FAR (ASX:FAR) said Woodside Energy (Senegal) advised the firm that it may make a formal written claim to FAR under the indemnity under a sale and purchase agreement relating to past petroleum expenditures in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) project, according to a Friday Australian bourse filing.
FAR completed the sale of its entire interest in the RSSD project in Senegal to Woodside in 2021.
The sale and purchase agreement contains an obligation on FAR to indemnify Woodside up to $6.8 million, relating to any loss from an inability of Woodside to recover petroleum expenditure not directly linked to exploration activities.
Senegal's petroleum, energy, and mines ministry raised a claim that certain costs incurred by FAR, up until the end of 2013, were rejected for cost recovery due to insufficient information to support the claim.
This came after the ministry conducted an audit of the contract for exploration and hydrocarbon production sharing in respect of the project.
Woodside advised that the ministry's claim is subject to talks between the firm and the ministry regarding the merits of all items raised in the audit.
FAR said it would liaise with Woodside to provide it with relevant information supporting FAR's position.
FAR's shares fell past 12% in early trading on Friday.
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