FAR Limited has announced a 20 per cent salary reduction for all senior executives and Non-Executive Directors effective July 1, 2020. It also said that it had made staff redundancies.

The company stated that the Board would review the fee and salary reduction at least every quarter. In April, the company also substantially reduced its contractors.

It said that it was yet to pay the most recent development cash call received, and had already got a notification of its default in payment from the operator of the Senegal RSSD Joint Venture. FAR Senegal RSSD is a party to the Senegal RSSD Joint Operating Agreement (JOA).

According to the terms of the joint agreement, if a party has not fulfilled its due financial obligations within 6 months from the date of notification of default, it shall forfeit its participating interest without compensation and unpaid amounts will accrue interest at the LIBOR rate +2%.

Key points of the JOA default provisions are:

• 6-month period to fulfil its financial obligations before forfeiting participating interest.
• Non-defaulting parties must pay defaulting party’s unpaid amounts pro-rata to their participating interests over this period.
• Defaulting party does not attend Operating Committee meetings or vote during default period.

The company has been rescoping, rescheduling, and repricing the project to reduce capital expenditure. It has taken the decision to preserve the group’s cash while awaiting clarity on the project’s amendment.

FAR is also considering the option to sell all or part of its Senegal interest in the RSSD Production Sharing Contract and Joint Operating Agreement.

The payment is for the Sangomar field in the West African country, Senegal. The COVID-19 pandemic has definitely hit the company hard, hence, its financial instability which has not only led to loss of countless jobs, both directly and indirectly, but may also force the company to sell its assets to be able to pay its debt.