Woodside prevents FAR’s Sangomar deal with ONGC

Australian giant Woodside will further increase its stake in a project located offshore Senegal following its decision to pre-empt another project stake sale, this time from compatriot FAR to India’s ONGC.

Woodside said on Thursday it has given notice exercising its right to pre-empt the sale by FAR to ONGC Videsh of FAR’s entire participating interest in the Rufisque, Sangomar and Sangomar Deep (RSSD) joint venture.

FAR has a 13.67 per cent interest in the Sangomar exploitation area and a 15 per cent interest in the remaining RSSD evaluation area.

FAR entered into a sale and purchase agreement with India’s ONGC for its entire interest in the production sharing contract for the Rufisque, Sangomar, and Sangomar Deep Offshore Blocks offshore Senegal in November 2020.

Woodside said that the terms of its acquisition will reflect those of the FAR/ONGC transaction, including payment to FAR of $45 million and reimbursement of FAR’s share of working capital, including any cash calls, from 1 January 2020 to completion.

The terms will also include the entitlement to certain contingent payments capped at $55 million.

The acquisition remains subject to Government of Senegal approval, FAR shareholder approval, and other customary conditions precedent. The acquisition will be funded from current cash reserves.

Woodside CEO Peter Coleman said the acquisition of FAR’s participating interest makes the value proposition for Sangomar even more compelling.

“Sangomar is an attractive, de-risked asset in execute phase, offering near-term production. The acquisition is value accretive for Woodside shareholders and results in a streamlined joint venture which will assist in our targeted sell-down in 2021.

“We plan to commence development drilling next year as we progress the project to targeted first oil in 2023”, he said.

Woodside’s participating interest in the RSSD joint venture will increase to 82 per cent for the Sangomar exploitation area and 90 per cent for the remaining RSSD evaluation area following completion of this acquisition and the Cairn acquisition announced on 17 August 2020, assuming no other joint venture participant pre-empts. Woodside will remain the operator.

To remind, Woodside in August exercised its right to pre-empt the sale of Cairn’s entire participating interest in the RSSD joint venture to Lukoil.

On the other hand, FAR decided not to object Cairn Energy’s deal with Russia’s Lukoil.