Page 8 - AfrOil Week 05 2022

AfrOil INVESTMENT AfrOil

West-Africa focused FAR Ltd

attracts another takeover bid

THE GAMBIA FAR Ltd, an Australian company focused on fund, told The Australian Financial Review on
upstream projects in West Africa, reported on January 31 that he saw the takeover offer as “very
January 31 that it had received a takeover bid sensible” in light of the failure to find oil at Block
from the boutique investment management A2.
firm Samuel Terry Asset Management, acting as “I think Samuel Terry owning FAR is likely to
trustee for Samuel Terry Absolute Return Active crystallise a lot more value from FAR than FAR
Fund. continuing to sink money into wildcat wells with
In a statement, FAR said that Samuel Terry little prospect for success,” he commented. “You
had offered to pay in cash at a rate of AUD0.45 could see how this being owned by someone else
($0.32) per share, which would put the total is likely to be a fruitful investment.”
value of the company at AUD45mn ($31.79mn). Allan Gray Australia had previously held a
It also said that the offer had been contingent on minority stake in FAR. However, it sold off its
the sale of at least 50.1% of FAR’s equity to the shares in early December, saying it was con-
investment management firm. cerned about the upstream operator’s push
Samuel Terry is already a minority share- to keep investing in high-risk exploration
holder in FAR, holding 4.9% of the latter com- operations.
pany’s equity. However, FAR managing director Cath Nor-
FAR went on to say that the offer was not yet man took a different view, saying that the offer
officially open and was not slated to close any from Samuel Terry was “cheeky” because it had
earlier than mid-March, meaning that its share- undervalued her company. “It’s very oppor-
holders did not need to take any action yet. It tunistic, and it’s not going to fly at this share
stated that it intended to consider the offer and price, clearly,” she told The Australian Financial
had appointed the Baker Mackenzie law firm as Review.
its legal advisor in this matter. This is not the first time FAR has attracted a
The company said that Samuel Terry’s takeo- takeover bid. Remus Horizons, a petroleum-fo-
ver bid had been motivated by recognition that cused subsidiary of Hong Kong-based Remus
FAR’s shares are undervalued, “having regard to Corp., said in December 2020 that it was will-
cash backing and the potential of FAR receiving ing to pay AUD209.6mn ($148.1mn) for 100%
a $55mn contingent payment from the sale of its of equity in FAR, provided that the company
interest in the RSSD project, as well as its existing retained its stake in RSSD. That offer fell through
oil and gas interests.” several months later, and Woodside eventually
(It was referring to the company’s status as bought FAR’s stake in Sangomar. ™
a former shareholder in RSSD, the consortium
set up to explore and develop the Sangomar
oil-bearing block offshore Senegal. FAR sold its
stake in the group to Woodside Energy, another
Australian company, last year and is slated to
receive contingent payments from the project
in the future.)

The Gambian factor?
Other observers have pointed out, though, that
Samuel Terry may have been spurred to action
by FAR’s recent failure to discover oil in a wildcat
well drilled offshore The Gambia.
The investment management firm began
building up its stake in the upstream operator on
December 24, 2021, one day after FAR revealed
that it had not found any oil in Bambo-1ST1, a
sidetrack drilled alongside the Bambo-1 well at
the northern edge of Block 2, just south of the
Sangomar block on the Gambian side of the
maritime border. The company’s share price
dropped by about 50% after that announcement.
Simon Mawhinney, portfolio manager at the
Allan Gray Australia investment management Bambo-1 and Bambo-1ST1 were drilled very close to Sangomar (Image: FAR)

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