Ann: Change in substantial holding, page-32

History shows the following:

lets assume a small oil co - is part of a joint venture, that makes a discovery....... (this in itself is "rare")

1. there is a period of time during which we see "appraisals" and step-outs to delineate the resource .......
2. most juniors are "cash strapped" - and so there are usually serval major dilutions ......
3. post resource definition, the JV works out if/when it may be commercial ....
4. plan is worked out, and we get the the "FID" decision ......

during the above period - the stock price initially jumps, and then trades in a large sideways band ........(news flow dependant)

for FAR - this is the last 5 yrs ....

once FID is taken, and funding is raised/organised ......the market starts to value the potential c/flows, based on the fiscal terms of wherever said JV is operating ........


during the "post raise" is when most of the share price action actually occurs .........

so, the management of FAR have to now weigh up the dilutionary cost of equity funding (post whatever the JV comes up with as a debt package .....along with its assoc hedging package)....... versus "can we sell the co to the highest bidder" ......

prob with opt 2 above - is 13.6% aint going to cut it for a major .......20-25 would be a better number for a major in new region/tax regimne .......

so FAR has to "wait" for Cairn to flog whatever % they want to ......that would also then "set a price" for FAR stake ...........

PV10 "wont" capture all the value in this instance - b/c we already know that it will be done in "3-stages" ..........

I rekon cujo is about right ......apart from having to wait for Cairn to enable a price set .......

rgds
Value_Hunter