Agree Tim the market has not been kind to FAR with the timing of the Kora result. Time to asses ones situation but if you still have faith in the geology in FAR's licenses than they hold many more and much bigger targets than Kora. Long post below but thought it may help pass the time for a few as the FAR thread has lost a little momentum as of late. Thought it may initiate some chat on where to from here & possible time frames as there are a lot of knowledgeable FAR posters out there.
In comparison Kora was a small play FAR were introduced at a very cheap price outside of their leases. I'm sure the offer was only put on the table due to the Senegal/Ophir option. Senegal license provide great leverage to FAR and lets hope we see that Decree soon.
Surely all those sophisticated investors that participated in the last $34 mill CR didn't do so on just one Kora wildcat well but had the bigger picture, Senegal in mind. If so the T20 should hold up reasonably well as we wait for Senegal Decree. If not then maybe Kora has pulled the plug on Senegal as well (no pun intended). If they do leave in droves which I doubt contrary to other posters thoughts on this, then I wish them well and say thanks for depositing $34 mill in FAR's coffers which will see FAR drill more wells offshore WA.
Present market conditions are not conducive for Ophir to take up the Senegal option, but Kora does show that its not easy to find areas with 500 mill & 1 bill boe targets. Also Senegal is a different basin. Personally I'll be surprised if Ophir take up this option given the fact that they wanted 60 days to think about it after Kora. If they do want to opt out than I'd like to see an earlier announcement so FAR remain the operator with a much larger 90% stake, giving greater leverage when negotiating with JV partners.
The fact that Noble came on board late with Kora & spent around 30 to 40 mill US on Kora and rated correctly the COS at 20% shows the large private US oil companies are looking at this unexplored area. With their exploration budget they could be a contender now to farm into Senegal. Would love to see that 1 bill boe "Giant Buried Hill" target being drill and off memory I think it is only about 1000 m water depth so drill costs should be a lot cheaper.
Purely speculating but ME has said he is assessing other WA opportunities. A nice curve ball from left field would be a flash Farm in announcement similar to Kora with AP, if AP goes ahead and drills early 2012 their 500 mill boe Gambia block target that overlaps Far Senegal licenses. As operator of Senegal with 90% stake if oil stays above $70 a barrel ME should be able to negotiate a good deal with cheap farm, offset by large percentage stake in Senegal. Success on that drill would be very beneficial to FAR and AP if FAR's blocks were consolidated with the APs adjacent blocks.
Anyway FAR has no need to spend any more on seismic surveys as it's all been done and the $25 mill cash they have the bank with near zero debt, IMO guarantees they will survive this downturn and all funds can be spent on future drilling, giving a quick turn around on SP & excellent upside to current SP levels.
A positive Svenska Seismic result would also add value as if they do decided to drill GB. One well will be a production appraisal well of Sinapa 240 mill boe P50 discovery and the other at a new target.
One thing is certain though that if FAR is to drill Senegal or GB in 2012 as per their quarterly report IMO news must be released soon due to the lead in time on acquiring a drilling rig. Be nice to hear thoughts on this and maybe a good question to ask ME next month for those that are going to the Perth show.
Will ME wait for Senegal or GB or will we see another Kora type deal announced out of the blue? IMO an announcement from left field is a real possibility. Again thoughts welcomed.
$25 mill cash in the bank, leverage from holding in excess of 20,000 km of WA licenses and a 240 mill boe discovery in the process of being appraised for production will see the phoenix fly again.
Gold is up in the current market but fact is you can't fly a private jet on a few ounces of gold so when it comes down to mining gold, mining coal, road transport, flying a plane, driving a car or ploughing a field the world runs on oil and can't survive without it without a massive change in lifestyle & massive starvation. Offshore exploration is the only avenue to hold this off while alternatives are sought (IMO there are no economical or practical alternatives to oil at present or in the immediate future) and FAR holds a lot of WA offshore acreage.
I also read a recent article showing efficient offshore wells cost around $40 to $50 per barrel to produce. Some of the older wells can cost up to $50 to $70 p/b to produce so current POO prices currently holding up above $70 a barrel still can deliver a profit margin and make offshore production economical.
However an interview on CNBC a few nights ago stated POO below $80 makes the large oil shale mines uneconomical so great incentive for offshore oil exploration in these unexplored areas for the Majors and IOC that have paid big money for the oil shale sand mines as POO drops off. Interesting that a lot of the oil shale mine operators have factored in POO at $100 to $130 p/b.
As long as India & China keep burning oil at increasing rates we will still see increased offshore exploration and hoping it will be announced in FAR's Senegal licences sooner rather than later.
Chins up Farites as we unfortunately have to jump back into the trenches and dig in again for the next 6 months barring ME un-expectantly bringing in much needed re-enforcements.
All IMO so PDYOR
Cheers
FAR Price at posting:
3.1¢ Sentiment: Buy Disclosure: Held
(20min delay)