The $60m was seemingly out of left field… and leaves me with...

The $60m was seemingly out of left field… and leaves me with mixed views. On one hand it is nice having so much money available (tho do we need that much right now?)…but on the other hand it is a crippling amount of shares on what was already a bloated share registry.
I guess how you feel depends on which hand you want to make your predominant side? We can’t do much about the shares being issued now, apart from possibly voting against the parcel that needs approval at the AGM, but I suspect that would not be a good idea. What we can do though is continue to consider whether we are getting the innovative / incentivized management that would be suggested, by the request for more performance options. As an exercise to view “performance”, it is good to scale it (say 1-10, with 10 being highest / outstanding) and then asking…what does “10” look like? In the case of FAR perhaps the following questions could make up part of the criteria….

• • Having drilled did we find oil?...answer YES (positive)
  • Having found oil, is there much?...answer YES (positive)
  • Has FAR had much to do with deciding locations / timing etc…answer Probably (positive)
  • Having found oil, has it been determined commercial…answer NO (negative)
  • If not declared as commercial why not?...answer - good question considering all the info so far in the market (negative)
  • Are we expanding the portfolio?...answer YES (positive)
  • Are we on a very transparent journey?...answer NO, we are tied to a restrictive tight hole policy (negative)
  • Are management trying to get CNE to lift the THP…if NO (negative)…if YES (also negative, as they have yet to succeed)
  • Do we yet know exactly how many holes are going to be drilled in this campaign?...answer NO (negative)
  • Has there been a significant increase in share price?...answer NO (negative)
  • Is the share price appreciating as could be reasonably expected?...answer NO (negative)
  • Is the market capital of the company appreciating?...answer YES (positive)
  • Is the number of shares increasing (possibly alarmingly)?...answer YES (negative)
  • Have we enough money in the near / medium term (assume nothing unexpected)?...answer YES (positive)
  • Has there been any unexpected announcements on cornerstone investors, bank finance etc?...answer NO (negative)

There could be many other questions that might be added (both positive and negative), and the “negative” answers should not necessarily be read as a criticism of management…the intent is if the “negatives” were “positives” then that is outstanding performance! It is reasonable to ask at what level along the scale should shareholders sign off on bonuses, versus standard expectations of doing a job? An immediate example in the case of FAR...an “expectation” of getting $60m is a CR at a discounted share price...versus “outstanding performance” of being able to argue to one or more investors that the existing share price is too low and investing at a HIGHER share price would be fair and still to their benefit!  
Bonuses / incentives / performance options must be against multiple criteria (not just against one or two easy headline objectives). It means diddly squat if FAR find all the remaining oil in the world if the share price does not reflect it. There is no problem that we need to crawl before walking but as can be seen above there are a lot of activities that could be turned “positive”…and just maybe suggest room for improvement by management in their pursuit of bonusable performance – ie. in the scale of “expected” to “outstanding”…the difference between a salesman who sells an item for $20 and another who sells the same item for $30!
Sorry about the long post - and all just IMO

dodds