FAR Limited an independent, Africa focused, oil & gas exploration company, provides its
quarterly activities report for the quarter ended 30 June 2024.
Highlights
- Woodside Energy advised the ASX on 11 June 2024 that it had achieved first oil from the
Sangomar field offshore Senegal, marking the safe delivery of the country’s first offshore oil
project.
- Woodside Energy advised the ASX on 23 July 2024 in its ‘Second Quarter Report’ that the first
cargo was loaded subsequent to the quarter and commissioning activities and the safe ramp up of
production are expected to continue through 2024.
- FAR is seeking offers for a potential sale of the up to US$55 million contingent payment from
Woodside Energy in relation to the RSSD Project in Senegal.
- Cash at quarter end was US$2.2 million (unaudited).
Commenting on the activities during the quarter, Independent Chairman Patrick O’Connor said:
“The Company is seeking offers with respect to its up to US$55 million contingent payment due from
Woodside Energy given the commencement of first oil production from Sangomar. We look forward to
the potential monetisation of this contingent asset.”
Woodside Energy Contingent Payment
As part of the consideration for the sale of its interest in the RSSD Project in Senegal to Woodside
Energy (“Woodside”), FAR received rights to a Contingent Payment with a maximum value of US$55
million.
The Contingent Payment comprises 45% of entitlement barrels (being the share of oil relating to FAR’s
previously held 13.67% of the RSSD Project comprising the Sangomar Field exploitation area of interest),
multiplied by the excess of the crude oil price per barrel and US$58 per barrel (capped at US$70 per
barrel). The Contingent Payment terminates on the earliest of 31 December 2027, three years from the
first oil being sold (excluding periods of zero production), or a total Contingent Payment of US$55
million being reached, whichever occurs first.
Woodside Energy ASX announcement dated 11 June 2024 advised that it had achieved first oil from
the Sangomar field offshore Senegal, marking the safe delivery of the country’s first offshore oil
project.
In the Woodside Energy in its Second Quarter 2024 Report dated 23 July 2024, the following was
noted in relation to Sangomar:
o Finalised sales for initial Sangomar crude cargoes loading in July 2024, receiving interest from
European and Asian refiners. The first cargo was loaded subsequent to the quarter.
o The project was 98% complete at the end of the quarter.
o The development drilling program continued with 21 of 23 wells drilled and completed. An
additional 24th well approved by the joint venture in May 2023 was also drilled and completed
in the period.
o Commissioning activities and the safe ramp up of production are expected to continue
through 2024.
As a result of the commencement of production, there is likely to be a payment to FAR under the
Contingent Payment in early 2025. Based on progress of the Sangomar development and current oil
prices, the Board of FAR expects that the full US$55 million will be received prior to the transaction long
stop date in 2027.
Gneiss Energy Limited, a UK-based leading energy corporate finance advisory firm has been appointed
as corporate financial advisor in connection with advising and assisting with the potential sale of the
Contingent Payment.
The process of seeking offers for the Contingent Payment has commenced. No assurance can be given
regarding the receipt by FAR of an acceptable offer or its timing. Any offer that may be received will be
considered by the FAR Board in accordance with its terms.
Corporate
Cash Balance and Expenditure (unaudited)
FAR had US$2.2 million of cash at the end of the quarter. During the June 2024 quarter expenditure
totalled US$0.3 million, comprising mainly corporate and administration costs and exploration
expenditure related to wind up of the Gambia interests.
Corporate and administration expenditure in the June 2024 quarter included mainly corporate and
compliance costs.
Exploration expenditure in the quarter comprised the finalisation of Gambia in-country administration
and support costs.
As detailed in Item 6.1 of the accompanying Appendix 5B, the Company discloses that the aggregate
payments to related parties and their associates during the quarter was US$66,000. The payments
during the quarter represent remuneration paid to Non-Executive Directors.
