Woodside’s US$6M Claim Clouds FAR’s Senegal Oil Gains and Cash Position
FAR Limited reports robust production from Senegal’s Sangomar field and ongoing negotiations over a US$6 million claim by Woodside Energy, while maintaining a solid cash position of US$7.9 million at quarter’s end.
- Sangomar field sustains 99,000 barrels per day production at plateau
- FAR holds contingent payment rights up to US$55 million from RSSD Project sale
- Woodside Energy claims US$6 million from FAR under Sale and Purchase Agreement
- FAR’s cash balance stands at US$7.9 million with minimal quarterly expenditure
- Provisional contingent payment of US$11.5 million received for 2024, pending reconciliation
Strong Production Performance at Sangomar
FAR Limited’s latest quarterly report highlights the continued strong performance of the Sangomar oil field offshore Senegal, operated by Woodside Energy. The field maintained an impressive average daily production rate of 99,000 barrels (100% basis) during the September quarter, with Woodside’s share at 82,000 barrels per day. This plateau production phase, supported by robust reservoir performance, notably in the S500 reservoirs, has also led to an upgrade of proved reserves by 18.4 million barrels.
Contingent Payments and Financial Position
FAR retains contingent payment rights linked to its previous 13.67% interest in the RSSD Project, with a maximum potential value of US$55 million. These payments are tied to oil price thresholds and production volumes, reflecting FAR’s ongoing financial interest despite having sold its stake to Woodside in 2021. In May 2025, FAR received a provisional contingent payment of US$11.5 million for calendar year 2024, though this remains subject to reconciliation with joint venture partners and the Senegalese Ministry of Energy.
Dispute Over Woodside’s Indemnity Claim
Adding complexity to the quarter’s developments, Woodside Energy has lodged a claim against FAR for US$6.03 million under the terms of the Sale and Purchase Agreement. This claim arises from a final decision by the Senegal Ministry of Energy that disallows Woodside from recovering certain petroleum expenditures not directly linked to exploration activities. FAR is actively engaging with Woodside to resolve this dispute, which could have material implications depending on the outcome.
Cash Flow and Operational Costs
FAR ended the quarter with a healthy cash balance of US$7.9 million, having spent a modest US$0.3 million primarily on corporate and administrative expenses. The company’s cash flow reflects prudent management amid ongoing negotiations and the transition of the Sangomar field from plateau production expected in the coming quarter. FAR’s financial discipline positions it well to navigate the uncertainties ahead.
Looking Ahead
As Sangomar is anticipated to come off its production plateau in Q4 2025, FAR’s contingent payments and revenue streams may face new dynamics. The resolution of Woodside’s claim and the final reconciliation of contingent payments will be critical to FAR’s near-term financial outlook. Investors will be watching closely how these factors unfold and impact FAR’s strategic positioning in Senegal’s oil sector.
Bottom Line?
FAR’s strong Senegal production and cash position provide a solid base, but the Woodside claim and plateau exit pose key challenges ahead.
Questions in the middle?
- How will the Woodside indemnity claim be resolved and what financial impact will it have on FAR?
- What are the implications for FAR’s contingent payments as Sangomar field production declines post-plateau?
- Could FAR pursue further strategic moves in Senegal or elsewhere to offset potential revenue fluctuations?
