FAR Limited (FAR) Earnings Call Transcript & Summary

Good afternoon, all. My name is Patrick O'Connor, the company's Chair, and it is my pleasure to welcome you to this Annual General Meeting of FAR Limited. This meeting has been held virtually. The company secretary has advised that a quorum is present. And as the time is now 12:00 p.m. Australian Eastern Standard Time, I declare the meeting open. I'm joined through this webcast over by my fellow directors. With me today is Andrew Lilley, non-Executive Director, and Mr. Robert Kaye also is on the webcast. I'd also like to welcome our company's Secretary, Mike Sapountzis and Andrew Johnson, a representative from the company's Auditors Moore Australia. Our share registry representants are also in attendance. The notice of meeting was made available to shareholders on 28th April 2025, and copies are available to you on our share registry's online voting site and on the company's ASX announcements platform. I will take the notice of meeting and explain if the statement as read. As previously advised, this is a virtual meeting. shareholders will be able to participate and view a live webcast of the meeting, ask questions and cast direct votes at the appropriate time whilst the meeting is in progress. The format of today's meeting will be a brief chairs address by myself, consideration of formal business on today's agenda, followed by questions in relation to items of business or in relation to the management of the company. I will now outline the procedures for today's meeting. The online platform is now open for shareholders' questions, and I encourage you to submit as early as possible. To ask a written question, please follow the instruction as displayed on the screen. Please note, while you can submit questions from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated or if we receive more questions on one topic, algamated together. The shareholders who wish to ask a verbal question, an audio question facility is available during the meeting. To use the service, please pause the broadcast on the Computershare platform and dial in by phone using the dial-in number displayed on the broadcast window. You'll be granted access and listen to the meeting until you're introduced to ask your question. This is a reminder that whilst we welcome you at this meeting, it is a shareholders' meeting, and you may not make comments or ask questions. Voting today will be conducted by way of a poll on all items of business. Items on how to vote through the Computershare platform are displayed on the screen. To provide everyone with an opportunity to vote, in case anyone cannot stay for the whole meeting, I will now formally open the poll on all resolutions. I'll give you a warning before I move to close voting. You can change your vote up until the time I declare voting closed. I'd now like to give a brief Chairman's address. The 2024 year saw the company continue to execute its strategy of delivering value to our shareholders. Key activities during the year included: firstly, the Woodside Contingent Payment as [ part ] of the consideration for the sale of its interest in the RSSD project in Senegal to Woodside Energy in 2021, FAR received rights to a contingent payment with a maximum value of USD 55 million. During 2024, Nisa Energy Limited, a U.K.-based leading energy corporate advisory firm was appointed as corporate financial adviser in connection with the potential sale of contingent payment. To date, no offers have been received to purchase the contingent payment that have been deemed sufficiently attractive to proceed with. Woodside advisory ASX 11 June 2024, it has achieved first oil from the Sangomar Field offshore Senegal and advised on 23 July 2024 in its second quarter report, that the first cargo was loaded subsequent to the quarter. Woodside further advised ASX on 17 February 2025, that Sangomar produced 13.3 million barrels of crude in 2024 with 12.9 million barrels of sales. Based on this FAR estimated that the contingent payment, which is payable to it with respect to the 2024 calendar year is approximately USD 11.5 million. On 25 March 2025, the company announced that Woodside advised that the precise amount of the 2024 payment, which is payable to FAR is subject to the agreement to the reconciliation of underlying entitlement volumes with each joint venture participant and the Senegalese Ministry of Energy Petroleum and Mines, and that process is ongoing. On 23 April 25, the company announced that Woodside would make a provisional 2024 contingent payment of USD 11.5 million, which was subsequently received by FAR in May 2025. Payment of the provisional amount is subject to the outcome of the reconciliation process, following which Woodside or FAR must pay the other, the difference between the final and provisional amounts. Turning to the Woodside claim. As announced on 31 January '25, FAR was advised by Woodside of a potential claim under the sale and purchase agreement relating to the sale by FAR of its interest in the RSSD project. That announcement referred to an obligation on FAR to indemnify Woodside up to a maximum of $6,803,355 relating to any loss from an inability of Woodside to recover petroleum expenditure, not directly linked to exploration activities. As announced the ASX on 28 May 2025, Far has now been advised by Woodside of a claim of $6,029,899. Woodside has advised that FAR that the Senegal Ministry of Energy Petroleum and Mines has made a final decision and that Woodside is unable to recover petroleum expenditure not directly linked to exploration activities, the subject of the claim. Woodside has demanded that FAR pay Woodside USD 6,029,899 within 14 days. FAR has been seeking a range of information for Woodside in relation to the subject matter of the potential claim, which remains outstanding. FAR has been reserving all its rights it has under the sale and purchase agreement and has not accepted liability of Woodside in this regard. FAR will provide in due course further updates of any material developments in this regard. Turning to capital management. The directors considered FAR has surplus capital, which they consider should be returned to shareholders. However, the directors consider at this time it is appropriate to retain sufficient funds to cover the claim from Woodside, as described above, in case the claim is proven. FAR does not concede any liability to Woodside, but is merely acting in a conservative capital management manner consistent with appropriate governance principles. At today's AGM, shareholder approval sought for a capital return of AUD 0.08 per share. which, if approved, is expected to be paid to shareholders on a record date of 5 June and paid on 12 June 2025. The company is seeking a class ruling from the Australian Taxation Office, seeking confirmation that the capital return will not count as a dividend for taxation purposes. The class ruling will be made available if received in due course by the company's announcement platform on the ASX. No buybacks, share buybacks or capital distributions were undertaken during 2024. The company continued to focus on rationalization of corporate overheads as it successfully operates a contract service provider model. I thank shareholders for their support, and we look forward to receiving future annual payments right to the contingent payment and returning value to shareholders. We will now turn to the business of the meeting. I confirm that Michael Hutchinson of our share registry, Computershare, has been appointed to act as returning officer for the purpose of conducting and determining the results of the poll, whereproxies have been properly nominated to be at the discrete -- Chair discretion. Those proxies will be voted cast in favor of today's resolution. Valid proxies for each resolution will be displayed on the screen. I now move to the first item of business, which is to receive and consider the company's financial statements, directors' report and auditors report for the financial year ended 31 December 2024. These items are contained in our 2024 annual report, a copy of which was made available to shareholders on 26 March 2025, and is available on the ASX market announcements platform. There is no formal resolution to put to the meeting in relation to the adoption of the 2024 annual report. However, I will respond to questions or comments from shareholders in relation to the annual report later in the meeting. Andrew Johnson from the company's auditors, Moore Australia is available to respond to any questions or comments relating to the audit and the financial statements. We'll also take questions about or comments that you may have in relation to the management of the company. No recent questions to the order were received by the cutoff date, 5 business days before this meeting. As this matter does not require a vote, we will now move on to the first resolution. I turn to Resolution 1, which is to consider the adoption of the remuneration report for the financial year ended December 2024. The remuneration report is set out in the director's report in our 2024 Annual Report. The vote on this resolution is advisory only and does not bind the directors of the company. Please see valid proxies received for this resolution as displayed on the screen. I move that shareholders consider, and if thought fit, pass this ordinary resolution. I'll pass the Chair to Robert Kaye to conduct the next item of business, which pertains to my reelection.

Yes. Thank you, Patrick. I now turn to Resolution 2 which pertains to the reelection of Mr. Patrick O' Connor as a Director of the company. Patrick's bio is outlined in the notice of meeting. Please see the valid proxies received for this resolution as displayed on the screen. I now move that shareholders consider, and if thought fit pass this ordinary resolution. I now pass the chair back to Patrick.

Thank you, Robert. I will now proceed to the next item of business. I refer to the final item business, Resolution 3, which relates to a capital return as set out in the Notice of Meeting. Please see valid proxies received for this resolution as displayed on the screen. I move that shareholders consider, and if thought fit, pass this ordinary resolution. I'll now address any shareholder questions. Michael, did we receive any questions on the formal or general business or does any shareholder wish to speak to the general or formal business.

[indiscernible].

Thank you for the question. We are subject to a calculation based on Woodside's operations and Woodside production performance. We have provided an estimate to provide an NPV discounted value in the balance sheet. But in our quarterly reports, we provide updates that Woodside released to the market, but it's difficult for us to provide anything more as we're not a participant to the joint venture. So I think we've met the required standard and we continue to refer to Woodside's releases on the Sangomar project on a quarterly basis. Michael, are there any other questions?

There are no further questions.

Thank you. We'll now provide shareholders an additional 30 seconds for poll voting to be completed. [Voting]

Thank you. I think with that additional time is now up. I now declare the poll closed. Once poll results have been tallied by Computershare, we will announce results later today on the ASX market announcement platform. The meeting has not received notice of any other business. And as such, that concludes the formal business of today's meeting, and I declare the meeting closed. Thank you for your attendance, and we look forward to your continued support. Thank you.