Australia’s FAR did not exercise its right to pre-empt the sale of Cairn Energy’s stake in the Sangomar field, as the company works to find a buyer for its own interest.
FAR was declared to be in default of its funding obligations at Sangomar as of June 23.
Russia’s Lukoil struck a deal with Cairn on July 27. The operator of Sangomar, Woodside, said it would pre-empt the sale of the 40% stake to Lukoil on August 17.
Woodside will pay $300 million upfront, plus various adjustments including capital expenditure since the start of the year. Another payment of $100mn could be triggered by commodity price moves and first oil. Following completion of the deal, Woodside will have 68.33% in the Senegalese area.
The sale to Woodside is contingent on approval from Cairn’s shareholders and the Senegalese government.
State-owned Petrosen has increased its stake in the Sangomar area to 18%, from 10%. This leaves FAR with 13.67%.
In the wider Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) area, Petrosen has 10%, Woodside 75% and FAR 15%.
FAR has not paid cash calls for June, July and August. The company must pay $28.2mn plus interest of $0.07mn. While FAR does have $63.4mn of cash it has taken the decision to halt payments.
Should FAR fall six months behind in its cash call payments it faces the loss of its stake in the project.
“Unfortunately, due to the COVID crisis and related rout in oil price, FAR continues to pursue a sale of all or part of FAR’s stake in lieu of concluding financing for the development. The Cairn sale is a sign that there is international appetite for this world class project, even during challenging times,” FAR’s managing director Cath Norman said.