FAR Limited swung to a US$1.44 million profit for H1 2026, driven by contingent payments from its Senegal asset sale, and completed a substantial A$32.3 million capital return to shareholders.
- H1 2026 profit of US$1.44 million reverses prior loss
- Received US$23.7 million provisional contingent payment from Woodside
- Capital return of 35 cents per share completed in June
- Operating costs cut via contract service provider model
- Net tangible assets per share fell to 21.29 cents post capital return
Profit Turnaround Driven by Contingent Payments from Senegal Project
FAR Limited (ASX:FAR) reported a half-year profit after tax of US$1.44 million for the six months ended 30 June 2026, a sharp reversal from a loss of US$1.82 million in the same period last year. This turnaround was largely underpinned by contingent payments linked to the sale of its 13.67% interest in the RSSD Project in Senegal to Woodside Energy.
The company received a provisional contingent payment of US$23.7 million in May 2026, related to 2025 oil production from the Sangomar Field, part of the RSSD Project. These payments are calculated based on FAR’s entitlement barrels multiplied by the excess of the crude oil price above US$58 per barrel, capped at US$70. The contingent payment arrangement, which terminates by the end of 2027 or upon reaching US$55 million in total payments, continues to be a key cash flow driver.
Capital Return of A$32.3 Million Completed Following Shareholder Approval
In line with its strategy to return surplus capital, FAR completed a capital return of 35 cents per share, amounting to approximately A$32.3 million, in June 2026 after securing shareholder approval at the May AGM. This return significantly reduced FAR’s net tangible assets per share to 21.29 cents from 44.44 cents at the end of 2025.
The capital return reflects the company’s focus on optimising shareholder value from the proceeds of the RSSD Project sale, while maintaining a lean operating structure.
Operating Efficiency Maintained with Contract Service Provider Model
FAR maintained minimal operating costs by continuing to operate under a contract service provider model with no employees, successfully reducing corporate overheads. Total operating expenditure, including employee benefits and corporate administration costs, declined compared with prior periods, demonstrating disciplined cost management aligned with the Board’s strategy.
Settlement of Woodside Claim and Executive Changes
The company settled a US$6.03 million claim from Woodside Energy related to unrecovered petroleum expenditure in Senegal, with a refund clause if Woodside recovers the amount from the Senegalese Ministry of Energy, Petroleum and Mines by the end of 2030. This settlement removes a key uncertainty from FAR’s balance sheet.
During the period, FAR also appointed Subaraj Subramaniam as Chief Financial Officer and Sonya Tissera as Company Secretary, reflecting ongoing governance enhancements.
Balance Sheet and Cash Flow Position
FAR’s net assets stood at US$19.68 million as of 30 June 2026, down from US$41.07 million at the end of 2025, primarily due to the capital return. Cash and cash equivalents remained steady at approximately US$1.97 million. The company reported net cash inflows from investing activities of US$23.8 million, mainly from contingent payment receipts, offset by capital return payments of US$22.8 million.
Looking ahead, the remaining contingent payment receivable is valued at approximately US$17.7 million at fair value, subject to oil price fluctuations and production volumes, which remain outside FAR’s control.
Bottom Line?
FAR’s profit rebound and sizeable capital return mark a pivotal phase, but future contingent payments hinge on volatile oil prices and production reconciliations.
Questions in the middle?
- How will oil price volatility impact the timing and size of remaining contingent payments?
- What are the implications if Woodside recovers the petroleum expenditure and refunds FAR?
- Will FAR pursue new projects or remain focused on capital returns and asset realisation?