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kkw

7,173 Posts.

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03/01/19

14:48

Post #: 37014835
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Originally posted by kbrown4515 ↑

New thread as sick of the same old PE stuff getting regurgitated.
We are guessing and don't know, no matter how many times we repeat the same arguments.

Expect next quarterly to be released in 4weeks today, I wonder if there will be any update on financing options?

Very broad brush, but...
Far have to date mentioned JV financing & also forward selling output at a discount.
I'm not sure how the former will work whilst arbitration is ongoing but the latter is certainly interesting.

I know the number is also in dispute, but for examples sake, let's say FAR have to raise $400M US.

The current Brent price for 2022 is $59 US average across months.
Let's say to make it attractive and to pay financing costs we have to sell at $50 a barrel.
Far have stated previously breakeven costs are in region $35 (with further upside once contracts are negotiated?)
Simply ignoring ramp up phase, we therefore generate 13,700 x ($50 - $35) per day profit ($205k) or $75M a year.
Of course upside at higher oil prices but assume this will have to be locked in anyway so give this away for first few years plus probably a risk of penalties to pay at market for non-delivery if project delays.

If JV financing is real option and say 50% debt funded by World bank or someone at reasonable or even low rates, then Far would pay off remaining 50% after allowing for corporate overheads, in 3 years or less (maybe 2 if $300M or if phased) - with a cash cow sitting for next few decades and to further invest in 3billion barrel SNE with technolgy to improve recovery rate from 20% (600M) to 30-40% as has been quoted by Cath.

This remains a compelling proposition and a steal at under 7c or $350M value IMHO.
Other prospects Soloo & Bamboo upside, but obviously have to be financed for drilling and prior to 2022.
Cash position of ~$20M and funding options awaited with interest.

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Kbrown,

Re "Other prospects Soloo & Bamboo upside, but obviously have to be financed for drilling and prior to 2022. "

My view is that SAMO would have provided a lot of verification DATA, and therefore would have made SOLOO and BAMBOO more (could be less also, but hopefully not) attractive. With the high % we have, we probably could be free carried again. This time, our COS is somewhat higher.

By then, our 12 months delay in the PE saga would also be close to the end. So 2019 could be FAR's year.

KKW

FAR Price at posting: 6.7¢ Sentiment: Hold Disclosure: Held
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