There are two aspects to the Erin default.Firstly, they owe a tax debt to the Gambian government of around $US5m (presumably tax on capital gain when farming down to FAR ( $8m free carry plus cash of around $5m).
Secondly, they also have a debt owing to FAR as part of the A2/A5 JV. No idea of the quantum but it must be material to invoke the JV default clause.
On the sidelines of the latest RIU confference there was some discussion that the Gambian government held a tender for Erin's Gambia assets. Since FAR probably have pre-emptive rights due to Erin's JV default, not surprisingly, FAR was the only bidder.
Just guessing here but I would expect, in the very least, that the Gambian government want at least $5m for Erin's stake (being the current debt) or alternatively the last sale price for an interest in A2/A5 ($700K per point from the Petronas farm-in). This would be $14m.
Anything less, may invite criticism that the government has sold out at less than the market price (notwithstanding Erin's JV default).
No idea what FAR's bid was.
If they cannot agree on a sum, maybe the Gambian government will hang on to Erin's 20% and sell it off post Samo (there are other promising A2/A5 prospects (Soloo, Bambo in the least) so it should have some tangible value, Samo or not.
Mind you if they sell it to a third party they are still in default to the JV and therefore FAR might still have pre-emptive rights. Depends on whether the (material ?) debt to the JV is paid prior to a Samo-result (Erin is free carried up to $8m by FAR).
I'm hoping that it will be resolved shortly but suspect the FAR might be holding all the cards and may be playing hardball.
Who knows, just speculating ...
