FAR Ltd. is exercising its pre-emption rights over the proposed sale of ConocoPhillips interests in Senegal to Woodside Petroleum, a deal that was struck in July.
Map from FAR.
In mid-July, Australia’s Woodside agreed to acquire all of ConocoPhillips’ assets offshore Senegal for US$430 million. However, the deal is subject to satisfaction of customary conditions, including government of Senegal approval and pre-emption.
FAR said that in its opinion, and as supported by legal advice, ConocoPhillips has failed to comply with the terms of the joint operating agreement in relation to the proposed sale of its interests in the Senegal project. As a consequence, FAR believes that the pre-emption period has not yet commenced. FAR has advised ConocoPhillips of this and both parties have been urged by the government of Senegal to reach an amicable solution on this matter.
The deal reached between Woodside and ConocoPhillips in July was set to be back dated to 1 January 2016. Conoco is expected to be paid $350 million, then $80 million on completion, for 100% of the shares in ConocoPhillips Senegal, which holds a 35% working interest in a production sharing contract (PSC) with the government of Senegal covering three offshore exploration blocks: Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore. The PSC includes the SNE and the FAN deepwater oil discoveries.
It is likely that a development will be a subsea project tied back to a floating production vessel. Woodside has an option to become operator for the development and production phases, should the deal go through. If approved, Woodside is anticipating the deal to close by year-end 2016.
In April, an independent assessment of SNE conducted by RISC, increased 2C contingent resources by 20%, bringing its estimate to at least 560 MMbbl. The latest estimate also surpasses FAR’s 200 MMbbl estimate for a minimum economic field size for SEN, also known as Shelf Edge.