Fastnet saves €22m drilling costs with Korean deal
IRISH oil and gas miner Fastnet has saved about $30m (€22m) by agreeing to share the costs of drilling a site off the coast of Morocco with a Korean company.
The "farm-out" deal, as it is known in the industry, will reduce the costs and risks carried by Fastnet. The deal leaves Fastnet subsidiary Pathfinder with a 12.5pc paying interest in the Foum Assaka bloc in the Agadir basin, and gives Korean company SK Innovation a 12.5pc paying interest too.
In return, SK Innovation will pay 12.5pc of the cost of the first exploration well subject to a maximum cost of $100m. If that well is unsuccessful and another must be drilled, it will pay the costs of that instead.
It will also pay Fastnet $3.2m for past costs and a further payment of 25pc of Fastnet's back costs between October and January of next year.
Sources said the deal equates to a $30m net saving that Fastnet would otherwise bear if it paid its way through the two wells while maintaining its 25pc paying interest.
Fastnet has been looking for a farm-out partner for Foum Assaka for some time. Analysts previously suggested it could take up to March before a deal was finalised.
Just weeks ago the company raised £10m to fund drilling at Foum Assaka through a new share placement. The money, combined with cash reserves of just under £7m, will be used to finance its remaining chunk of the bill and for other Moroccan drilling projects.
Offshore Morocco is an emerging hydrocarbon basin that has attracted new entrants in the past 12 months including BP, Chevron, Cairn Energy, Galp, Genel and Total. As many as 12 wells are planned by the industry over the next two years.