how high can far go?, page-44

This is taken from an old (pre-Shell exit) post of mine. THought it may be relevant to the renewed comparison with Hardman:


"Hardman was taken over by Tullow in January 2007 for A$1.47Bn, around USD$1.1Bn at the time. Previous to the successful takeover bid price of A$2.02, shares had been trading as high as $2.50 (April 2006) on speculation of the Tullow bid and of potential rival bids. Until that time HDR shares had been declining after a downgrade of the daily production for Chinguetti, even though the total reserve estimate was not changed. Post April HDR shares were "the worst performer on the S&P/ASX 200 Energy Index, despite the move by world oil prices to more than $US 78 a barrel"?(ABN Newswire), and slumped to $1.19 in September 2006. The shares had risen dramatically to the $2.50 mark in the lead up to spudding (I believe), based on the 4D seismic data. Hard to get an accurate picture of the real price as there were a couple of large placements, one to British investors for $2.33 (Hardman was dual listed).

In Tullow's presentation to shareholders seeking approval for the acquisition, they cite an increase in production of 6000boepd and an increase in total 2P reserves of 105mmboe. Whilst also citing the potential of Hardman's other exploration assets, the justification for the deal was based on existing assets.
Presentation is here: (http://www.tullowoil.ie/tlw/ir/reportspres/finreportspres/2006/presentations/hardmanres/hardman.pdf)

So in late 2006, with the oil price somewhere around US$65 but market sentiment quite negative (trending down), Tullow valued HDR at US $1.1Bn with 105 million barrels, or just over $10 a barrel (A $14 at the time). "

It does surpise me a bit that the focus of discussion seems to be Hardman's share price rather than their market cap. The share price is completely irrelevant, in that if the company had only one share, that share would have been worth $1.1Bn. I for one still believe, even after taking a bath with Shell's walkout, that FAR's share of its combined assets will yield more than a total of 100m barrels. So the last thing I want to see at this early stage is a takeover bid at a measly 20-30c per share. Kora alone could be worth almost $.50!

Holding out for $1+

Cheers,

MM