FAR’s remaining value is tied largely to Woodside’s Sangomar production and oil prices, with up to US$19.8 million still potentially payable after a US$23.7 million provisional receipt. The oil and gas company ended September with US$1.73 million in unaudited cash and no exploration expenditure.
- Up to US$19.8 million remains under FAR’s Sangomar-linked contingent payment
- Woodside reported Sangomar production of 94,000 barrels per day in the September quarter
- FAR held US$1.73 million in unaudited cash at quarter-end
- Estimated funding runway stood at 6.61 quarters based on current operating outgoings
- Unmarketable parcel buy-back set at A$0.2979 a share
Sangomar Production Supports Remaining Payment Rights
FAR Limited (ASX:FAR) remains exposed to the performance of Senegal’s Sangomar field, even after selling its RSSD Project interest to Woodside Energy. The company’s contingent payment rights could deliver up to a further US$19.8 million, subject to production volumes, entitlement calculations and the Dated Brent oil price.
Woodside reported average Sangomar production of 94,000 barrels per day on a 100% field basis during the September quarter, with reliability of 99.2%. Its sales volumes were 6.932 million barrels for the quarter, while the average Dated Brent price used in the quarter’s operating context was US$97 a barrel.
The payment formula applies 45% of FAR’s entitlement barrels to the amount by which the crude price exceeds US$58 a barrel, capped at US$70. The entitlement is linked to FAR’s former 13.67% interest in the RSSD Project. The arrangement ends at the earliest of 31 December 2027, three years after first oil was sold excluding periods of zero production, or the US$55 million maximum being reached.
US$23.7 Million Receipt Still Awaits Reconciliation
FAR received a provisional US$23.7 million contingent payment in May for 2025 sales, an event covered in the company’s earlier US$23.7 million payment. That amount remains subject to reconciliation of underlying oil entitlement volumes with joint venture participants and Senegal’s Ministry of Energy, Petroleum and Mines. Either Woodside or FAR must settle any difference between the provisional and final amount.
The latest report does not provide a fresh estimate for the next payment. That leaves the remaining value dependent on a moving combination of Sangomar output, entitlement mechanics and oil prices rather than a fixed receivable. Woodside also said Sangomar production reflected natural field decline and a reduced production-sharing-contract entitlement after recovery of all Woodside-funded pre-final-investment-decision costs.
FAR’s Cash Runway Extends Beyond Six Quarters
FAR ended the quarter with US$1.733 million in cash, down from US$1.967 million at the end of June. September-quarter expenditure was US$262,000, made up chiefly of US$237,000 in administration and corporate costs, US$46,000 in staff costs and US$21,000 of interest income.
On the Appendix 5B calculation, that cash balance represents an estimated 6.61 quarters of funding at the reported operating outflow rate. There was no exploration, development or production spending during the quarter, and FAR reported no financing facilities. The figure is therefore a measure of corporate cash endurance, while the company’s larger potential value remains tied to future Sangomar-linked receipts.
Small Parcel Buy-Back Targets 1,500 Holdings
FAR is also proceeding with an off-market buy-back for shareholders holding unmarketable parcels valued below A$500. Eligible shares will be bought back at A$0.2979, based on the five-day volume-weighted average price at 21 September, with holdings of 1,678 shares or fewer falling within the threshold.
The initiative covers approximately 1,500 small holdings and is expected to cost less than A$400,000. Shareholders who do not retain their shares by 6 November will be eligible for the facility, while the company expects to announce the result on 13 November. The buy-back follows the 35 cent capital return completed in June, which returned A$32.3 million to shareholders.
The Australian Taxation Office has separately confirmed that no part of that 35 cents per share capital return is treated as a dividend for Australian income tax purposes, subject to the conditions set out in its class ruling. The more consequential question for FAR now sits offshore: how much of the remaining contingent payment is ultimately crystallised before the Sangomar-linked entitlement window closes.
Bottom Line?
FAR has several quarters of reported cash cover, but the larger shareholder value question remains the final amount and timing of its Sangomar-linked receipts.
Questions in the middle?
- How much of the provisional US$23.7 million payment will remain after reconciliation with Woodside, joint venture participants and Senegalese authorities?
- Will Sangomar’s natural production decline reduce future entitlement volumes before the contingent payment expires?
- How many shareholders will participate in the A$0.2979 small parcel buy-back, and what will the final administrative saving be?