Latest From Malcy

Far Ltd

I took the opportunity to catch up with Far MD, Cath Norman last week, the shares are finally rewarding faith invested and I believe there is considerably more upside from here. Firstly on the arbitration regarding the situation in Senegal where a good deal of time has been spent preparing and putting forward the company’s case. Right now there is nothing that they can do, the powers that be will come to conclusions and make a judgement in due course, in the meantime it’s business as usual for Far. Given that the process is no longer in their hands the company are rightly taking the view that nothing is going to change the number of barrels in the ground they have and my own thought is that there is no downside for Far, only a possible chance to add value and that they are taking the correct route.
The next opportunity for Far is in The Gambia where they took a dominant position in offshore blocks A-2 and A-5 which are adjacent to and on trend with the SNE field in Senegal, a world class discovery as rated by Wood Mackenzie. Recently Far farmed out 40% of their 80% to Petronas in one of the best deals I have seen for a long time and whereby the national oil company carry Far in what is a better than 2 for 1 arrangement. The deal is awaiting final ratification by the Government but I am sure that there is no doubt that it will get the go-ahead before long, triggering the A$17m to be paid to Far.
The Samo prospect on block A-2 is expected to start drilling in late 2018 and although not yet mentioned by the company I’m sure that the partners will probably announce a commitment to another well before long. It is worth mentioning that Erin Energy, a company that filed for bankruptcy on April 25th this year, holds 20% of blocks A-2 and A-5 along with Far (and imminently Petronas). This is only speculation on my part but it could be expected that if Erin does not satisfactorily restructure the company, the partners, led by Far, might legally have first rights to that stake. Should Erin have any debts to the Government for example, the partners should be able to come to some sort of agreement as to how the stake is divided. As I said, this is my speculation only but all perfectly possible I would have thought.
So, expect Samo-1 to spud at the end of this year with Petronas carrying Far in this quest for what is a substantial potential prize, Samo has 825m bbls of prospective resources and blocks A-2 and A-5 together, over 1bn barrels. It is fair to say that whilst Far has plenty of barrels in the ground in its SNE field stake, and will inevitably prove highly valuable for management and shareholders, The Gambia is where the real potential upside lies. There is little doubt that the management are indeed keeping a serious eye on this prize about which I am expecting find out a lot more in coming months.