Malcy declares FAR 'a no-brainer', page-16

Invain, I think you're right. Our SP defies logic.

FAR's most recent moves have intrigued me, and I suspect they were undertaken in response to the total lack of market response to our wonderful results.

Why pay for an independent assessment of SNE1? Particularly at a time when results from SNE2 and 3 are imminent?

And why contract the independent to make ongoing well-by-well assessments? Isn't that what the JV will do?

And why the apparent round of investor/media (eg Malcy) presentations just at the moment? Wouldn't they be better left for a month or so when the SNE2/3 results are known and the story is even better?

You would be disappointed if I didn't proffer a theory, so here's one possibility:

The Board is now actively seeking suitors - or at least putting the house up for auction. Why think this?

We know FAR is highly frustrated by the tight hole policy, which makes it easy for shorters to control the action. Hence 6.9 cents after a 42% upgrade.

At 6.9 cents, FAR is vulnerable. Yes, the top 20 protect against a hostile takeover, but a would-be aggressor would hoover up a good percentage of shares for sub-15 cents and potentially make life really difficult.

FAR is coming to another funding crossroads. It has enough cash for two more wells, Bellatrix/SNE4 plus one. Bellatrix will start drilling within a couple of weeks, so based on our track record, you would think another capital raise is perhaps six to eight weeks away. More dilution.

But by this time, to some extent the cat will be out of the bag. SNE will be heavily upgraded - I'm still tipping the billion barrels - and, fingers crossed, Bellatrix will have proven up the migration theory, opening the whole buried hills play. In short, in eight weeks time the potential enormity of Senegal will be much more apparent to the big oilers of the world and FAR will be worth heaps more than it is today.

So if FAR's board has determined it does not want to raise more funds, it makes sense to gain control of its own destiny by obtaining independent (higher) valuations of its assets rather than rely on the under-stated valuations of the JV under tight hole.

(I must admit I am ignorant of the influence the JV agreement would have over Australian corporate law in the event of a takeover offer. For example, would the tight hole policy hold sway? or would FAR be able to open up its data room to suitors, revealing the full 'tight hole' story?)

I hasten to add I don't necessarily believe FAR is seeking suitors, but it is at least a plausible reason for the curiosity of independent valuations and seemingly pre-emptive promotional activity. It could of course just as easily be explained by FAR doing the spadework ahead of raising more capital, perhaps by way of a placement. Either way, the events of the past week suggest to me that FAR is looking to change things up pretty radically within the next couple of months.

My tip - and I know others share it - is that we will see an end game, at least for our Senegal assets, by May.

OOO