Hi Whiskey
I hear what you say about our propensity to over-value our assets, but IMO there is no way 14-16 cents would even go close to getting a deal done. Yes, it would certainly mop up a heap of retail shares, but a company valuation of a billion dollars would fall way short of the expectations of major shareholders. Consider:
> Farjoy believes FAR will 'one day exceed Santos'. Nothing we've seen so far suggests the Company has no chance of getting there. One dry hole in Gambia does not kill those ambitions in a basin containing 12 billion barrels of oil (Farjoy) and in which FAR holds prime position.
> Our share of SNE itself is worth $US600m at $US8 per barrel (and yes, I did forget to convert that back to $AUD yesterday, so say $AUD850m).
> Soloo seems highly likely to be an extension of SNE itself. (Yes, it might be another Samo.)
> The FANs and SNE North are unappraised and with even ordinary luck should add considerably to FAR's inventory. Down the track, I concede.
> PE remains a chance (slim, I reckon, but still a chance).
> GB is to be drilled next year.
> Samo notwithstanding, A2 and A5 are virgin territory in an emerging major basin.
> Western Australia is now a looming wildcard.
> Kenya is ... well, Kenya, so forget that.
If you were Farjoy/Meridian, would you sell that at this stage for a billion dollars? Wouldn't think so - not even close.
The real issue here is one to which you constantly refer - time. Major shareholders seem to have it; nervous Nellies on here expect windfall profits tomorrow. Given time and capital - and the market is happy to throw capital at this venture - FAR is highly likely IMO to become a multi-billion dollar company. Shouldn't go broke - SNE plus cash well and truly exceeds current market capitalisation - and if everything goes wrong from here might not reach that single billion, but IMO FAR has everything in place (as we speak) to achieve major company status.
Time will tell. I'm holding.
OOO
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