FAR secures $300 million credit for Sangomar development

Australia’s FAR Limited has received final credit approvals for an underwritten $300 million senior secured reserve-based lending facility for the Sangomar field development offshore Senegal.

Following approval of the exploitation authorization by the government of Senegal and the joint Final Investment Decision (FID) statement last week, FAR said on Monday that it entered into a $300 million facility which was approved by Macquarie Bank Limited, BNP Paribas, and Glencore.

FAR previously secured a $200 million credit facility but stated at the time that it was negotiating for that number to rise to $300 million.

The three financing institutions each credit FAR with an amount of $100 million. According to the company, the facility is a key part of the funding package to develop FAR’s interest in the Sangomar oil field in Senegal.

The facility has a seven-year term with a four-year repayment holiday and is priced at a margin of 7.75 percent over LIBOR.

FAR has so far raised over $400 million in new capital to fund its share of Phase 1 capex for the Sangomar development, including a A$146 million equity placement (around $100 million) and share purchase plan with receipts of A$11.18 million.

It is worth noting that following the FID, FAR has 28 mmbbls (2P net economic interest) associated with this development attributed to the company.

FAR’s Managing Director Cath Norman said: “Reaching agreement for a $300m underwritten senior debt facility […] is further endorsement and support for Sangomar being a tier-one oil development asset.

“2020 is shaping up to be a busy year for FAR, with a junior underwritten debt facility due to be put in place early in the year and the drilling of one of its highly prospective exploration opportunities in the neighboring Gambia to follow in the second half of 2020.

“In addition, the Senegal JV is preparing for drilling in 2021, commencing with an appraisal well on the FAR or SNE North discoveries before embarking on the development drilling for the Sangomar Field development.”

The Sangomar Phase 1 development is anticipated to produce 231 mmbbls of oil (2P gross) and is planned to consist of 23 subsea wells including water injectors.

The wells will be tied back to a floating production storage and offloading facility (FPSO) for processing prior to export to market via tankers. First oil is expected early in 2023. The FPSO is designed to allow the integration of future development phases, including potential for gas export to shore.

To remind, Woodside, as operator of the joint venture, completed the purchase contract for the FPSO vessel and issued full notices to proceed for the drilling and subsea construction and installation contracts.

MODEC was awarded a contract for the FPSO with an oil processing capacity of approximately 100,000 barrels per day. Subsea Integration Alliance (a non-incorporated alliance between Subsea 7 and OneSubsea) won a contract for the construction and installation of the integrated subsea production systems and subsea umbilicals, risers, and flowlines. Diamond Offshore received a contract award for two well-based contracts for the drill rigs Ocean BlackRhino and Ocean BlackHawk.

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