Australia-listed minnow FAR has given up its plans to grow and instead opted to wind down its business and return cash to shareholders.
The company drilled the disappointing Bambo well off The Gambia in late 2021. While it found oil shows, it was not a commercial discovery and its partner Petronas relinquished its interest.
FAR announced today it had not found an “appropriate new business” that would be better than its capital return plan. It will hold a meeting in mid-August on its planned A$0.4 ($0.27) return per share plan. It requires approval from shareholders to go through.
At the end of May, the company had $30 million in cash. The capital return would see it paying out around $25mn to shareholders.
It has carried out a similar return before, in 2021, paying out A$0.8 per share. FAR has said that structuring it in this way should mean the return does not count as a dividend for tax purposes.
FAR has been buying back shares on the open market over the last year. It will pause this while it carries out the capital return.
The Australian minnow continues to hold blocks in The Gambia, where it is aiming to farm-out, and a contingent payment based on production starting at Woodside Energy’s Sangomar field.
It is also working on ways to monetise its Sangomar contingent payment.
FAR was involved in the Sangomar discovery, but was unable to finance its share of costs. As such, it was forced to sell out to Woodside. The Sangomar operator will pay up to $55mn once production starts and contingent on certain price metrics. FAR has said it expects to receive the full amount by the end of 2027.
In the company’s AGM presentation, it said it had reduced corporate overheads and expected this to be $1.7mn in the 2023 financial year. FAR also said it was working to extend its Gambian licence to September 2025, from 2024.is
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