Could we be seeing the END GAME!!!
While we exceedingly patient SH’s await resolution of the PE dispute which now, I believe, includes the DJ block, it enables we mere SH’ers ample time to speculate what could be happening and below I’ve outline my prognosis on the proceedings:
Judging by the extended time taken to sort out the PE issue I speculate that CN and management are right now playing out the ultimate end game - it'll either be an ‘all or nothing’ TO or alternatively FAR will be in this to production.
If it ends up as an ‘all or nothing’ TO then the offer would need to price FAR north of $1 PS (or very close to it) to appease the high net wealth individuals, institutional investors and management holders, this would mean a figure for a TO would need to be north of $4.8b US (includes COP's $440m) however the major will get 50% of the JV plus 75% of DJ, just depends on how much value the major places on the upside!!! Posters need to bear in mind that FJ was the first to raise the $1 figure (not Aqua) so will he and his fellow investors now accept considerably less, somehow I doubt they will so am guessing a figure ~80c - $1 US per share in this scenario.
For the alternative (FAR to be in this to production) FAR will need to get as much as they can from the sale for all or part of the 35% COP holding, we know that WPL were willing to pay $2.20 pboo BUT the general market consensus was that this figure was on the low side plus the offer was before FAR’s audited upgrade and the recent increase in the Brent plus of course was before CN's 'Declaration of DOC' so am guessing (hoping) FAR could get close to $4.50 in hard negotiations (hoping CN can bring out her mongrel side LOL)!!!
Therefore if a major (most likely TOTAL IMO) accepts the above estimated value of $4.50 pboo for the 640m boo 2C audited figure then the it could quite possibly get 50% for a quarter of the $4.8b TO figure however for this to happen (and FAR to remain in the JV with a reasonable %) CNE would need to be convinced to sell down ~20% and I see this as quite possible.
Simon Thompson has already stated that CNE would be a seller at the right price. This would normally be reached just prior to production HOWEVER if CNE do proceed to production they will need to finance 40% which would be ~$2b US (@ development costs of ~$5b US) however if they sold down 20% for $4.50 pboo then this would be reduced to $1b and they would net $576m from the sell down so the $2b is reduced to $423m ie ~25% of the original figure!!! Would/could this be an attractive proposition for CNE.
FAR's position would also be greatly enhanced as they would sell down 30% (of the COP’s 35%), pay COP their $440m US and FAR ends up with ~$420m US in the bank to move forward with.
The revised JV membership would then consist of the major (operator) with 50%, CNE & FAR 20% each and Petrosen 10%
If FAR then took the SNE JV as a farmin partner into DJ for the cost of a free carried exploration well plus a few million $’s then the SH’s could end up in a DJ JV with the SNE JV @ say 50% (the major as operator) FAR 25%, TAOL 15% and Petrosen 10%, not a bad result IMO.
Also 'IF' the SNE JV were to be farmed into the DJ block then any production in DJ could be tied back to the SNE FPSO, thus spreading the development costs of SNE over two fields and reducing the overall costs!!!! its a win win situation
Now I realise all the above is pure speculation BUT with the time this has taken plus that DJ now appears to have become embroiled in the solution (my speculation), I have come to the conclusion there could be a lot more that is about to happen than most realise.
FAR Price at posting:
8.0¢ Sentiment: Buy Disclosure: Held
(20min delay)