FAR Ltd (ASX:FAR)’s board has decided to retain a US$126 million payment received in cash from Woodside Energy’s purchase of FAR’s entire interest in the Senegal RSSD Project, rather than demerging the capital into a separate entity.
The sale agreement includes a potential future contingent payment from Woodside, up to US$55 million in additional funding should oil price and production meet requirements.
Based on statements by the operator of the Senegal RSSD Project and current oil prices, FAR is confident the full payment will be received in time.
Due to the tax losses and capital structure of FAR’s corporate entity, shareholders may receive some consideration from the capital return, as was delivered in September last year.
The Gambia exploration strategy
FAR's remaining active oil and gas exploration assets are its two licences in The Republic of Gambia, blocks A2 and A5, in which it holds a 50% working interest and is the operator.
Following the Woodside payment, the company is focusing its efforts on value-creating strategies for its oil and gas exploration assets. A farm down of FAR’s working interest is in progress, seeking a carry of a well for drilling in late 2023 or an outright sale.
If The Gambia assets are not sold in their entirety, the board intends to demerge them into a separate standalone entity post farm-out, reducing the company’s exposure to the cost of a 2023 exploration well.
“While we continue to focus on our core expertise as an oil and gas exploration company, we are seeking to extract maximum value for our exploration assets in The Gambia by way of farm-out with a financial carry, an outright sale or ultimately a demerger,” FAR independent chair Patrick O’Connor said.
“The board is focused on the careful management of the balance sheet and the unlocking of shareholder value.”
About FAR
FAR Limited is an independent, Africa-focused, ASX-listed oil and gas exploration and development company with high value assets in West Africa and Australia.
In West Africa, FAR holds a portfolio of exploration licences in The Gambia and Guinea-Bissau. FAR also holds acreage surrounded by proven petroleum systems in the state of Western Australia.
The company has a highly experienced board and management team with strong relationships in Africa.