*** FAR hits the big time
Last week — indeed, over the past few months — I explained why the share price had started to surge at African oil explorer FAR Ltd [ASX:FAR].
There’s strong potential that the company is sitting on an embarrassment of oil riches off the coast of Senegal.
On Tuesday night, FAR repaid investors’ patience in spades.
Its trailblazing work off the Senegalese coast has led to what its senior partner, Cairn Energy plc [LON:CNE], describes as a ‘significant oil discovery’ down the FAN-1 well.
Cairn puts the most likely potential oil in place at the prospect at a whopping 950 million barrels.
The real volume of oil at the prospect could be anywhere from 250 million to 2.5 billion barrels. Of that, anywhere from 15% to 40% could be recoverable.
That shows you how inexact geophysics can be. But even in the worst possible case, it’s now clear to investors that FAR is sitting on a significant commercial find.
By comparison, the threshold for oil finds in West African waters to be economic is around 150 million to 200 million barrels.
In the more optimistic case…this could prove to be a transformational, company-making discovery.
Experts are already comparing FAN-1 to the massive Jubilee discovery off Ghana in 2007. That remains the largest oil find ever off the West African coast.
Now that FAR has cracked the big time, how good could things get?
FAR has a 15% stake in this well. Analysts tend to put a value of around US$10 per barrel on undeveloped oil off the coast of West Africa.
If 400 million barrels of oil prove to be recoverable, FAR should see around US$600 million of that value. Depending on where the Aussie dollar goes, that could more than double FAR’s market cap from its current levels.
You should know that the quality of the reservoir is key, and FAR and its partners will need to evaluate it further.
But this news is a sensational result for FAR.
This is exactly what I aim for with your speculative stock tips.
And here’s the best part: you’ve had plenty of chances to take your stake in the company’s success by buying in at a reasonable price.
As recently as five weeks ago, FAR traded well below my 5.5 cent buy-up-to price…and it had spent the previous five months below that level, just waiting for you to pick it off.
I can’t advise you to wade in with a fresh purchase at these levels if you missed out.
But if you’re one of the lucky readers who is now sitting on a multi-bagger, 100%+ gain here…I’d love to hear about it.
Tell me your story by sending an email to [email protected] and writing ‘I struck black gold with FAR’.
Do your own research and listen to what is going on around you.
JP - i loved your post and could not agree more
Aqua i love your lists and sometimes lack there of
, and to Elemental, Coopy, Wasa, HKP and the others, keep answering questions too because this is what these threads are all about - i have learnt a Motherload from all of you guys and whilst some of the rubbish comes in and its hard to decipher, you only have to read the posts from the ones that matter.
Off to buy a cheese grater
GLTA
(20min delay)