Tweet - FAR 12 Month Value Drivers, page-29

Just trying to compare our commercial discovery at SNE with a commercial discovery at SAMO, should we be so lucky..

The glaring differences are WI and retention of operatorship and they are quite significant, oil price is also potentially quite significant, although the price of oil was similar to now when we discovered SNE ,consequent events had an impact.

With SNE our WI started low and to date has been retained, at considerable cost in dilution achieving it, mitigated to some extent by reduced drilling costs, we also lost operatorship during the farm out process. The project is also at the upper end of time to first oil from discovery, at 7-8 years.

Turning to SAMO the main difference is WI ,with operatorship also giving us some initial control over events. The oil price outlook is more favourable and IMO, SAMO covering a smaller foot print, will require considerably less appraisal and development wells and a shorter timeframe to first oil, possibly 4 -5 years as a result of knowledge gained with SNE...this should also lead to a lower break even cost per barrel.
That would also be influenced by the size of any find and the reservoir and oil quality.

Getting back to WI, as I and others have mentioned previously, it's very likely FAR would want to retain the full WI untill appraisal was finished, for obvious reasons, but it would require a CR.

The real benefits of a large WI held through appraisal is the ability to sell down to offset development costs, possibly even eliminate them, depending on what we wish to retain..this can be done with maximum knowledge of recoverable oil and at a better price per barrel,which should more than account for appraisal costs.
Its was something we had, and still have with SNE, but with a lot less WI to play with.

Whichever way you look at it a commercial discovery at SAMO will be transformational for FAR, particularly over the long term and the bigger the better.

So we await the verdict and its rapidly approaching....I'm very positive about the outcome but it's certainly made easier having SNE as a backstop..

Cheers Whisky