Up to $45 million in costs to drill a well off the Gambian coast is covered through a deal with Malaysian oil company PETRONAS, Australia's FAR Ltd. said.

PETRONAS, an abbreviated form of Petroliam Nasional Berhad, was assigned a 40 percent stake each in two petroleum licenses off the Gambian coast. Under the terms of the agreement, PETRONAS agreed to cover 80 percent of the costs to drill an exploration well up to a total maximum coast of $45 million.

FAR Managing Director Cath Norman said the deal is a testament to the emerging value of the broader West African basin.

"Success in this well would be of significant value to our shareholders and truly transformational for the people of The Gambia," she said in a statement.

An audit of geotechnical data show the Samo and Bambo prospects off the coast of Gambia hold combined best estimate prospective reserves of 1.1 billion barrels. The Samo prospect in particular holds substantial promise, with an estimated chance of success of more than 50 percent.

FAR stays on as the operator through the exploration phase offshore Gambia, and PETRONAS has the right to become the operator once development begins. Drilling is expected late this year in what will be the first exploration campaign for Gambia in nearly 40 years.

FAR's permit area offshore Gambia, which covers 1,000 square miles, is adjacent to its flagship SNE discovery offshore Senegal. The initial oil discovery offshore Senegal was made in 2014 and met the minimum threshold for a commercial opportunity by the third quarter 2016.

West African countries have been at odds over their maritime borders, while officials there have been vetting their corporate options as the potential for oil evolves. In October, African Petroleum said its subsidiaries in Gambia filed requests for arbitration at an international dispute chamber to protect two of its offshore licenses.

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