Deplorable Situation

Hi all,

I've just got to say...I honestly no longer care.  I was once very attracted to participating in the development of a new, world class oil field and province (a once in 20+ yr kind of event) but now its just a corporate survival play; I've accepted my investment is all but lost.

Some (last) observations:

1) FAR has effectively been begging WPL and the JV to seriously review the cap ex and expenditure rates since Jan 22 ("...Capital and operating expenditures remain unchanged from those presented in the Exploitation Plan submitted Oct 2019").  In every Sangomar announcement since then, FAR has been saying they have been working with WPL to explore and evaluate all options to reduce costs and delay expenditures and they have been expecting to announce results of that review.  

But it hasn't come out.....

2) It is very difficult to materially change a major project's execution plan and expenditure profile, however all JV's review plans and adjust the projected cash calls on a regular basis (every 6 months for a project this size or earlier if material changes).  In the first qtr, the project expenditure came in some US$117m under budget (definitely a material amount) and FAR and other JV partners would have rights to call the Operator for a review as they all need to have updated and accurate projected cash calls....their banks all require them anyway.

So FAR is strongly infering that they dont have an updated and accurate cash call profile in front of them which makes it impossible for them to sensibly plan their current focus.....the Sell - Down.

3) But let us be honest: it would be impressive if FAR could sell down for any material amount.  The world is absolutely awash with large, quality oil/gas assets for sale.  CNE and FAR have had the DD room open for a long time now and would have a very good feel for the potential buyers and market out there...and it doesnt look good.  The vultures now have so much choice that there is little or no buyer tension to be had.

4) So by defaulting, FAR is suggesting to me that they don't hold much hope for a material sell-down result (if any) within 6 months.

So...and very central to this default 'strategy' (IMHO)...it's FAR's only real chance of preserving any capital with which to pheonix out of the Gambia...their last real asset.  

5) At LIBOR + 2%, Defaulting is a very cheap loan...I would have done it...very reluctantly.

6) I would have then apologised to all shareholders and resigned immediately (with no entitlements) and contemplated a life of corporate repentance.

Deplorable.