Email from Cath and Ian, page-135

I think I said FAR is a superior company to LNC but there are parallels.

LNC ran out of money trying to become an oil major. The money came from coal mine sale at peak of the market. They ran out of cash when the oil price dropped and their debts borrowed against the oil reserve became due and could not be paid.

I managed to trade on their hype cycle successfully a few times through to 2012 until a convertible bond capital raising occured a few months after they said they didn't need to raise capital for at least 3 years. That was the turning point if you look at my posts. The relist was my final exit - they claimed that the ASX investors didnt get it - could not appreciate the companies true value, when is actual fact they really just needed to look in the mirror. I got lucky - they were crushed (cashflow insufficent) by falling oil price.

They did a drilling campaign in the Arctic at their Umiat field QUOTE Ryder Scott estimates Umiat Proved & Probable (“2P”) reserves of 154.5 million barrels of oil equivalent (“MMboe”), with a 2P NPV10% of US$2.465 billion, and Proved, Probable & Possible (3P”) reserves of 194 MMboe, with a 3P NPV10% of US$2.845 billion.ENDQUOTE http://lincenergyumiat.com/

FAR still only has 2C reserves at SNE

LNC had 2P reserves at umiat and producing wells in the gulf coast as their source of cashflow.

Can a company with nice big 2P reserves run out of money? Yes because sometimes it is costly and difficult to move to production and takes more time that you might like. Sometimes the oil price is not what you would like.

Don't get me wrong FAR has a chance to do great things, but it is not a certainty.

WPL is a blue chip, I am buying at this oil market bottom in dips with an expectation of doubling money in 2 years. FAR could be a Disallowed if everything goes their way but it is not beyond possibility that if a few things beyond their control go against them they could be in a spot of bother raising funds. If they pull off a sweet deal I will be a holder. Until they do I will warn that there are risks.

Feel free to ignore my warning. My LNC colleagues ignored my warnings for the most part too but with risk may come spectacular reward - GLTA.