FAR, JV Partners to Exit Kenya’s Block L6

FAR the block operator to Kenya’s Block L6 and JV Partners , PanContinental Oil & Gas and its wholly owned subsidiary Afrex Limited have resolved to surrender the block according to an announcement by the Austalian company. FAR however says despite the resolve no resolution has been passed and discussions are underway to this end.

The JV has been unable to access the license due to insecurity in the region and had secured a 24-month renewal to the existing Environmental and Social Impact Assessment ahead of the planned 2D seismic acquisition. It was expected that the seismic will define drillable locations on primary prospects Mamba, Kudu and Boundary Anticline within block L6.

A farm-out to Milio International by FAR fell off as the company was unable to conclude the transaction due to delayed government approval. FAR was fully carried through a proposed onshore well and a 1,000 line kilometre  onshore 2D seismic survey and associated processing and interpretation by Milio group of companies through the farm-out completed in February 2014.

There has also been an ongoing dispute between the JV partners on default notices (2015 Default Notices) issued to Pancontinental by FAR on the basis of the non-payment by Pancontinental of two cash calls in the same year and currently amounting to US $567,145.80.

The L6 permit area in the Lamu Basin covers over 3,134km² with about one quarter onshore and the remaining offshore in water depths up to approximately 400m. FAR’s initial strategic interest was on the onshore exploration play which should there have been a discovery could be readily commercialized. The largest potential prospect identified to date is the Kifaru prospect in water depths of 80-100m in the southwest of the L6 permit. This prospect and several others have been covered by a 3D seismic survey (refer Table 3).

Block L6 has the potential to contain approximately 3.7 billion barrels of oil or 10.2 trillion cubic feet of gas prospective resources on a gross, un-risked, best estimate basis, as assessed by FAR and audited by RISC.