PE Timetable

In trying to understand when we might know what is happening in Senegal with COP stake I thought I would re-read things after a few days.

It is clear that FAR has/(maybe had) the right to PE under the JOA.

FAR has initiated a dispute process with the JOA partner relating to a technical breach of the terms of the JOA relating to the proposed sale to WPL.

FAR have not publically stated any particular clause of the agreement that COP are not complying with and the agreement is confidential and will not be discussed in public but on 23/8 they said they had notified COP. In fact the Senegal Govt is looking to make future licences dependant on such agreements being made public because they also cannot talk about the JOA.

FAR have said that they want to sort out the dispute (compliance with the agreement) but have not said that they wish to PE, just to amically resolve the issue of JOA compliance. They have attempted to claim that the timetable for PE will commence once they agree COP have complied with the JOA terms which none of us are privvy to. Possibly the motive is to stall the process - so long as FAR are willing to pay lawyers to argue about JOA compliance they might be able to delay the PE process and seek funding. This shows simultaneously the companies feeble cash position and strong cahunas possessed by CN to even attempt PE.

IMO as soon as FAR has the cash and big backer ready to roll they will stop arguing about JOA compliance and attempt to activate PE clock and COP will get their cash and be happy and WPL will miss out. Big win for FAR in that case BUT With compliance issue out of the way COP might argue about PE clock dates and the saga continues in arbitration again, FAR will need to do a CR after the next 2 wells are done and doing another CR in the uncertainty of court actions without locked in additional % of the asset will be challenging. it could put FAR in serious financial pressure in 2017 if JOA disputes drag on in the courts and puts a ? over their ability to participate in complex JV arrangements. One angle to remember is that the JV maybe can be dissolved if the parties cannot resolve disputes within certain time periods, without the JOA we cannot know the terms.

Alternate Scenario: FAR have difficulty locking in finance due to oil price and arbitration decision beats them to the line - in this scenario the decision could go 2 ways - in FAR favour or in *WPL* favour (COP just want their cash yesterday). If it goes in WPL favour FAR still have their 15% and the JV is back on track. If the arbitation court rules in FAR favour its a big win for FAR and increases the probability they will secure funding if their right to PE is subject to a ruling in their favour and the clock argument come into play depending on how COP want to play it.

If WPL miss out they still have a contract for sale with COP and may seek damages for breach of that contract due to negligence etc. In every scenario it is in COP interest to fight and to win vs FAR. Interesting times indeed.