Due to numerous delays, oil, and gas finder Far (ASX: FAR) expects the final cost of drilling at its joint venture Bambo-1 well – around 85 kilometres offshore of Gambia - to soar by $9.87m.
As a result, Far estimates that the cost to complete the well will increase from a total of US$51.4m to US$61.27m.
After significant fluid losses were experienced, the company was forced to temporarily halt drilling at 3216 metres.
But with these fluid losses now stabilised in accordance with standard offshore operating procedures, Far is now planning to plug and side-track the well to continue drilling to the planned total depth.
The company released a wide-ranging update on Monday, noting it was likely to net US$4.935 million of the increased costs.
Bambo-1 is expected be drilled to a final depth of 3450 metres and work is likely to continue for a few more weeks.
The well has been designated a “tight hole” by Far and JV partner Petronas. As a result, no information related to depth or formation is likely to be provided during the drilling beyond what is required to meet ASX continuous disclosure obligations.
Commenting on the drilling delays, Far managing director Cath Norman notes the company still had cash reserves of around $52.74m
“Far is pleased with the experienced drilling team and contractors who have acted to quickly manage and adjust the Bambo-1 drilling program to suit the geological setting and best meet the objectives of the drilling program,” Norman said.
“We are encouraged by the presence of oil in potential reservoirs and look forward to completing the well in the coming weeks.”
Far forecasts a cash balance of US$37m after the completion of the well, inclusive of the increase in Bambo-1 well costs.
Shares in Far were trading up 2.07% at 74 cents but bounced back to around 70.5 cents in late trading.
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