Ann: Change in substantial holding, page-16

Lot of talk about what WPL or CNOOC might do, but what about Petronas?

The Malaysians stumped up $45 million (wasn't it?) on what turned out to be ... well, we're still not quite sure what Samo turned out to be. Not quite a duster, it seems. 'Oil shows', said FAR. 'Oil shows at different intervals' according to reportage elsewhere. The well provided 'valuable information', according to FAR (they all say that when drilling a duster, don't they!) and maybe it will turn out to be the key to unlocking the oil migration secret. One thing all seem to agree on is that the West African source rocks are prolific enough to have generated multi-billions of barrels of oil - we've just got to find where it's gone.

But back to Petronas.

It's difficult to see them departing stage left, is it not? Having been convinced enough by FAR's geological analysis to stump up the cost of Samo, they will surely be at FAR's side for the post-well washup and the 'next steps' that emerge from that. I surely would if I'd pissed $45 million up against the wall ... or down a deep hole in this case. There's a fair chance Petronas will be part of FAR's next exploratory venture - assuming that is on a Gambian block (no certainty).

As for Meridian continuing to buy ... why wouldn't you! FAR is currently valued at less than $AUD400 million and yet has circa 130 million barrels of oil fully appraised, with around 30 million about to become reserves. By any reasonable assessment, FAR is heftily undervalued at seven cents. Base case to me looks more like 10 cents.

Ah well, another Christmas without a present. Getting used to them by now.

PS: Changed my sentiment from None back to Buy to reflect my comments above.

OOO