Two weeks after it voluntarily asked the Australian Stock Exchange (ASX) to suspend trading of its stocks, FAR has announced that the suspension continues
The request was made on September 14, 2020 to allow ASX to review FAR’s Half Year Accounts and raise certain queries with FAR. It was meant to run for 10 business days.
“Since that date ASX and FAR have exchanged communications and ASX currently expects to complete their process later this week”, FAR says in a release out today September 28, 2020.
Why should we care?
FAR holds equity in the Sangomar project, Senegal’s first oilfield development, operated by Woodside Energy. It also drilled the first well in The Gambia in 40 years, although Samo-1 turned out to be a disappointing dry hole.
But FAR is very broke. It has reported that the COVID-19 pandemic and the falling oil price impacted its ability to finalise financing arrangements for its share of the oilfield development and has made the decision to commence a sale process for all or part of its working interest in parallel with investigating alternative sources of finance. While it is talking with third parties evaluating its Senegal asset for the purpose of sale it has reported that In the event that it is unsuccessful in selling its Senegal asset, “such circumstances would indicate that a material uncertainty exists” that may cast significant doubt as to its continuation as a going concern.
In the meantime, however, FAR says the Voluntary Suspension from trading on ASX “remains in place until a further announcement in respect of the Half Year Accounts is made”.
Australian minnow FAR has reported being notified that its Joint Venture voting and meeting rights on the Sangomar field development have been suspended.
Woodside Energy, the operator of the field is committed to going ahead to deliver first oil by mid-2023, but FAR, which holds 15% of the asset, has struggled to raise its share of the funding.
“The Operator is working with project contractors and the Government of the Republic of Senegal to optimise near-term spend whilst protecting the overall value of the investment and remain on schedule to deliver first oil in 2023”, FAR said in a release.
“Detailed engineering is progressing and long lead item purchase orders are continuing to be awarded for major equipment items in preparation for commencement of drilling operations in mid 2021”, the explorer disclosed.
FAR did not pay the June, and subsequent, cash call and accordingly has received notification from the Operator of the RSSD Joint Venture that FAR Senegal is in default.
“FAR has received notices of demand from one of the Joint Venture parties to compensate it for its share of the cash call it is funding on FAR’s behalf”.
Under the JOA default provisions, if a defaulting party has not fulfilled its financial obligations within 6 months from the date of notification of the default, it shall forfeit its participating interest without compensation. Unpaid amounts accrue interest at the LIBOR rate + 2%.
Key points of the Joint Operating Agreement (JOA) default provisions are:
6 month period to fulfill its financial obligations before forfeiting participating interest
non-defaulting parties must pay defaulting party’s unpaid amounts pro-rata to their participating interests over this period
defaulting party does not attend Operating Committee meetings or vote during default period