Post from Johnnie

Our mate Johnnie Mac posted this on Facebook today.
The CNE Half yearly.
Firstly to preface my thinking. - I don't understand a lot of the negative sentiment that is cropping up on Hotcopper. It would appear that a number of people are hanging their hats on the PE as though it is do or die. This is simply not the case.
Not withstanding this, things have got better. CNE have now stated an OIP 2c of 2.7B Barrels. With recoverability at a conservative 17%. According to Cath sometime ago it could be as high as 60% once EOR is tested. Which per slide 23 is mentioned along with -
"Drilling focused on some, or all, of:
Deliverability of reservoir units not yet tested
Connectivity of upper reservoir units over
development well spacing
Injectivity testing
High angle / near horizontal ‘proof of concept’
well
Step-out appraisal"
You can do your own maths on what 60% recoverability could do to the resources from SNE alone.
Remember my comments from SNEball? - another aspect that I think is widely misunderstood is that DOC will upgrade IMHO in a material fashion any resources COS (chance of success) within tie back (~75KM) that are over 75MMBLS. By my rational this is an additional 6BBLS of potential upside. Risked per slide 19 CNE make this only an additional 500MMBLS. No doubt very conservative....
Now for the fun part. Did anyone notice the disclaimer on page 16?
1 Resource estimates audited by ERC-Equipoise
2 Cairn internal estimates of exploration potential
3Woodside Petroleum acquiring 35% from ConocoPhillips (subject to approvals)
In particular point 3...."Subject to approvals"
Sorry Cuju, but unfortunately WPL haven't got through the legal hurdles as of yet.
If I was to speculate, I would assume the following IMHO, DYOR etc;
FAR wasn't notified of WPL buying into COP's share. The ANN and halt was due to this 'surprise' as speculated online. This said, there is clauses for notification of JV Partners to enable them to pre-empt.
This is the 'legal glitch' that Malcy talks to. In order to resurrect this right it is common to use an arbitrator. In this case it is the ICC, or International Chamber of Commerce. They are based in London and per the finding here - http://www.ogj.com/…/interoil-wins-arbitration-over-rights-… are able to ensure that even minor partners have rights.
Per the summary within the Interoil vs Oilsearch dispute "The dispute hinged on the fact that Total bought the subsidiary. If it had bought the interest directly from InterOil, then InterOil would have been obliged to offer Oil Search an opportunity to match the offer.", (sound familiar) it appears to me that there is light at the end of the tunnel and it is shining very bright. Or is that light Sirius? 67% GCOS and no doubt about to increase the SNE field in a material fashion..
It is at this point that I am glad that our majority holder (FARJOY) is not only Tim, but also his brother Geoffrey, yes perhaps one of the more senior QC's globally, not only very well networked and respected but with $30M plus of family money tied up in FAR..... I am sure he is already across the happenings and of course has a very high level of motivation to support us all.
So what happens next?
I speculate that if PE can be 'resurrected', that PE2 (squared) is alluding to private equity being on hand to fund FAR's share of the PE rights.This IMHO would be an absolute masterstroke. From there, FAR would have the opportunity to Farm down their portion to the highest bidder (of which I speculate there is a couple lined up - in fact a TOTAL of 4 (pun intended)).
Irrespective of PE, we still have a Farm in to DFF and perhaps WA pending, as well as DOC and RISC. Don’t forget GB. Informal DOC and RISC IMHO will elevate again the estimates of the treasure trove we have in front of us and no doubt we will in time make the elusive ASX200. I don't believe it is 'if', it is when.
My calls around upside in FAR has been impacted no doubt by a plunging Oil price, COP's withdrawal and some of the delays we have observed.
Throw into the mix a motivated partner, whether WPL or one of the 3/4 FAR has lined up notwithstanding the PE partner assuming PE is available and the sky is the limit.
With Saudi Arabia looking to float Aramco in the new year and with the Russia / Saudi collusion rhetoric stepping up, 10% increase in Oil last 2 days and it could be a very very good new year that awaits us.
never lost faith. Patience is a virtue.
$1 party in 2017?, I wouldn't bet against it.