FAR's West African assets under stress from oil price rout

London — Australia-based explorer FAR Limited's operations in Senegal and the Gambia have been adversely impacted due to the coronavirus pandemic and the "precipitous fall" in oil prices, it said Monday.

FAR said the debt facility for Senegal's maiden oil development, Sangomar, had been "compromised" and it is evaluating and exploring options to "preserve and enhance the value" of this project in light of the current environment.

This would include "how the costs can be reduced, expenditure delayed or both and any impact on the timeline to first oil," it said.

The Sangomar project received a final investment decision, with first oil due in early-2023, but this now likely to be pushed back. The Sangomar field, known as the SNE field until recently, is expected to produce up to 100,000 b/d from a stand-alone floating production storage and offloading facility.

The company said the lead banks to the senior facility had confirmed "they cannot complete the syndication in the current environment."

"At the end of February 2020 the company had approximately A$150 million ($91 million) cash at bank and no debt," it added.

Gambia drilling suspended

FAR also said its drilling operations offshore Gambia had been suspended due to the coronavirus pandemic.

Last October, the explorer said it's two exploration blocks A2 and A5 hold up to 1.2 billion barrels of oil with four key prospects identified. The company was planning to drill an exploration well in the second half of this year.

This was done "to remove the risk" to FAR staff and contractors and also because the "international supply of services is currently uncertain."

FAR said the well was not obliged to be drilled until the third quarter of 2021 but would look to reactive the project "when it is safe and sensible to do so."

Blocks A2 and A5 lie in water depths of 50 to 1,500 meters off the West African country.

FAR's subsidiary, FAR Gambia and PC Gambia, a subsidiary of PETRONAS, each have a 50% participating and paying interest in the blocks.

Woodside settlement

Meanwhile, FAR agreed to settle an arbitration case with Woodside Energy, which is the operator of the Sangomar field.

The two were at the loggerheads after Woodside bought a 35% stake in the deepwater SNE project from ConocoPhillips and became the operator. FAR had always insisted that a valid pre-emptive rights notice had not been issued to the partners by ConocoPhillips.

In a statement, FAR confirmed both parties had withdrawn their respective claims and that the International Chamber of Commerce's tribunal had been invited to terminate the arbitration with immediate effect.

Senegal is an emerging oil province that was opened up by the SNE and FAN discoveries drilled in 2014. The West African country is expected to launch an oil and gas licensing round later this year with 12 blocks on offers in its major MSGBC offshore basin.