FAR Limited reports robust production from Senegal’s Sangomar field and a solid cash position, while anticipating a contingent payment from Woodside Energy that could reach US$55 million.
- Sangomar field achieves 95 Mboe/day production in Q4 2024
- FAR holds contingent payment rights up to US$55 million from Woodside Energy
- Company ends quarter with US$1.7 million cash balance
- FPSO commissioning and gas/water injection systems successfully completed
- FAR remains open to monetising contingent payment asset
Strong Production Milestone at Sangomar
FAR Limited (ASX: FAR) has reported a significant operational achievement in its December 2024 quarterly activities report, highlighting the Sangomar field offshore Senegal’s outstanding production performance. According to Woodside Energy’s recent fourth quarter report, the field produced 95 thousand barrels of oil equivalent per day (Mboe/day) during the quarter, with Woodside’s share at 75 Mboe/day. This robust output underscores the field’s successful ramp-up following the FPSO commissioning and start-up activities, including the critical gas and water injection systems.
Contingent Payment Potential
FAR’s financial outlook is buoyed by its entitlement to a contingent payment from Woodside Energy, linked to production from the Sangomar field. This payment, capped at US$55 million, is calculated based on FAR’s 13.67% former interest in the RSSD Project and the crude oil price exceeding US$58 per barrel, up to a maximum of US$70 per barrel. The contingent payment mechanism provides FAR with a valuable revenue stream tied directly to oil price movements and production volumes, with the first annual payment expected imminently.
Financial Position and Corporate Costs
At the end of December 2024, FAR held US$1.7 million in cash, down from US$2.0 million at the previous quarter’s close. The company’s expenditure during the quarter was modest, totaling US$0.15 million primarily on corporate and administrative costs. This lean spending profile reflects FAR’s current focus on managing its contingent asset and maintaining corporate governance rather than direct exploration or development activities.
Strategic Outlook and Market Expansion
Woodside’s report also noted the successful expansion of the market for Sangomar crude, with the grade being supplied into the United States for the first time in Q4 2024. This diversification of crude off-take markets could enhance the field’s commercial resilience. FAR’s board, led by Independent Chairman Patrick O’Connor, remains open to monetising the contingent payment asset, signaling potential strategic moves to unlock value for shareholders in the near term.
Looking Ahead
While FAR’s immediate cash flow is limited, the contingent payment tied to Sangomar’s production and oil prices presents a compelling upside. Investors will be watching closely for the timing and size of the first payment from Woodside, as well as any corporate actions to monetise this asset. The company’s ability to navigate oil price volatility and production sustainability at Sangomar will be critical to its financial trajectory over the next three years.
Bottom Line?
FAR’s contingent payment from Sangomar production could transform its financial outlook—next steps will be key.
Questions in the middle?
- When exactly will FAR receive the first contingent payment from Woodside Energy?
- How will fluctuations in oil prices between US$58 and US$70 per barrel impact FAR’s contingent payment revenue?
- Is FAR considering any strategic partnerships or asset sales to monetise its contingent payment rights?