FAR Ltd., Melbourne, a member of the Sangomar oil field development joint venture offshore Senegal, has signed a binding memorandum of understanding with Glencore Energy (UK) Ltd. for Glencore to take FAR’s full allocation of Sangomar crude once production begins.
Far said it will benefit from Glencore’s global network and expertise to maximize the intrinsic value of the new field’s oil.
Earlier, FAR named Glencore as one of the three lenders involved in an underwritten $300 million senior secured reserve-based lending facility—a key part of the funding package to develop FAR’s interest in Sangomar field. The other lenders are Macquarie Bank Ltd. and BNP Paribas. The lenders will each contribute $100 million to the facility.
Provided Glencore remains a lender to FAR, the oil offtake is expected to be for 7 years after the field is brought on stream. A minimum of 20 million bbl representing FAR’s allocation is expected to be produced during the period.
The deal follows a final investment decision for development of Sangomar by the Woodside Petroleum-led JV. Woodside has now issued the full notice to proceed to key contractors and orders have been placed for long-lead items for drilling and related completions. Drilling at the field is scheduled to begin at the end of first-quarter 2021.
FAR said it has raised more than $400 million in new capital to fund its share of expenditure for the first phase of Sangomar development. This sum includes a $146 million (Aus). equity placement and share purchase plan with receipts of $11.18 million (Aus).
FAR says that its net economic interest 2P reserves in the field are 28 million bbl out of a total field 2P reserve estimate of 231 million bbl underpinning Phase 1 development. FAR’s net working interest is 13.67% assuming that Senegal’s national oil company Petrosen will exercise its right to take an 18% working interest in the production sharing contract.
A further 253 million bbl of 2C contingent oil resources (32 million bbl net to FAR) are estimated to underpin development in future phases, the detail of which will be honed with results from the Phase 1 program.
Phase 1 comprises 23 subsea wells, including water injectors to provide waterflood to improve recovery. The development wells will be tied back to a floating production, storage, and offtake vessel.
Sangomar field (then known as SNE field) was discovered in 2014. The current shareholding is Cairn Energy PLC with 40%, Woodside 35% and operatorship of the development phase, FAR 15%, and Petrosen 10%.
