Woodside Petroleum Ltd., Perth, has given notice of pre-emption of the sale by FAR Ltd., Melbourne, of its interests and oil discoveries offshore Senegal to ONGC Videsh Vankorneft Pte Ltd. (OGJ Online, Nov. 11, 2020).
FAR holds 13.67% interest in the Sangomar oil exploitation area and 15% interest in the remaining evaluation area of the Woodside-operated Rufisque, Sangomar, and Sangomar Deep (RSSD) joint venture.
Woodside said it will match the ONGC offer—with current cash reserves—with a payment of $45 million to FAR, reimbursement of FAR’s share of working capital (including any cash calls) from Jan. 1, 2020, until deal completion, and FAR’s entitlement to contingent payments capped at $55 million.
The pre-emption remains subject to approvals from the government of Senegal, FAR shareholders, and other conditions precedent.
FAR shareholders are due to consider sale authorization at a Dec. 21 meeting.
Woodside already has acquired the 36.44% RSDD interest of Cairn Energy after pre-empting an offer from Lukoil in August (OGJ Online, Aug. 17, 2020). Assuming no other party pre-empts the FAR sale, Woodside’s participating interest in the RSSD joint venture will increase to 82% for the Sangomar exploitation area and 90% for the remaining RSSD evaluation area. Senegal national company Petrosen holds the remaining 10% interest in the area.
The acquisition of FAR’s interest on top of the Cairn interest makes the value proposition for Sangomar oil discovery even more compelling, said Peter Coleman, Woodside chief executive officer.
“Sangomar is an attractive, derisked asset in execute phase, offering near-term production,” he said. “The acquisition is value accretive for Woodside shareholders and results in a streamline joint venture which will assist in our targeted sell-down in 2021.”
Development drilling is expected to begin in 2021 with a first oil target of 2023.
FAR’s move to sell its Senegal assets are expected to lift the company out of default on overdue payments for the $4.2-billion development.
FAR had previously established debt financing as part of its funding package to cover its share of the project costs, but the arrangements fell through following the fall in global oil prices in March.
FAR expects to have $130 million in cash at close of the sale which the company expects to use to rebuild and fund exploration work offshore Gambia and Guinea-Bissau.