

Does the OPTION shell signed for the licence area include the 3 Senegal blocks or does the option area relate to the new boundry block which the CSEM was used on ?

the programme is designed to enable Shell to determine
whether or not to exercise an Option to acquire a 70 percent interest in the block and enter the second renewal period that includes a well commitment



IMO After looking more closely at the OPTION and the terms of the agreement arranged by FAR it seems that FAR had only agreed to a JV ON THE ONE BLOCK which was one of the Senegal offshore blocks not all 3 blocks therefore it is a very good deal for FAR as Shell could have finished up competing for the other remaining blocks in the Senegal region independently from the option deal ....

After the extension was granted by the Senegalese Government the configuration and area of the 3 blocks were changed.....

Moreover it could be concluded that SHELL was not interested in the OPTION because if the CSEM data proved up the OIP SHELL would only have access to the one block which was surveyed by SHELL ....

1. Shell's cost approx 7.5 million to use CSEM over the
Multiple Santonian age fan area block only .

2. Shell was to free carry FAR for a 65 million cost of the first well then pay another 6 million when they hit oil.

3. shell may have 70% operatorship of the one block in Senegal but would have to compete for the other larger blocks which have identified mutiple targets including the very large Albian to Neocomian shelf edge closure adjacent to a Turonian oil source rock kitchen.

Under the terms of the licence granted by Senegal a decision to enter into the drilling phase is due during late September 2009 unless otherwise extended.

SHELL to make a technical report by 21 september 2009.


Last 3 months trading volume in FAR

MAY .....107 MILLION
JUNE ....108 MILLION
JULY.....169 MILLION
AUGUST ..322 MILLION

There seems to be a lot of interest in FAR since Shell started the CSEM surveys. (cant be all Day Traders) ..