Large equity positions in a fast emerging oil and gas margin
In Block L6 FAR holds 60% offshore and a 24% onshore paying and beneficial interest (I) and is also the permit Operator. In Block L9 FAR holds a 30% paying and beneficial interest. Both blocks are located in the highly prospective East African margin in the Lamu Basin, Kenya, north of recent, world-scale, natural gas discoveries totalling around 100 trillion cubic feet off the coasts of Mozambique and Tanzania.
While explored by major oil companies since the 1950s, no exploration activity was carried out in the Lamu Basin between 1986 and 2002. Now a significant proportion of the Lamu Basin is leased to major players, including Anadarko, TOTAL, ENI and BG Group.
(i)Subject to completion of Milio farm-out agreement. Current paying beneficial interest is 60%.
L6: Billion barrel combined prospective resource potential
The Block L6 permit area, over, 3,134 kilometres², has both onshore and offshore potential with water depths varying from shallow transition zones to approximately 400 metres.
In February 2014, FAR completed its third farm-out to the Milio group of companies leaving FAR fully carried through a proposed onshore well and an onshore 2D seismic survey and associated processing and interpretation.
Since executing the farm-out agreement, the agreed onshore work program, to be operated by Milio International has suffered delays due to civil upheaval and security incidents in the region that arose during 2014. As a result of these incidents, the Ministry of Energy and Petroleum of Kenya awarded the Block L6 joint venture an extension and it is working with the Block L6 participants to ensure appropriate access for petroleum operations is established.
FAR is planning for a 2D seismic survey to commence as soon as possible and is continuing discussions with the Government of Kenya to secure suitable arrangements pursuant to the Petroleum Sharing Contract to allow exploration activity that has been hindered by past security incidents and land access issues, to commence..
In relation to the offshore portion of Block L6 where FAR has a 60% interest, FAR has been progressing a farm-out initiative for drilling an offshore well. The Sunbird-1 oil discovery in the nearby Kenya Block L10A targeted a Miocene reef structure. The Miocene reef play extends along the coast of Kenya and through both of FAR’s offshore Blocks, L6 and L9. The discovery of oil in the Sunbird-1 well at the southern extent of the Miocene reef play and evidence for oil in the Maridadi well, drilled at the northern extent in L6, has generated strong industry interest in FAR’s Block L6 farm-out.
In 2012, FAR completed a 778 kilometres² 3D seismic survey over the L6 permit offshore Kenya. The survey was conducted by Fugro Geoteam and was completed within the approved budget and expected schedule. Combined with existing 2D mapping, FAR has identified a number of hydrocarbon play types and prospects. Within the additional 3D coverage, FAR has matured three prospects (Tembo, Kifaru and Kifaru West) which have prospective resources of 327, 178 and 130 million barrels of oil (un-risked best estimate, 100% basis) respectively, or in a gas only success case, 807, 517 and 388 billion cubic feet of gas. The chances of a discovery of the three prospects have been assessed to be 21%, 19% and 18% respectively.
Combined prospective resources for the L6 Block have been assessed at 3.7 billion barrels of oil or 10.2 trillion cubic feet of gas (un-risked, best estimate, 100% basis).
L9: Oil seeps & gas shows
Awarded in 2011, the highly prized L9 block covers an area of 5,100km2 in water depths ranging from 300m to 1,400m. To date, only one well has been drilled in the L9 block, the Simba-1 well in 1979, which encountered gas shows. In addition, offshore oil seeps have been identified to the north of L9. In combination these lend support to a working hydrocarbon system in the Lamu basin.
The assignment agreement between FAR and Ophir energy (the Operator of Block L9) expired on 23 July 2014. Following this date, FAR and Ophir energy have held discussions regarding FAR’s entry into the block and FAR is currently seeking to resolve the status of its interest.
FAR holds a 30% interest in L9.
For further information and up-to-date progress on FAR’s Kenyan licences, please visit the Announcements & Reports section of the Company website.