FARties, page-41

Hi Geoneo....Believing in analysts is like believing in the tooth fairy...when did they EVER get anything right...when did they EVER see anything that wasnt presented to them or they presented because they had their own agenda! seriously!..

These charts (as supplied by Linq in a previous post) are from the industry...have a look and then try to understand why some posts are perceived as out and out downramping.

Just some comments about the oil price / Senegal commerciality from a back of the envelope look at the oil market.


https://www.iea.org/oilmarketreport/omrpublic/currentreport/#Demand
From the above, 2014 - global demand 92.4Mb/day, 2015 fct – global demand 93.6 Mb/day.

The cost curve below gives a generalisation of the major supplier groups and their cost of production to cumulatively meet global demand up to sub 90Mb/day (2013) – this suggest the marginal cost of production is 70-80$/bbl, though in reality this is likely higher as I expect the cost curve steepens to meet today’s 92Mb/day.


http://www.financialsense.com/contr...a-shale-mirage-future-crude-oil-supply-crunch

Referencing the chart above, today’s price of 61$/bbl would render the supply covering the last 15Mb/day (Canada Oil Sands, Mexico, US Shale) uneconomic and therefore unsustainable – this supplies ~15% of the global demand.

Calls of the price heading to 50$/bbl, if sustained would knock out Brazil and other Non-Opec and leave supply of 65Mb/day to cater for market demand of 92Mb/day – hardly a market in balance.

Ultimately, while probably overshooting on the downside the oil price could not be sustained below the 80$bbl price for any length of time (months IMO) without causing serious supply issues and a subsequent overshoot in price on the upside when demand is not met.

If FAR can achieve project capex recovery and opex supply costs for Senegal, with some risk buffer, at less than 80$/bbl marginal cost then the project is certainly commercial and Senegal production would slot nicely into the supply curve and displace higher cost producers out the top end of the bed.

Ya and Mandurah, I am buoyed by your comments referencing 40$/bbl for Jubilee as a representation of deepwater offshore West Africa costs which clearly can allow Cath, even at this early stage to speak confidently about commerciality, with upside through scale still to come.