About to run again? Last chance for cheepies?, page-121

Hi All

Wish I’d known Samo was a dud. I’d have sold for 13 cents, made a good - nay, excellent - profit and been happier than all on this forum. Instead, here I am as part of the self-flagelating soon-to-be-under-six-cents brigade.

Yes, the current situation is frustrating, but I feel Szabo’s analysis is pretty right: A sensible funding plan and FID will see the Company valuation increase significantly.

Note the big money has not shifted - well except to increase its position. Doubtless they are mindful of the Chairman’s prediction that SNE will repay FAR within the first three years of production, thereafter generating a near-30-year flow of unencumbered cash.

Considering long-term valuations is fraught because of the many unknowns (not the least of which is FAR’s chance of further discoveries) but if we look at established producers we find PEs sitting between 11 and 20-odd. Now I’ll be shot down here for over-simplification, but assuming FAR’s PE will be at the lower end of producers, a PE of, say, 8.0 still produces some enticing numbers.

Assume we produce 13.7% of 100,000bpd at a cost of $US25pb and sell for double that, generating earnings of:

13,700 x 365 = 502,605 barrels p.a.
502,605 x 25 = $12.565m x 1.3 = $AUD16.334m
Divide by six billion shares = 2.7 cps
Multiply by PE of 8.0 = 21.8 cent share price

(Can someone better qualified than me have a crack at this. I’ve shifted so many decimal points my head is spinning. It is 2.7 cents, isn’t it? Not 0.27 cents. You might even question my assumptions, which I think are conservative but might be wildly inadequate.)

Even if I’m only remotely on track, it does suggest FAR will be significantly reweighted IN TIME.

Therein of course lies the rub: Most of us expected to be richer and richer quicker. Instead, it seems to me we need to recalibrate. I still anticipate solid returns from this investment, but now expect they will be less than stratospheric and further off than hoped.

Of course another big discovery and ... well, who knows.

OOO