Sydney-listed Far has received a conditional non-binding offer from Russia’s Lukoil to acquire 100% of its shares at Australian cents 2.2/share, it said on February 17. This values the company at A$220mn ($170.37mn). 

“Lukoil has stated that the price proposed by it represents a higher value for Far shareholders than both the proposed sale of the RSSD project to Woodside Energy (Senegal) BV and the incomplete proposal from Remus Horizons PCC Limited. Far has not received a binding offer from Remus,” it said. 

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Lukoil has stated that the buyout will be funded from available internal cash reserves and that any formal binding offer would not include any financing conditions, Far added. 

Far earlier this year signed a sales and purchase agreement to transfer its interests in Senegal to fellow Australian explorer Woodside Energy. Lukoil had in fact completed due diligence of the RSSD project and entered into an agreement to acquire an interest from Cairn Energy which was subsequently pre-empted by Woodside. 

Lukoil in its offer has stated that it is "open to providing reasonable financing support to allow Far to come out of default in relation to its RSSD project cash call defaults once its proposal is unconditional subject to customary conditions being agreed." Far is in default with respect to its January 2021 cash call of US$19.9mn.

Lukoil is eager to grow its international upstream business to counter decline in Russia, where many of its fields are mature and potential growth is restricted by Opec+ cuts. The company's oil output fell 10% in 2020 to 77.2mn metric tons, while its gas extraction slumped 17% to 29bn m³, as China cut purchases from its fields in Uzbekistan.