Erin Energy Corp (NYSEMKT:ERN), a public listed lithium stock has announced entering into an agreement with FAR Ltd. (FAR), a public oil and gas company listed at the Australian Securities Exchange. According to the deal, FAR will acquire 80% interests and operation rights of Erin Energy’s offshore A2 and A5 blocks in The Gambia with Erin Energy retaining 20% working interest in the blocks. Additionally, FAR will finance Erin Energy in the first exploration well.
Under the agreement, which is subject to approval by the Gambian government, upon closing the deal, FAR will pay a purchase price of $5.18 million and take over $8 million of the company’s share in costs incurred in a planned exploration well that is scheduled to be drilled in 2018. Additionally, if Erin Energy’s exploration well shares fall below $8 million, the balance will be paid to the company in cash.
Erin Energy’s interim CEO, Jean-Michel Malek, says they are delighted to work with a company with a reputation of success adding that the partnership will enable them maintain a significant stake in the highly prospective blocks without incurring additional capital investments. He says the partnership will enable the company to ease and strengthen its balance sheet and offer the ability to explore additional opportunities for growth.
Blocks A2 and A5 are next to FAR’s 2014 SNE-1 oil field discovery which was the largest offshore oil discovery of the industry that year. Since successfully drilling the SNE-1 well, FAR has also drilled wells on the SNE field in addition to increasing the field’s best case 2C contingent oil resource to 641 million.
Erin Energy and FAR are planning to carry out interpretation and reprocessing of 3-D data acquired by Erin Energy to further advance identified prospects on Blocks A2 and A5. The company has also acquired 1,504 km2 worth of modern data and has also spotted prospects on the blocks.
Erin Energy Corporation is an independent gas and oil exploration and production entity with focus on sub-Saharan Africa energy resources.