Just had another look at the article from the Australian dated 24th March 2017.
Wasn't that long ago and FAR were still saying WPL's position is not secure. Always worth another read
Woodside Petroleum’s $US446 million ($582m) entry into the big SNE oil discovery off Senegal, which continues to expand after recent drilling, is still not 100 per cent secure, according to the field’s Melbourne-based discoverer, FAR Ltd.
The Melbourne explorer, which has a 15 per cent stake in the field, has been challenging Woodside’s acquisition of a 35 per cent stake from US major ConocoPhillips.
FAR claims that its rights to pre-empt the deal were not upheld, something Woodside disputes.
It is believed FAR, keen to protect its rights on this deal and any in the future if operator Cairn sells down, has been lining up deep-pocketed partners to potentially pre-empt the sale, which is yet to be signed off by the Senegalese government.
In FAR’s annual report this week, chairman Nic Limb said that when the transaction went through Conoco had refused FAR access to required information on a transaction he said was at “a price that was surprisingly low and represented an attractive opportunity”.
“The fact that FAR has not been afforded these same terms and conditions as the purchaser has resulted in a dispute with ConocoPhillips pursuant to the joint venture agreement that, at the time of writing, has not been resolved,” Mr Limb said.
He said FAR retained the option to take the matter to arbitration.
Conoco and Woodside have declared the deal complete as of October last year and Woodside’s 2016 annual report makes no mention of any risk to its purchase.
Woodside’s deal notification said Senegalese approval would be required before the deal was finalised but there has been no announcement that this has been granted.
Yesterday, a Woodside spokeswoman said the company had complied with the terms of the operating agreement, production sharing contract and Senegalese law.
“If there is a valid dispute relating to pre-emption, it will be managed in accordance with the dispute resolution process under the applicable Joint Operating Agreement,” she said.
“Woodside does not believe that this claim by FAR Ltd has any merit.”
SNE, the biggest global oil discovery of 2014, is now expected to support a $US7bn development that can produce 100,000 to 120,000 barrels of oil a day (up from original estimates of 50,000 to 100,000), with first production some time between 2021 and 2023.
In good news for Woodside, the value of the field, which has contingent resources of 641 million barrels of oil, may have been boosted by the seventh straight successful well, the SNE-5 appraisal well, drilled on the big discovery.
FAR managing director Cath Norman said that the well, whose results were released this month, had given better understanding of the upper reservoir, returning stronger than expected flow testing and showing much better reservoir properties than previously thought.
”This allows us to get more confidence in increasing our recovery factor for that particular unit, so we expect an upgrade to the contingent resource estimate,” Ms Norman said.
“It has also allowed us to get a lot more confidence in the fact that the SNE field, we believe now is a lot larger than we’ve originally mapped.”
FAR shares are off about 30 per cent in the past year and have not reflected the continued success at the field.
The price has been weighed down by low oil prices, concerns over how the company, with a market value of $335m, will fund its share of development costs, and the look-through value of the low price Woodside secured as Conoco looked to exit global deepwater assets.
Yesterday, FAR shares closed at 7.4c down 1.3 per cent for the day.
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