Bell Potter Report

Bell Potter Report

FAR (8.1 c target 27c)- mkt cap $350 mil;l Value accretion of Gambia deal missed by market

This week’s Gambia deal is worth multiples of the $5 miill usd FAR paid and could add more than 10 pc to near term valuation and probably more over time as Big Oil attention focuses on that area of offshore West Africa.


To understand why look at FAR’s track record in Senegal history and then do the math.



After FAR secured the Senegal acreage Cairn paid USD1.38/b% point for farming into in the Senegal JV

4 months later, COP paid USD2.86/% point

After 8 successful wells (and 4 successes by Kosmos to the north).

FAR , farms into the A2/A5 acreage, adjacent to its successes for USD0.05/% point on trend just as Big Oil is re focusing on West Africa to fill in a production hole post 2020.


Alright the oil price was a lot higher in those days but as the consortium has shown thanks to lower drilling costs offshore Senegal is b can be commercial at these sorts of prices and the


Bought from Erin Energy Corp, as it decided to focus on its Nigerian assets for an upfront payment of $5.18m… after a six month lock up.

The farm-in requires FAR to pay up to $8m of Erin’s costs for an exploration well due to be drilled by late 2018. Prior to that FAR expect to complete seismic reprocessing and interpretation work some of which has already given up valuable potential.

There are several large prospects and the company has already mapped three potentially drillable prospects and leads and the two blocks between them contain prospective resources of in excess of 1bn barrels of oil on an unrisked, best estimate 100% basis.


FAR hold 80%, operator rights and has time to farm down, which for potentially on trend acreage will be interesting given the expected stampede for Senegal offshore assets later this year.