This is obviously not for traders , shorter term punters, down rampers or up rampers for that matter as the short term is not what this Company is about IMO but if one can scalp a bit here and there go for it.
So what do we know for a fact about FAR, assuming, as I expect, they will take this to production at the least . Any positive results of PE would alter some of the below.
1: Has no income.
2: Has no debt.
3: Currently has 15% of the JV leases.
4: Currently has 96Mmbbls 2C of high Quality oil and is expected to grow. Prospective resources are also expected to grow.
5: Has cash to see us through to an official DOC which brings with it Reserves.
6: Peliminary work already being done on developing the project.
7: first oil expect somewhere in the 2020-2022 timeframe.
8: Production expect to peak at around 140,000 Bopd or currently 21,000 Bopd net to FAR.
9: Option expected to be taken up on the DJ lease.
10: 3D being processed for DJ and JV leases.
11. Spending will likely back off through 2017/18 then step up big time.
12. We will need more cash from some source sometime next year and going forward.
13: We are in a three year evaluation period over the leases and whatever drilling is done beyond SNE is an unknown at this stage, I doubt the deeper prospects will be drilled in that period,with the possible exception of FAN but expect some shallow water exploration wells if 3D looks promising.
14. Excellent Management IMO.
15. We have been well supported by larger holders with long term horizons.
16. Drilling offshore is expensive and carries risk.
So looking at the above we have the product, the management, the support and it will be developed so beyond a TO the only thing that stands between now and first oil is cash and time. The actual shareprice , as we have no income, will be dictated largely by the price of oil and shares issued ,although its impossible to predict accurately, the odds are stacking up for a squeeze in prices leading up to first oil and if we are still in the game thats when the value will be reflected IMO..
Getting cash has not been an issue in the past but being in an oil slump it has come at significant dilution which is the fate of many small Companies with no income . The game will change to some extent going forward with reserves based lending and other types of facilities and hopefully dilution through shares isued is limited. I'm certainly not expecting raising funds being an issue in the future , its just the nature of them that is in doubt...
So for this longterm holder anyway ( I have no set target for selling but on any over the top spike I would probably lighten up and re enter later ) it stacks up as likely to be a successfull Company long term s, its really just becomes a waiting game and to be treated much the same way as any longterm deposit or the other shares held. It is in the end just another company but with higher risk / reward characteristics but it is a very interesting Company to hold...if it does get to production and beyond it will likely start paying dividends...
I can't see any circumstances ( beyond a drilling disaster and they are very rare) where the Company would be sold under what I paid for it (8.5 c average ) or any current shareholder paid for it but I can see circumstances where it could be worth considerably more and for me thats all that matters really, if we are taken over in the meantime so be it....
So if posters wonder and some have, as to why I'm relaxed about FAR ( and am in fact very passionate about it as a stock but tempered by experience ), despite its lingering shareprice, its because of the above and the fact other than selling or adding their is nothing i can do about it anyway plus not being over exposed which obviously is having an effect on some holders..I expect they will be rewarded for the boldness or rashness in time..
Anyway just some weekend ramblings from over the ditch and if it helps other longer term holders reflect a little on why they bought FAR in the first place thats great..like most journeys this one hasn't gone quite as expected but the destination often supprises and can be very interesting....
Cheers Whisky
(20min delay)