Energy: FAR puts up some mighty fine numbers for Woodside-led oil project
There are measurable advantages to being able to hitch a ride on the development bandwagon being pulled along by a major partner.
And when the operating partner is $30 billion market cap Woodside Energy (ASX:WPL) pushing through a global tier one development with more than 640 million barrels of oil in resources, it can certainly be a thing to behold.
FAR Limited (ASX:FAR) is the lucky company that has found itself in this position with the company reporting today that the SNE oil field offshore Senegal could deliver production of 13,670 barrels of oil per day net to its 15 per cent interest in the field, at an unchallenging operating cost of $US11 per barrel.
The benchmark West Texas Intermediate Crude price currently stands at $US55.52 per barrel.
The company also noted that the project will deliver an internal rate of return (IRR) of more than 30 per cent.
Pretty impressive when you consider that the higher the IRR, the more profitable a project is expected to be.
And this could be just the beginning, FAR and its partners believe that economic returns from the project could be improved through acceleration of future development phases such as the monetisation of SNE’s gas resources and improved oil recoveries.
Formal Senegal government approval of the project and a final investment decision by the partners is anticipated in December 2019, with first oil forecast in later 2022.
“Given the strong economics for the development, the value of FAR’s share of the SNE field is forecast to triple in value between now and first oil,” managing director Cath Norman said.
“This is a terrific result for FAR shareholders, especially given this estimate does not take into account the anticipated upside opportunities that are anticipated through the development.”
Pancontinental Oil & Gas (ASX:PCL) has joined Key Petroleum (ASX:KEY) as a partner in the Meeba oil project in the Cooper Eromanga Basin, Queensland.
The former can earn a 20 per cent interest in ATP (authority to prospect) 920 and a 25 per cent stake in the Ace Area of ATP 924 by paying Key $150,000 and fund 26.67 per cent of the total costs of drilling an exploration well.
Pancontinental also has the option to earn a further 15 per cent in ATP 920 by funding at its own risk and expense a 280km 2D seismic program.
Tap Oil (ASX:TAP) and its partners in the Manora joint venture in the Gulf of Thailand have approved a three well exploration drilling program aimed at finding new oil resources that can be tied back to the existing Manora platform.
The program also includes a sidetrack appraisal well that is contingent on the success of exploration drilling.
Coal miner Terracom (ASX:TER) has signed a binding agreement to acquire a 19.9 per cent stake in fellow coal player Universal Coal (ASX:UNV) for $34.6m in cash and shares. The acquisition gives Terracom exposure to Universal’s South African coal assets.