Hi there HKP, I believe that 'someone' was I about 7 weeks ago...

Hi there HKP,

I believe that 'someone' was I about 7 weeks ago and suspect we'll see another 1000++ posts speculating about who, what, when and how much re the inevitable corporate activity that will eventually 'hit' this JV. Lots of fun mental posterings during news/info voids to come yet. Maybe in a year's time (I don't believe COP will move pre-appraisal results), we'll all gather our historic posts and say he/she/I was right/wrong. Its just a game of corporate Cluedo.

But really, there are only 2 players controlling this game. FAR and Petrosen. COP/CNE can wish/hope/need/strategize ad infinitum but nothing is going to happen without the approval of at least one of these deal gate-keepers. (Although it is entirely likely that COP could just by-pass FAR and take out CNE...as its not the custom for US$75B corporate elephants to muck around with US$230m minnows such as FAR).

And I stand by my assertion that COP is definitely eyeing off improving its JV voting and working interest because it could not tolerate the strategic folly of being potentially out-voted by JV minnows on a $US5-10B asset development.

But we're missing the JOA (Joint Operating Agreement) which would detail the JVA voting conditions for all...and those of Petrosen, if they exist. Govt entities are usually silent in JV voting given their 'higher' ranking Govt and regulatory approval processes. But I've seen Govt entities step in and disagree at the JV project level so we'd need to view the documents on this one. Or, perhaps, just call Cath.

Speaking of CN, a lot of the corporate discussion on these threads seems to have omitted how FAR would be looking at all this. By now GR would have reverse engineered FAR's medium and long term estimated project capital requirements to optimise all 3 key components of possible capital: Equity, Debt and Project. Doing this gives the FAR board a clear picture of which portions of capital present the greatest value to the company and the equity holders. Without rambling on, the junior explorer is almost always 2-3 times better off using Project capital (sell-down) than equity in the pre-development phase and sometimes, but not always in the pre-appraisal phase.

PVD is a recent case in point where they, at their sole option, covered any JV overruns in excess of US$215m with project equity. This equated to them having the option of placing equity at 76c/ fully diluted PVD share sometime in the future (no value is given for **on of Madagascar in this calc). An easy choice when the SP was around 45c.

In FAR's case, we don't know yet the extent of commitment for the next appraisal program. It could be 3 shallow and seis for US$120m (FAR 16.7% WI = A$25.7m) or up to 5 shallow, 1 deep and 2 seis for approx US$250m (FAR A$53.5m) using 0.78 Xrate. If its the former, then FAR can handle most/all of this right now with a small placement perhaps. But if its the later then Far would very likely approach COP and CNE (or a completely new entity) and auction some small % interest whose minimum price would have to be a serious premium (equivalent) to FAR's equity price at the time.

So the release of the appraisal program will be critical to the next steps in this game of corporate Cluedo.

Hopefully only 999 more posts on this topic to go.

Cheers,