share price action, page-15

All ..................... I have always expressed the view that, if Senegal turns out to be a resounding success, IMO FAR does not have the financial resources to take their 15% holding through to production.

IMO the appraisal, production engineering and construction would be from $US4.5b to $US6b to complete and FAR will not have the ability to finance that amount (15% of $5b is $750m) ....................... therefore IMO FAR will need to either sell out of the block or take on a partner and both options have difficulties.

If FAN-1 proves to be commercial on its own (this has already been raised by all partners) then COP will want to proceed into additional appraisal and production ASAP (remember they have the option to be the operator) COP also have an annual CAPEX expenditure budget of $US16b so they have the resources to do this and if they buy out FAR's 15% they will have 50% of the block ........................... HOWEVER how do the respective parties value the additional prospects on the block which at this point will more than likely be unproven ...................... I have considered this and IMO it is quite easy to solve with a clause stating that for every additional find COP makes within say 10years COP will be required to pay FAR additional x dollars per proven boo ..................

If FAR takes on a partner once again I believe COP is the obvious candidate for the all the reasons outlined above .................... this could be a blocking percentage of 11% to 19% and would give FAR a percentage of the funds to proceed with the development of FAN-1 (however it would severally dilute the existing SH's) however FAR would still need to raise additional finance to fund the 15% of Senegal into production PLUS fund additional exploration in all their blocks ie Kenya, Guinea Bisseau, WA etc and when (hopefully) they make a second discovery the finances would be very stretched IMO.

IMO I believe that FAR management do have a plan (possibly several depending on the success at each move) and the recent CR is just a small step on the way.

All IMO and comments are welcome.

HKP