I was struggling to figure out how the farm in values made...

I was struggling to figure out how the farm in values made sense, it looked like Conoco Phillips were paying a whole lot more per % share in the Senegal acreage then Cairn were. But I think I got it now, please comment on my logic.

Cairn bought a 65% WI by paying the back costs ($9.8M) and full cost of first well capped to $80M.

So they have bought 65% for $89.8M, or $1.38M per % of the acreage with one well paid. (By paid, I mean the money has been put aside to pay the drill contractor)

So, that infers a total value of $138M for the acreage WITH ONE WELL PAID.

Following this, Cairn have 65% WI with 72.2% commitment to further costs, and FAR have 25% WI with 27.8% commitment to further costs. Petrosen have 10% fully carried.

So if well #2 is going to cost $190M (FAR estimate of two well total) - $80M (Cap of well #1) = $110M, then

Cairn are up for another $79.42M, and FAR need to find $30.6M. Enter Conoco Phillips. They will pay equivalent of FAR's share of well #2 for a 10% WI. So with two wells booked, we are looking at Cairn having stumped up $169.2M for 65% (inferred value about $260M), and CP have put up $30.6M for 10% (inferred value about $300M). So for the acreage with 2 wells paid, we are looking at about $280M give or take $20M. The finer details of the deal make it a bit muddier, e.g. the first $80M is capped, and funds for the second well are deferred etc.

$280M gives $42M net to FAR.

These 2 wells will be testing 1500M barrels, which equates to around 20c per to be drill tested barrel!

Toot toot?