Ann: The Gambia - FAR's next frontier, page-33

Hi Davy Boy et al.,

Short answer is I see no chance of any tie-up of any potential Samo hydrocarbons with the SNE development. Assuming that Samo has 200mmbbls or more (stand-alone potential) then I see the reasons as:

1) No Sovereign govt I know will hand effective control (or any say) of a major resource to another country.
2) This is the only chance for the Gambia to control probably its only get-out-of-economic-jail card. They would be id*ots to blow it.
3) Project development within its own waters will add significant potential to any other discovered hydrocarbons.
4) A stand-alone development will allow the Gambian govt to be Master of its destiny.
5) I'd rather wrestle tigers than try to get 2 govts to agree on how to share a major strategic asset (Tortue will be interesting to watch!)
6) Sharing (getting some money) for shore based facilities in Dakar is one thing. But I cant see the SNE JV agreeing to make available any space for potential Samo production (unless Samo comes in <50mmbble and even then the JV would likely put that production toward the back end of the project).
7) The Sangomar Deep JV actually doesnt need Samo. At all. It has more than enough to keep it busy for the next 30-50 years
8) Samo is just too far off and wont be in a position to hook into any Phase 1 development of SNE.
9) If anyone thinks that the SNE development will be a walk-in-the-park, please think again. Trying to develop a trail blazing major project in a 3rd world country with a very nascent regulatory, judicial and corporate frameworks is hard. But financing one is harder still. Bank Credit Committees (and their attendant bankers) physically tremble with anxiety when face with the above. So adding an additional layer of cross-border complexity would be the best way to unnecessarily sabotage the SNE project that I could possibly think of.
10) Pretty easy to see that there is little/no upside for WPL/CNE....and I certainly can't see FAR shareholders winning in any unitisation negotiations with these guys.
11) FAR and the Gambia are in so many ways, better off pursuing a stand-alone HC industry.
12) If I were the Gambian Govt, I would be very displeased and would loudly squash any discussions about potentially sending production/development benefits north. Cutting your neighbours grass is a thing too in West Africa.

All of the above is, of course, mute if Samo ends up being a disappointment like Chinguetti.

Cheers,