FAR Ltd Progresses Plans to Drill Gambian Oil This Year, Erin Energy Files Voluntary Bankruptcy

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Erin Energy files voluntary bankruptcy

Houston based Erin Energy Corp., the oil and gas producer that initially acquired a licence on Gambia’s offshore Blocks A2 and A5 before sharing them FAR Ltd, has filed court documents to enters voluntary bankruptcy and seeking reorganization.

Erin Energy finances were already in a very bad shape in March 2017 when the company had no choice but to sell 80 percent interest and operatorship of its two offshore blocks to the Australien company FAR Ltd. The said blocks are close to the SNE discovery offshore Senegal.

While entering voluntary bankruptcy in the United States Bankruptcy Court for the Southern District of Texas, Houston Division, Erin Energy said it is seeking a source of debtor-in-possession financing for working capital needed to continue operations. Erin Energy is, therefore, seeking approval from the Bankruptcy Court for a variety of motions, including the authority to maintain bank accounts and other customary relief.

Erin Energy and its subsidiaries will continue to operate under the jurisdiction of the Court and in accordance with the applicable provisions of the Code and the orders of the Court. To assure ordinary operations, Erin is in the process of looking for a source of debtor in possession financing to provide it with the necessary working capital to continue its operations and move towards a successful Reorganization Plan.

To remind, FAR bought 80 percent interest and operatorship of Erin Energy Gambia’s two offshore blocks, close to the SNE discovery offshore Senegal, back in March 2017.

Under the terms of the agreement, the stake in the blocks was acquired by a wholly owned subsidiary of FAR, for an upfront payment of $5.18 million and will fund up to $8.0 million of Erin’s share of the cost of an exploration well. If Erin’s share of the well costs is less than $8.0 million, the remaining amount will be paid in cash. Erin will retain a 20 percent working interest in the blocks.

FAR Ltd Selects Stena Drilling for Gambia Due Late 2018

With its quasi complete control over the Gambia Block A2, having a stake of 80% partnered with Erin Energy, Australian oil and gas explorer FAR has selected Stena Drilling’s drillship, Stena DrillMAX, for the drilling of the Samo prospect offshore Gambia. The purpose is to drill the Samo-1 exploration well whose primary target is estimated by FAR to contain a best estimate prospective resource of 825 mmbbls of oil.

The Australian junior oil company expects the Stena DrillMAX to confirm its forecasts that the Samo field is very highly rated and has an estimated chance of success (CoS) of 55%, as endorsed by RISC, an independent oil and gas consultancy firm. Samo-1 well is set to become the first offshore well to be drilled in Gambian waters for 40 years

The Stena DrillMAX is a DP class 3 drillship and a dynamically positioned, deep water drill ship. It has the capability of drilling in water depths of up to 10,700m and has recently carried a similar job for FAR in its Senegal oil fields, next to The Gambia, where this new mission is to take place. The Stena DrillMAX can also operate in harsh environment and has vast experience in international and regional West African waters.

FAR’s drilling program is scheduled to begin in late 2018 and is expected to take anywhere between 40 and 120 days for its completion.

Concerns Around Gambian Oil Contracts

11 newly shortlisted bidders on Gambia offered acreage, including the two onshore licences of both upper and lower River Gambia tracts, (the two shallow water licences A3 and A6), will very soon submit requests for proposals by the middle of this year.

These proposals shall include key technical and commercial terms in line with Gambia’s draft model contract — the Model Petroleum, Exploration & Production Licence of 2014, which was reviewed and reformatted last August.This second phase of the licensing process means possibly awarding production sharing contracts (PSC), before autumn.

All indications are that bidding companies had expressed interest in just four blocks, suggesting that either the two onshore licences had been dropped or that blocks A1 and A4, currently claimed by Oslo-listed African Petroleum (APCL), have been withdrawn from the bidding process, by the Gambia Government, to avoid controversy.

Majors in the bidding process include France’s Total, Italy’s Eni and two affiliates of China National Offshore Oil Corporation (CNOOC) — CNOOC International and CNOOC UK. Also in the race are Australian juniors Far Ltd and Talon Petroleum, UK-based Impact Oil & Gas, Sweden’s Svenska Petroleum and a joint venture of UK-based Tullow Oil and Australia’s Woodside Energy. Australian FAR and Woodside Energy are already in advanced operation Senegal SNE offshore fields, adjacent to The Gambia.

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