FAR Limited announces that together with its wholly owned subsidiaries FAR Senegal RSSD SA and FAR Holdings 1 Pty Ltd (collectively "FAR"), it has entered into an RSSD Sale and Purchase Agreement with ONGC Videsh Vankorneft Pte Ltd (”ONGC”) in respect of FAR’s entire interest in the Production Sharing Contract for the Rufisque, Sangomar, and Sangomar Deep Offshore Blocks offshore Senegal and the relevant Joint Operating Agreement (the “RSSD Project”). ONGC Videsh Vankorneft is a subsidiary of ONGC Videsh, the largest E&P company of India.
As consideration for the sale (the “Transaction”), ONGC has agreed to pay FAR US$45 million at completion. In addition, ONGC has agreed to reimburse FAR’s share of working capital for the RSSD Project from 1 January 2020 totalling US$66.58 million, payable on completion. The reimbursement is comprised of cash calls paid by FAR, including US$29.60 million paid to cure FAR’s default to the Joint Venture. The Transaction also includes an entitlement to certain contingent payments capped at US$55 million as outlined below. The Transaction is subject to conditions precedent that are summarised below and are typical for an agreement of this nature.
FAR's Managing Director, Cath Norman said: "We are pleased to bring this deal to our shareholders and wish to thank ONGC for their interest and cooperation over the last few months. ONGC is a very reputable group with global exploration and production interests. We believe they will be a valuable partner for Petrosen and Woodside going forward.
As we have acknowledged, the market for financing and selling assets has been weak since the impact of COVID was felt in March of this year. In these circumstances, the offer from ONGC represents the best option available at this time and we trust that our shareholders will vote for this transaction.
FAR expects to have approximately US$130 million in cash at the close of this Transaction that will be used to rebuild the Company and further our other West African prospects offshore the Gambia and Guinea-Bissau.
We thank our shareholders for their patience over the last few months and look forward to releasing the Notice of Meeting and forward timetable in the coming week.
And finally, we wish to acknowledge FAR’s long partnership with Petrosen and the Government of Senegal. Having been in the RSSD project for 14 years, it’s a bittersweet moment to be selling our stake. FAR is committed to our projects in The Gambia and Guinea-Bissau and using our deep knowledge of the MSGBC Basin to potentially explore offshore Senegal again."
