FAR in Default on Senegal Project

FAR in Default on Senegal Project
On top of the default announcement, FAR also revealed more job losses and executive pay cuts.

Australia’s FAR Senegal RSDD has not paid its most recent development cash call related to the Sangomar field, and subsequently has received a default notice from operator Woodside Petroleum.

The announcement comes one day after Woodside said it still expects production at Sangomar to begin in 2023 as planned.

FAR owns 15% of the Sangomar field offshore Senegal; Cairn Energy holds 40%, Australia’s Woodside 35%, and Senegal’s NOC Petrosen owns 10%.

For months, Woodside has been trying to rescope, reschedule and reprice the project in order to cut costs, and FAR said it has made the decision to preserve cash until Woodside can offer clarity on changes to the project’s capex plan. For now, FAR is continuing to mull selling all or part of FAR Senegal’s interest in the RSSD production-sharing contract and joint operating agreement.

Under the contract, if FAR fails to pay amounts owed within six months from the date the default, it will forfeit its project stake without compensation.

Like most of the oil and gas industry, FAR has taken several steps to conserve cash amid the whirlwind of oil market uncertainty. The latest steps include staff redundancies, and all senior executives and non-executive directors have accepted a 20% salary or fee reduction, effective July 1. This recent round of cutting costs is on top of FAR significantly reducing its contractor headcount in April.

To contact the author, email bertie.taylor@rigzone.com.


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