PERTH (miningweekly.com) – ASX-listed FAR on Wednesday announced a $45-million transaction with Indian major ONGC Videsh Vankorneft for its 15% interest in the Rufisque offshore, Sangomar offshore and Sangomar deep offshore (RSSD) contract area, offshore Senegal.
In addition to taking FAR’s 15% interest in the project area, ONGC has also agreed to reimburse FAR’s share of the working capital for the RSSD project from January 1, totalling some $66.58-million, payable on completion.
The reimbursement will comprise cash calls paid by FAR, including $29.6-million paid to cure FAR’s default to the joint venture (JV).
The transaction will also include an entitlement to certain contingent payments, capped at $55-million, based on future oil sales from the RSSD project. The contingent payment comprises 45% of entitlement barrels sold over the previous calendar year, and multiplied by the excess of the crude oil price per barrel and $58/bl.
The contingent payment will terminate on the earliest of the end of 2027, three years from the first oil being sold, or a contingent payment cap of $55-million being reached.
The FAR transaction comes shortly after JV partner Woodside inked a binding sale and purchase agreement to acquire Capricorn Senegal’s entire participating interest in the RSSD project for up to $400-million, taking its interest to 68.33% in the Sangomar exploitation area and to 75% in the remaining RSSD evaluation area.
Woodside has, however, flagged plans to sell down its equity in the project over the course of 2021 "to the right partner at the right price".
“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 growth with global exploration and production interest. We believe they will be a valuable partner for Petrosen and Woodside going forward,” said FAR MD Cath Norman.
“As we have acknowledged, the market for financing and selling assets has been weak since the impact of Covid-19 was felt in March 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.”
Norman said that FAR expected to have some $130-million in cash at the close of the transaction, which will be used to rebuild the company and further its other West African prospects offshore Gambia and Guinea-Bissau.