FAR

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47.0¢ far limited

Why Far is Undervalued., page-72

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jctl

215 Posts.

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24/07/17

08:40

Post #: 26034369
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Originally posted by walk-it-off ↑

Working on a few ideas presented by earlier posters in the workings below.

What value is FAR Oil?
CNE quote a NPV of $US6.50 ($Aus 8.22) per barrel at $US50 oil for SNE (at FID 2018/19), and a NPV of $US12.50 per barrel ($Aus 15.82) at $US70 oil. With the current 5.462B shares issued and the 88M barrels of oil net for Far ( @ holding a 13.7% interest for currently declared 2C of 641M barrels ).
It is assumed the discount factor used by CNE is 10%. The discount factor accounts for the cost of capital for FAR,for any capital which FAR needs to raise for development of SNE (by either a Capital Raising or a loan at FID).
Then in $2017.
So for SNE @ $US6.50, say a discounted $Aus7.39 x 88M/5.462B = 11.9 cents per share.
So for SNE @ $US12.50, say a discounted $Aus14.23 x 88M/5.462B = 22.9 cents per share.
And for an oil price of $US 55 per barrel a share price of 11.9 + 0.25 * (22.9 – 11.9) = 14.65 cents per share.

This doesn’t take account of

any unexplored reservoirs, of which the Annual Report estimates there are 1.5 Billion barrels over and above SNE, and not including FAN1.

Nor does it account for the results of the SNE VR1 well which has added oil from the thicker sands to the 88M barrels

the Gambian A2/A5 acreage (Far 80% WI – looks quite prospective analogue of SNE)

the Guinea Bissau acreage (Far 19.28% WI)

The Djiffere acreage (Far 75% WI subject to drilling well before July 2018)

the $80 M cash just raised (value = $80M/5.462B = 1.5 cents per share)

that need to be ascribed some cents per share value.
Suggest at least double the current 88M barrels of oil net for Far for SNE.
So for SNE @ $US6.50, say 2 x 11.9 cents per share = 23.8 cents per share.
So for SNE @ $US12.50, say 2 x 22.9 cents per share = 45.8 cents per share.
And for an oil price of $US 55 per barrel (as predicted by Kent Moors by September 2017), say 2 x 14.65 cents per share = 29.3 cents per share. This is close to Malcy’s last valuation.

Value of Woodside Stake
Woodside have been given approval to participate in RSSD, presumably until PE is sorted whence they will either lose their stake through arbitration or be given full right to 35% of the RSSD lease.
The value of the 35% (31.96% after Petrosen takes up their option) can be calculated
(0.3196 x 641M) x $US6.50 = $US1.331B
(0.3196 x 641M) x $Aus7.39 = $Aus1.513B
Now Woodside paid $US450M for their stake, so as they would have this amount (plus costs) repaid if FAR can uphold arbitration.
So Woodside has at least $US881.6M to protect from a successful FAR arbitration, at a $US50 per barrel oil price. More at a higher per barrel oil price.
I expect this amount should focus peter Coleman’s attention. There is a fair arbitrage value to be had here on FAR’s market capitalisation.

DYOR

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FAR Price at posting: 8.0¢ Sentiment: Buy Disclosure: Held
1 Upvote

0 Great analysis

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(20min delay)
Last 47.0¢		Change -0.015(3.09%)		Mkt cap ! $43.43M

Open	High	Low	Value	Volume
47.0¢	47.5¢	47.0¢	$9.995K	21.23K

Buyers (Bids)

No.	Vol.	Price($)
3	82233	47.0¢

Sellers (Offers)

Price($)	Vol.	No.
48.0¢	50000	1

View Market Depth

No.	Vol.	Price($)
2	71033	0.470
1	50000	0.465
1	50000	0.460
1	1822	0.450
1	3000	0.445

Price($)	Vol.	No.
0.480	50000	1
0.485	50000	1
0.490	54000	2
0.510	100895	2
0.520	225286	3

Last trade - 15.00pm 27/09/2024 (20 minute delay)

FAR (ASX) Chart

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