Fundamentals and General Discussion, page-89

FDR Investment Theory

Macro Environment/Sector Economics

Why oil and gas?The first important question when deciding where to park capital for a return on investment, especially important at the time of this post when we are losing purchasing power on our hard earned due to inflation. I look at the why nots first – Savings account? Yuck. Bonds? You won’t keep up. Real Estate? That opportunity is past. Precious Metals? Two steps back, one step forward. Crypto? Let’s be serious. Okay what about stocks? Much better, but choosing the right sector is important i.e. where is the growth going to be. For me, I am quite confident in a few sectors, Oil/Gas, Lithium/New Energy, and to a lesser extent, defence. Essentially, strategically important resources. Everyone knows the situation in the world today with war and the fracturing of relations, but perhaps they don’t understand the significance this has on supply security for energy. My theory is that major energy producing countries will fall into one of two sides (or blocs), east and west, the lines of separation might not be so clearly defined but they are there. The partial de-globalisation of globalisation.

Regardless if you agree with my future prediction or not, you’d have to realise that energy security for the Democratic “west” is an issue of major importance. Take one look at your fuel bill in Australia, orthe 600%+ increase in energy costs in Europe and UK, Nord-stream 1 and 2 sabotaged, Europe now being reliant on new “partners” in the middle east, OPEC+Russia’s recent decision to cut oil output.

Some might also argue that we are just going to make up for it with solar and wind. It’s simply not true, the alternative energy sources and infrastructure are not in place yet and require current fossil fuel output to be maintained for the foreseeable future. Additionally, emerging economies are increasing their demand for oil and gas, putting more pressure on global supply. We are dealing with a Transition to new energy, not Teleportation.

All this is why I believe if you pick the right oil and gas explorer, you can leverage the previous 10 years lack of fossil fuel investment (supply) in combination with a demand crisis (See UK’s exploration tax incentive). It’s the perfect storm for the right candidate. A candidate who can leverage their assets for producers who need supply NOW, not in five years.

https://reaction.life/pragmatism-is-needed-to-ensure-global-energy-security/

https://www.bloomberg.com/opinion/articles/2022-10-07/the-price-of-energy-security-requires-more-than-just-spending

https://www.upstreamonline.com/production/russia-takes-control-of-sakhalin-1-oil-and-gas-project/2-1-1331213

https://www.bbc.com/news/science-environment-63163824

https://www.upstreamonline.com/exploration/india-launches-offshore-licensing-round-in-latest-exploration-push/2-1-1332297New India Licensing round

https://www.energynewsbulletin.net/exploration/news/1441121/uk-kicks-off-oil-and-gas-licensing-round-to-boost-domestic-supplyFirst UK licensing round since 2019 (Too late, FDR plays are drill ready)

https://www.bloomberg.com/news/articles/2022-10-11/philippines-to-maximize-oil-and-gas-resources-marcos-says#xj4y7vzkgPhilippines Hydrocarbon push

https://www.theguardian.com/australia-news/2022/aug/24/australian-government-launches-offshore-petroleum-exploration-permits-for-47000sq-km-of-ocean47,000sqkm licensing round for Australia

https://www.copyright link/policy/energy-and-climate/albanese-pours-scorn-at-offshore-oil-and-gas-exploration-critics-20220825-p5bcrfAlbanese Govt attitude towards Oil/Gas

https://www.dw.com/en/putin-offers-europe-gas-through-nord-stream-2-germany-declines/a-63416138Russia as an Energy supplier is over

Why FDR?

The key for why FDR can succeed is their strategy. It’s simple, acquire highly attractive exploration projectsnearto existing production infrastructure or major finds, conduct seismic/gather/process project data as required to high grade drill ready status, shop for farm out partner to take majority stake in exchange for cash and/or drill financing. This isn’t just wishful thinking, this is what FDR has done privately for 18 years, generating a positive income for the owners. FDR have all the capabilities in place including: Data Resource (Fugro partnership), Asset supply, Subsurface expertise, industry recognition, producer contacts, deal makers, technical know-how and quality people etc. The difference in strategy now is that Finder is a public company, when there is a commercial find, capital can be accessed easily to take it all the way to production, giving the company a recurring revenue which then grows the farm out strategy etc. There is your business model and there is your growth avenue

Next post we’ll take a look at Finder’s strategy in practice i.e. where their plays are in relation to current operations

GLTA