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FAR defaults over Sangomar payments

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Oilfield Technology,

FAR Ltd has said that its subsidiary FAR Senegal RSSD SA, which is a party to the Sangomar joint venture (JV) project in Senegal, has not paid the most recent development cash call received by it and accordingly has received notification from Woodside Petroleum, the operator of Sangomar, that FAR Senegal is in default.

Over the past several months, Woodside has been undertaking a programme to rescope, reschedule and reprice the project in order to reduce CAPEX. FAR has made the decision to preserve the group's cash whilst it awaits clarity on project CAPEX amendments.

In the interim, FAR is continuing to investigate selling all or part of its interest in the project.

Under the JOA default provisions, if a defaulting party has not fulfilled its financial obligations within 6 months from the date of notification of the default, it shall forfeit its participating interest without compensation.

FAR has made staff redundancies, and all senior executives and Non-Executive Directors have accepted a 20% salary or fee reduction effective 1 July 2020. The Board will review this fee and salary reduction at least quarterly. This recent round of cost cutting comes after FAR substantially reduced contractor headcount in April.

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