FAR’s $6 Million Settlement with Woodside Highlights Risks in Senegal Deal
FAR Limited has agreed to promptly pay Woodside Energy a $6 million claim related to the 2021 sale of its interest in the RSSD Project, with a potential refund if Woodside recovers disputed costs from Senegal authorities.
- FAR to pay Woodside $6,029,899 settlement promptly
- Claim arises from unrecovered petroleum expenditure in Senegal
- Indemnity capped at $6.8 million under 2021 Sale and Purchase Agreement
- Woodside to refund FAR if expenditure recovered by end of 2030
- FAR has reserved sufficient funds for the settlement payment
Background of the Claim
FAR Limited (ASX, FAR) has resolved a lingering financial dispute with Woodside Energy (Senegal) BV concerning the sale of its interest in the RSSD Project in Senegal. The claim, initially flagged in May 2025, centers on a decision by the Senegal Ministry of Energy, Petroleum and Mines that Woodside cannot recover certain petroleum expenditures. Under the terms of the 2021 Sale and Purchase Agreement, FAR was contractually obligated to indemnify Woodside for losses up to approximately US$6.8 million related to unrecoverable petroleum costs not directly tied to exploration activities.
Settlement Terms and Financial Impact
The recent agreement sees FAR committing to a prompt payment of the full claim amount of just over US$6 million. Importantly, FAR has already set aside sufficient funds to cover this payment, mitigating immediate financial strain. The settlement effectively closes this chapter of uncertainty, providing clarity to investors about the company's near-term cash flow and contingent liabilities.
Future Refund Potential
While FAR will pay Woodside now, the agreement includes a noteworthy clause, if Woodside manages to recover the disputed petroleum expenditure from the Senegalese government before the end of 2030, it must refund FAR the corresponding amount. This provision introduces a conditional upside for FAR, though the likelihood and timing of such recovery remain uncertain. It also highlights the complex interplay between international oil companies and host governments in emerging markets.
Strategic and Market Implications
This settlement removes a significant overhang from FAR’s balance sheet and allows the company to focus on its core exploration and development activities without the distraction of ongoing legal and financial disputes. However, the dependency on Woodside’s future recovery efforts means investors should monitor developments closely, as any changes could materially affect FAR’s financial position. The resolution also underscores the risks inherent in cross-border energy transactions, particularly in jurisdictions with evolving regulatory frameworks.
Bottom Line?
FAR’s settlement with Woodside clears a financial hurdle but leaves a watchful eye on future recoveries from Senegal.
Questions in the middle?
- What are Woodside’s prospects of recovering the disputed expenditure from Senegal authorities?
- How might this settlement influence FAR’s future deal structuring and risk management?
- Could similar indemnity claims arise from other international projects in FAR’s portfolio?
