I have held FAR now for 8 years. Sadly I have not made a single cent in that entire time (I have however managed to double my original holding by selling and buying back in at the right time).
After many years of coming on here and reading all the positive posts on how 'this next thing will make the SP soar' - I have to admit, I am well and truly over it.
Why don't I cut my losses and run? - well, i'll be honest - it is tempting.
The really annoying thing is that 'on paper' you can't really fault management. I mean seriously, the fact is that they have discovered well after well full of oil. There success rate is unheard of (seriously - the amount of other oil companies I have held shares in over the years that have drilled duster after duster is huge!).
Sadly the SP is where it is because that is our current value. There are a few realistic things that I am waiting for that will in my opinion see significant gains in the SP.
1.) An increase in the Price Of Oil (POO). Oil is our product, the global price of it crashed. That has a huge impact on the SP. Will the price of oil lift? who knows. If WAR starts then yes (and I hope that isn't the case as I don't want to profit from WAR). If the Saudi's want the POO to increase then yes.
2.) We need to remember - higher POO is great for us if we are going to sell our assets or sell oil (become a producer) but it's actually bad while we continue to explore / appraise... the higher the price of oil, the more oil rigs been used, the higher cost of exploration and appraisal = more money required from us and more Capital Raises and dilution.
3.) Dilution. I certainly do not have the answer to the 5.2 billion shares currently on offer. In my opinion this seriously hampers the SP and there is always the prospect of FAR 'needing more money' - seriously, what's next? 6.5 billion shares? - I think just about everyone would agree that we need some kind of share consolidation, however, I also know that this needs to be managed carefully. Companies that time this right allow for shareholders to see real gains, those that don't time it right get burnt big time. It would however be nice to know what is happening in this space - perhaps some of you could email FAR and ask the question (I have emailed them enough lately!).
4.) PE - I won't touch on this much but the fact remains that there is the potential for FAR to win PE. I believe this is probably going to be concluded within the next 10 months. If we win PE, I think the SP will triple overnight. This may also trigger a takeover or offer to purchase the entire 50% (or whatever percentage we end up with). There is also the chance that this does not happen and we lose PE.
5.) A takeover. Who knows if/when this will occur. Some people suspect after a resource upgrade, personally I do not share this view. I think any company wanting a takeover would want to know the results of PE and to be honest - I suspect so would FAR Management. I don't think there is any chance of FAR Management accepting a takeover while the results of PE is unknown, who in their right mind would make an offer that values in a successful PE? no one. Conversley, why should we accept a low offer that does not factor in a PE win? - so no takeover imo until after PE outcome is known.
6.) A2 and A5. I am very interested in the JV agreement and timings of exploration wells here. It would be great if we could sink a drill bit into A2 within the next 10 months with CNOOC - if we got a hit here, this might then be factored into either a takeover or asset sale.
I am hoping we win PE, onsell 35% to CNOOC. At this point, undertake a share consolidation. Sink a few drill bits into A2 and A5 - appraise that field, keep a percentage and onsell the rest.
There is still huge potential for FARs SP to go up many times over, sadly, it's becoming very frustrating and for long terms like myself - I have to remind myself - while I have held over 8 years, the fun and games have really only been happening since 2014.
Ele.
FAR Price at posting:
7.5¢ Sentiment: Buy Disclosure: Held
(20min delay)