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23:45
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Originally posted by elemental09
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Hi all I emailed FAR today and Cath kindly took the time out of her busy schedule to respond to a number of questions I had. Below are Caths responses in red. I think there is some really good clarification here that will hopefully answer a number of the questions that have been asked on here lately. I am really looking forward to the new year - RISC, PE, hopefully a JV and drilling A2 or A5 and it sounds to me as though we really are fully funded to FID. I hope this helps. Ele. Me : What was the average oil quality for SNE? (I thought it was 31 API)?CN : 32 degrees Me: Was the oil found in SNE good 'light' quality oil? or heavy oil? CN: Good quality, light oil Me: Have FAR already paid ERIN Energy the $8million for a future exploration well in blocks A2 and A5? if not, when do you think that this payment will likely be made (e.g. Q3 2018 - approximate spud date). CN: We have paid Erin the agreed back costs to enter the permit and also paid for our licence for the 3D seismic data (both total approx. A$10M). Our agreement with Erin is to carry them through the costs of the well to a cap of $8M and these costs will be borne as the well is prepared and drilled. Costs are ongoing and we have ordered long lead items (well head and pipe for example) that take 9 months to machine and deliver. The well is currently planned for a Q3 2018 spud. Me: Approximately how many exploration wells will be drilled in the Gambia in A2 and A5 in 2018? CN: One - the obligation to retain both permits is to drill a single well on either block. Me: The latest FAR quarterly report stated the following: "The budget for the Senegal project for 2018 was agreed during the quarter and will largely consist of field development and engineering studies to FID and the compilation of the development plan for submission and total US$84m gross (US$14m net to FAR, approximately AU$19m). The majority of FAR’s 2018 budget, as per previous years since our oil field discoveries, will be spent on the Senegal project. The funds raised in Q2 of this year will leave us in a well-funded position for 2018 and into 2019. " Question: When you say that we will be in a 'well-funded position for 2018 and into 2019' - are those 'calendar' years or 'fiscal' years? - I will be honest - I am trying to work out whether there is the possibility of a future Capital Raise. CN: Goodness, I never thought anyone would interpret this as FY! It says 2018 and was intended to mean calendar year - which takes us to FID on the SNE development . Me: Obviously the amount of FAR Shares already issued is a concern for all of us. In saying this - I appreciate that FAR need money in order to fund future initiatives. I was hoping that FAR would only have approximately $10million dollars worth of drilling costs remaining (for the two planned SNE wells) + 8 million dollars for ERIN (which I am assuming might be back paid as part of an agreement with a future 'farminee partner'. CN: The forecast expenditure for the last quarter of 2018 does not include payback of sunk costs on the Gambia project through a farmout. The farmout process is underway but we thought it prudent to assume this closes (financially) on 1 Jan 2018. At this point, we have forecast these monies coming back to FAR. When we raised money in April, I said that we were clearly funded to FID and bar anything coming from left field, we are. Me: FAR have approximately 61 million dollars NET cash and are forecasting an approximate spend of 22 million dollars in the next quarter. 21 million will be spent on 'exploration and evaluation'. What (if any) portion of that 21 million is for past Senegal exploration or evaluation costs? or are these costs for a 'yet to be disclosed' initiative ? CN: Not quite sure what you mean here, the drilling costs for the 2017 program have largely been paid in the last quarter with only a small overhang into this quarter. The seemingly large cost for the quarter includes Gambia operational costs that will be recouped in a farmout. We are not planning any large new project that requires funding. Me: 61 million - 22 million is obviously 39 million dollars. As I mentioned above - I am expecting approximately 20 million of that to go towards 2x SNE drills and to ERIN Energy - leaving FAR with approximately 20 million (and obviously my concern here is that we would do a Capital Raise). CN: There are no wells planned in the 2018 budget for Senegal Me: At what point will far be in a position to borrow money rather then undertake Capital Raising? I am unsure of the financial institutions requirements - I am assuming once an asset is classed as a Production Asset ? - I am really interested on your view on this. CN: The financing of the development project will be partially funded with debt and partially funded with equity (but not necessarily the traditional equity in the form of issuing scrip). Hence why we wanted to be fully funded to FID – at this point we have options for debt financing for Senegal and the use of other fiscal instruments. The JV is working together now on a financing model.
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Fantastic work Ele09.
(20min delay)