for those that are looking for a junior oil play that has massive upside potential check out FAR, it is about to undergo a serious upward re-rating due to news coming out of its Senegal JV.
Analysts and Brokers believe FAR will take the place on the ASX left by the takeover of HDR, I will post several links to articles by brokers/media reports detailing the significance of Senegal Oil Leases.
As there is way too much going on at FAR at the moment I will just highlight the short term explorational upside along with the massive upside provided by Senegal.
For clients of Hartley's and Fat Prophet's (buy reco in 2005) you would probable know about the upside potential of FAR, but once the seismic data/drill targets for Senegal are released in the coming weeks expect increased broker/media coverage due to the shear size of the targets.
Now for a look at the short term explorational upside
Beibu Gulf China FAR 5%
Background
Block 22/12 is situated approximately 60km off the coast of China, north west of Hainan Island, and covers an area of 456km2. Water depths are shallow, ranging from approximately 10m to 40m. In June 2006, Roc Oil Company Limited (“ROC”) announced the discovery of the Wei 6-12S field. Roc aims to rapidly move towards production.
With the first of a four well program already spudded, expect to hear the results of the first well early next week. Given the current oil environment any oil discovery will greatly benefit FAR's shareprice.
FAR’s 5% interest in the China Block could be worth 10.3cps(taken from Hartleys Report, also needs to be upgraded due to oil price rising from $60 to $100)
US Operations
FAR currently has oil/gas production in several locations in the US, generating about $600k revenue a quarter.
But what is of particular interest is the current drilling of the South Grosse Tete Deep Well in Iberville Parish, Louisiana. This is a massive gas/oil target and have the potential to add over $1 per share to FAR shareprice if successfull at the deeper target.
South Grosse Tete Deep Well, FAR 18.3%
Explorational Targets
Nonion Struma 12-15 BCF gas Nodosaria 100 BCF gas and 5 million barrels oil Deep Wilcox 350-500 BCF gas and 9-13 million barrels oil
Australia/Canada Exploration
FAR has several explorational targets in both countries see below Hartley's Report for more details.
Senegal West Africa - The Massive Upside for FAR 30%
It is these leases that cause brokers/analysts to compare FAR to HDR, below is the link to a recent Resource Stocks Article comparing FAR and HDR, remember FAR are at the stage where they are about to release the seismic data/drill targets which have targets adding up to well over 1 billion barrels of oil.
Now a closer look into the Senegal Oil Exploration Leases and why they are already worth $300 million or 60 cps to FAR before a rig has even started drilling.
Unprecedented Interest in West Africa
With the major oil companies searching the globe for areas with potential for huge oil fields, under explored West Africa has captured their attention. West Africa continues to be viewed by the industry as one of the few regions outside the Middle East capable of hosting big enough hydrocarbon reservoirs to attract the major oil companies. As illustrated in Figure 1, there are a number of majors that surround FAR’s acreage including Woodside Petroleum Limited, Dana Petroleum Plc, Tullow Plc and Edison International. FAR is the only junior ASX listed company along the Mauritania-Senegal-Guinea Bissau offshore trend.
Recent activity in West Africa by some of the majors include:
• Edison completed a 1,500km2 3D seismic survey in the Rufisque Deep Offshore block to the north. • Kuwait Foreign Exploration Co recently purchased BG Group PLC’s interests in Mauritania for $128 million. • A recent auction of acreage in the Congo Basin, offshore Angola, for three deepwater exploration tracts saw international oil companies bid in excess of US$3.1b in signature bonuses alone. This amount is reportedly the highest ever offered for exploration anywhere in the world. • Gaz de France has recently agreed to study the feasibility of an LNG project based on deepwater gas discoveries in nearby Mauritania.
Look at the above auction results for the acreage in Africa, just goes to highligh what FAR are currently sitting on. As detailed in the linked media article below FAR is well and truely swimming with the big boys. Also it must be noted that FAR is the only junior ASX listed company along the Mauritania-Senegal-Guinea Bissau offshore trend.
Below are some figures from the Huntley's Research outlining the possibilities of a Senegal Oil discovery, and these are only two of the known targets.
(C1Prospect) 180-320mmbo $2.66-$4.73 per share (N3Prospect) 120-418mmbo $2.12-$7.37 per share
The fact that oil has now hit the $100 a barrel mark, will mean any positive exploration news will send FAR flying, with results due from the first of four wells in China next week, and the results also due shortly from the high impact South Grosse Tete in the US along with the Seismic Survey results out of Senegal it will be a great time to be holding FAR.
Another interesting point is FAR is one of Fat Prophets long term oil holdings and don't be surprised once the Seismic Survey results are released from Senegal that they will re-cover the stock with a higher price target meaning more likely buyers from people that subscribe to the newsletter.
There is just so much info on FAR so below are some great links outlining what the company is all about (remember when reading the impact prices of successfull exploration it needs to be upgraded due to the increase in oil price from $60 to $100.
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