Malcy & the 7c (6.7) steal

News is generally lurking when Cath and Malcolm have an ol chinwag. Something has to give soon...

Cairn Energy/Far Limited
Eric Hathon, exploration director of Cairn Energy, gave a very positive speech to the conference this morning and I was able to have a one to one meeting with him afterwards. Whilst Cairn havent changed their numbers at all, and readers will know that I think that the numbers will book a lot higher in due course, it is the language that is being spoken that to me is more positive than before. It is clear now that the appraisal process is now complete with the results from all the wells coming in way better than expected. There is no doubt whatsoever that as the partners go into the development process, all options remain on the agenda, these are what will determine the timings to first oil but it is a massively profitable, substantial and to quote Woodmack ‘a world class asset by any standards’.

The question that most would want to ask and of course I did without expecting an answer, is whether or not Cairn will sell all or part of the Senegal asset. The answer is again, what I had been expecting, the field is fully financed at current oil prices, and lower I suspect and there is no pressure whatsoever to sell up. The second part of the answer is equally predictable, ie if we were to receive a bid that was simply too good to be true, the board would have to consider it for understandable reasons of financial rectitude. It is worth noting that Cairn have a record of giving money back to shareholders so would be comfortable if that scenario played out.

All this makes the valuation of Far Limited to be not just difficult to understand but impossible to justify, whatever happens with all the possibilities open to the partners old and new, at A7c the shares are a steal, tomorrow I am interviewing Cath Norman so expect another update soon