FAR Limited has announced it will not be exercising its pre-emptive right to the proposed transfer of Cairn Energy’s interest in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) Contract Area, offshore Senegal, to Lukoil.
Per the Joint Operating Agreement (JOA) between the co-venturers, FAR has a pre-emptive right over the sale of Capricorn Senegal’s (a wholly subsidiary of Cairn Energy) 40% working interest to Russian oil and gas giant, Lukoil. The asset sale was announced in July.
In a release by FAR, it clearly stated that it would not be exercising its right as the company doesn’t object to the sale. Although the operator of the field, Woodside, has exercised its pre-emptive right, the sale of the working interest still depends on Cairn shareholders and the approval of the Senegalese government. FAR announced the thirty-day pre-emptive period is now over.
FAR announced the completion of Petrosen’s interest increase in the project from 10% to 18%. If Woodside completes the takeover of Cairn’s interest, the percentage of the joint venture partners in the Sangomar Exploitation Area will be as follows: Woodside with a 68.33% working interest, Petrosen with an 18% interest and FAR with a 13.67% interest. The remaining working interest in the RSSD evaluation area which includes the FAN and SNE North oil discoveries will be Woodside with 75%, FAR with 15% and Petrosen with 10%.
FAR said it is defaulting on its payment to the joint venture. The company’s payment for June, July and August which amounts to $28.3 million and has accrued interest of $0.07 million interest each, has not been made. The company has 6 months from the date of default which was on the 23rd of June 2020, to make the payments plus interest. The company also announced it is making progress with its asset disposal programme.
In the release, the Managing Director of FAR, Cath Norman said: “It is pleasing to see the operator, Woodside, and Petrosen showing their support for the Sangomar Field development by increasing their working interest in the project. Unfortunately, due to the COVID19 crisis and related rout in oil price, FAR continues to pursue a sale of all or part of FAR’s stake in lieu of concluding financing for the development. The Cairn sale is a sign that there is international appetite for this world class project, even during challenging times.”