FAR’s Capital Return Hinges on Provisional US$23.7M Payment from Woodside
FAR Limited has agreed on a provisional US$23.7 million contingent payment from Woodside Energy tied to the Sangomar Project, prompting a proposed capital return of A$32.3 million to shareholders.
- Provisional 2025 contingent payment of US$23.7 million agreed with Woodside Energy
- Payment relates to FAR’s 13.67% interest in Senegal’s Sangomar Project
- Maximum future contingent payment reduced to US$19.8 million after provisional payment
- Proposed capital return of 35 cents per share, approximately A$32.3 million
- Shareholder approval sought at May 2026 annual general meeting
FAR Limited’s Contingent Payment Milestone
FAR Limited (ASX:FAR) has reached a significant milestone with Woodside Energy, agreeing on a provisional contingent payment of US$23.7 million for 2025. This payment stems from FAR’s previously held 13.67% stake in the Sangomar oil project off the coast of Senegal, which Woodside now operates following a 2021 sale agreement.
The contingent payment is linked to oil production and pricing, payable annually over three years starting from mid-2024 when first oil was sold. FAR received the initial tranche of US$11.5 million for 2024 in May 2025, and this latest provisional payment aligns with Woodside’s reported 2025 Sangomar sales of 28.4 million barrels.
Implications for FAR’s Capital Position
With the provisional payment expected in April 2026, FAR’s maximum remaining contingent payment entitlement drops to US$19.8 million. The company’s board sees this influx as creating surplus capital, prompting a proposal to return approximately A$32.3 million to shareholders through a capital return of 35 cents per share.
This move follows FAR’s history of capital returns in 2021, 2023, and 2025, reflecting a consistent strategy to reward shareholders when excess capital arises. The proposed return requires shareholder approval at the upcoming annual general meeting scheduled for 28 May 2026, with detailed documentation to be released in late April.
Tax Considerations and Next Steps
FAR intends to seek a class ruling from the Australian Taxation Office to confirm that the capital return will not be treated as a dividend for tax purposes, mirroring previous successful rulings. This approach aims to maximise shareholder value by minimising tax liabilities associated with the return.
Investors will be watching closely as the reconciliation process for the contingent payment concludes and shareholder approval is sought. The outcome will influence FAR’s capital management and potentially its strategic options going forward.
Bottom Line?
FAR’s contingent payment and capital return plans mark a pivotal moment, setting the stage for shareholder returns and future financial manoeuvres.
Questions in the middle?
- How will the final reconciliation of the contingent payment affect FAR’s cash flow?
- What impact will the capital return have on FAR’s share price and investor sentiment?
- Could FAR pursue new investments or acquisitions with the remaining contingent payment balance?
