Far spreadsheet late NOV post issue update, page-9

For OOO again

With respect to the other points you have raised:

1. The issue of the relevant oil price to use to value a takeover. I have thought about this and touched on it before. Who knows what a private buyer might pay if their firm view was that prices would be much higher in the future, but in the more likely case of a public company they surely have a responsibility to their own shareholders and any expert valuation would take into account the market valuation at the time. I think I have previously demonstrated this will depend on the prevailing oil price.

2. Funding for the 6 well program - Whisky I think is right, we are only budgeted for the first three wells, the follow up wells are as yet undecided and unbudgeted. It is true that if costs have been overestimated then there may be some left over to partly pay for the next part of the program. For the spreadsheets I have assumed well costings that add to around US250m of the budgeted US330m gross and to account for the need for further raisings the sheet automatically issues new shares to keep the cash balance in excess of A$50m at all times That is to say that after the three wells that the spreadsheets cover, the sheets automatically create new shares at a 15% discount to the then prevailing price, and this is already taken account of in the market values shown.

3. Effect of success on the unproven potential. All undrilled potential is already built into the original sheet calibrations. The sheet then takes account of the effect of future success on these values by applying notional increases of COS and also applying notional efficiency premiums if it the find can be tied in without a separate development hub.

The real issue is whether I have set the value of proven reserves too low and that is yet to be tested in the market as we don't have any proven reserves yet. I can't find a single equivalent company to FAR which does not have complex holdings at various development stages with which to make a comparison and that in itself says something about how unusual the FAR situation is (or maybe that I haven't looked hard enough I guess).

Regards
pj