Malcy's email, page-54

lot of nervous nellies now coming to the fore. I'm just wondering why they even invested in FAR in the first place.
Interest rates are down .. again today . Development costs.. crazy down. DOC allows for forward sales and private equity partners and a bit of debt from banks... fact is FAR's 9.45% if they pre-empt, will cost plus minus $140 mil . If FAR borrow at say 3% interest for 18 months (crap is the banks will be looking at freebies) that amounts to 4.2mil interest over 18 months. Now lets assume they prove up 1bil barrels up to end of next drill phase (mid 2017) ( very achievable in my book) ... Meantime POO increase, we prove DOC early 2017 and we start talking about $4 per barrel.... NOW that is really nothing.. that is at the very lowest range but let's run with $4 just to make a point to all the nervous nellies. So 1bil barrels x 5% = 50mil barrels at $4 = $200mil .... minus 140mil and minus 4.2mil interest and FAR is still left with $54mil in the kitty AS WELL AS now sitting on 20%..
If you can't appreciate or handle a bit of risk taking then you ( whoever you are... there's a few now showing their faces...) should not be in this risk space.... period.

We are in low cost environment and low POO, best time to scoop up.

I'd expect that if CNE don't pre-empt then FAR, if it wants to play, will have to take up the full 35 %.. and vice versa. No such thing that they only pre-empt their 9.45% and the remainder goes to WPL because CNE don't pre-empt. Won't work that way...
So it could be that FAR might be faced with a pretty big task initially... BUT based on low interest rates and the ultimate stake they could walk away with is pretty compelling.... As would be Managements actions. (especially after they've shouted from the rooftops for almost 2 years how HUGE this discovery is)... time to put their money (or the banks money in this instance).. where their mouths are... their actions will be telling and will be my que whether to leave or stay.. So we wait...

Cheers