Oil and gas explorer FAR Limited (ASX:FAR) released some fairly startling news early Wednesday afternoon. It’s on the hook for A$10M, and oil and gas supermajor Woodside (ASX:WDS) is the one asking for the cash.
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What is perhaps most interesting is that FAR Limited, for now, says it’s not taking Woodside seriously: “[the company] has not accepted liability to Woodside in this regard,” the company concluded in its Wednesday disclosure.
Talk about a David and Goliath story. FAR Limited has a market cap of $45 million, and on March 31, 2025, it actually had less than $2 million in the bank.
This is clearly bad news for the company, but perhaps counterintuitively, the stock hadn’t really reacted too strongly as of 3pm AEST. Shares were down -4.17% to 46cps, around where it started the day.
That’s because the stock is highly illiquid – according to data provided by Market Index, less than $6,000 of shares have traded hands, most of that following the news.
So what’s going on? This stems back to January, when Woodside first informed FAR it might come knocking for cash later in the year. Now, here we are.
How did we get here?
FAR sold to Woodside in 2021 its interest in the formerly titled RSSD Project, which energy watchers likely know better as Woodside’s Sangomar project.
Under the terms of that deal struck in 2021, FAR Limited was to take the heat if things went sour when it went to Woodside’s ability to have financial discussions with the Senegalese government that went in Woodside’s favour.
Senegal implements Production Sharing Contracts (PSC), which basically make the government something like a JV partner.
Maybe unsurprising for a West African nation, discussions with Woodside haven’t ended in Woodside’s favour.
The government of Senegal isn’t playing ball with white-owned Woodside; the latter advised FAR that “Woodside is unable to recover petroleum expenditure not directly linked to exploration activities.”
In other words, lost costs under that country’s corporate finance legislative ecosystem.
Be careful what you sign
And because of that, Woodside’s now turning to FAR Limited for US$6M. After all, that term was in the contract struck between Woodside and the former in 2021.
Except that FAR Limited, in not accepting liability, has some of its own concerns around Woodside’s conduct, here.
(And that mightn’t be too shocking, seeing as without a loan or capital raise of some kind, the sum could bankrupt the company, going off its March 31 quarterly.)
“[In January, Woodside] stated that any indemnity obligation only arises if Woodside provides written notice of the claim stating in reasonable detail the nature of the claim and the amount claimed in respect of it on or before the first anniversary of first oil being sold. That time limit is approaching shortly,” FAR Limited wrote.
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“FAR has been seeking a range of information from Woodside in relation to the subject matter of the potential claim which remains outstanding. FAR has been reserving all rights it has under the Sale and Purchase Agreement and has not accepted liability to Woodside in this regard.”
Here, one can probably smell the beginnings of an eventual settlement.
But if that’s correct, we mightn’t have to wait too long.
Because FAR Limited, looking at its latest quarterly, absolutely hasn’t got the cash base Woodside do to endure a protracted lawsuit.
FAR last traded at 46cps.
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