FAR (ASX) The Deal, ...and its just started...

Originally posted by Kfann ↑

Hi All,

How could I not break my self imposed HC sabbatical for this?? Some 600+ posts since yesterday am!!! My observations/comments:

1) Firstly, I'm am both staggered and furious that Cath and Gordon somehow concluded that the WPL announcement would NOT materially affect the market and allowed the market to trade without any comment from FAR. It was a major stuff up on their part; idi*ts.

2) Congats to the Corporate lads and ladies at WPL...an amazing deal. They know that these kind of opportunities only come around once a decade or more. Some on these boards may not be old enough to remember (or have been born at the time!) but the most transformative time in WPL's history was when they very tenaciously fought to hold onto the operatorship of the NW Shelf project when under pressure from BHP, Shell and the other heavy weights back in the early/mid 80's. They just love getting the operatorship of any project and now they have it (well maybe....see point 10 below)

3) COP has US$23B of debt and is under great pressure to improve their balance sheet. When Big Oil make a strategic decision...its not about price...its about action. So COP were never hanging out to maximise any offers; it was all about getting out of deep water exploration. And we all know what great deals Big resources leave on the table....

4) Dont get caught up in the Jan 1 effective date. It has no connection to the pricing or resources at the time. It is very typical of pretty much all US (and many international) deals to make them effective to the last reporting/audit date.

5) I am also dumbfounded that Cath and Gordon didnt have a better prepared plan for this (at least overtly). We all knew COP's interest was going to get sold. We all knew there were pre-emptive rights. We all knew FAR would have an opportunity to match a bid for their additional share (at least 9.545%). This has been on the table for at least 6 months and during this time FAR coulda/woulda/shoulda lined up potential/possible financing from many non-bank sources (banks unlikely to touch this pre 2P reserves and DFS). Yesterday's announcement just doesnt give any hint that they were in any way prepared for this inevitability.

6) Assuming 5) is true, then they are now scrambling to find financing options for at least the 9.545% at US$12.268/% = US$117.4m...but probably more as it is unlikely that CNE will stump up any of their share (25.454% for US$312.7m). So they now have between 30 and 90 days to come up with a matching offer.

7) On the basis that CNE are not in, FAR will need a Big Oil daddy or consortia. The 2 carrots that they can offer are a) no bidding competition and b) the Operatorship. This is very attractive and I believe will flush out more interest.

8) In effect, WPL have shown their hand and the pre-emptive rights are the only risk here. This actually gives FAR some negotiating power. I am sure they would have already talked but now FAR can go to WPL and play the game of "what is it worth to you for me NOT to use my pre-emptive?"...and WPL will be expecting this.

9) A key unknown here is how the Operatorship resides within COP's interest. COP negotiated with CNE to get it but CNE/FAR would not have let it go without conditions and a typical one is maintaining a minimum % JV interest. So the question is...'does the operatorship still reside within COP's interest if FAR exercised its 9.5454% (or greater?) percent?

10) In other words....could FAR actually wrestle the all important Operatorship out of the sale interest?!?!! If so then FAR's negotiating power just doubled. This is a long shot....but hell, its important.

11) Given FAR is (very likely) scrambling for funding options, there is now greater pressure to release not just an updated RISK report but a 'really good' one (if you know what I mean?). Our ever optimistic Whitenoise may get some early validation!

12) I agree with some here like Phillip321 that we will not see a bid for FAR. We could possibly see FAR 'negotiate' WPL into taking a 20% placement at a massive premium (20c?). This would be about a 31% premium to secure no contest to WPL's bid and puts a foot on an additional 15%. This is actually pretty reasonable and doable in my experience.

13) For all these postulations to have any credibility, FAR must first and foremost put a credible and real funding/consortia package together to get WPL to the negotiating table. I recon they have less than 60 days to do it and they'll only have but one chance to ever do it and this is it.

14) I would expect them to bunker down and not return phone calls until they are ready....a month maybe? But when they do say something, I recon its going to be big...real big.

Cheers,

Expand

Thank you @Kfann. For people like me who have no idea about big finance let alone oil company deals this is gold to me. Do you think FAR will have time to get organised if they were completely blindsided or do you think that the low price of the deal makes it much easier? DB

No.	Vol.	Price($)
2	5993	50.0¢

No.

Vol.

Price($)

5993

50.0¢

Price($)	Vol.	No.
50.5¢	5982	1

Price($)

Vol.

No.

50.5¢

5982

No.	Vol.	Price($)
1	2000	0.500
2	28930	0.480
2	70000	0.475
3	84150	0.470
2	60000	0.465

No.

Vol.

Price($)

2000

0.500

28930

0.480

70000

0.475

84150

0.470

60000

0.465

Price($)	Vol.	No.
0.520	50000	1
0.530	10000	1
0.540	22471	1
0.550	82295	3
0.590	5000	1

Price($)

Vol.

No.

0.520

50000

0.530

10000

0.540

22471

0.550

82295

0.590

5000

(20min delay)
Last 50.0¢		Change -0.015(2.91%)		Mkt cap ! $46.20M

Open	High	Low	Value	Volume
52.5¢	52.5¢	50.0¢	$45.91K	88.73K

The Deal, ...and its just started..., page-19

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

Recce's R327 found effective against E.coli during clinical trial

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

ChemX Materials kicks off first stage works at WA high purity alumina pilot

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

Microcap Wrap: 5 explorers with news out today

Ava Risk Group expands US presence with A$0.7M Substation Deal

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

The Deal, ...and its just started..., page-19

Top Stories

Silver Mines models five new calderas close to 396Moz Bowdens deposit

Week 26 Wrap: Cerberus of inflation barks – rents, electricity & fuel – and world watches two elders bicker

Sun Silver gets that drill to thrill feeling from high grade hits at Maverick Spring

Lithium Universe (ASX:LU7) board visits Quebec to engage key stakeholders

Recce's R327 found effective against E.coli during clinical trial

Wealth Within weighs in on shock 4% inflation read – and stocks that could survive the gloom

ChemX Materials kicks off first stage works at WA high purity alumina pilot

Larvotto identifies new exploration target at NSW's Hillgrove, boosting shares by nearly 20%

Microcap Wrap: 5 explorers with news out today

Ava Risk Group expands US presence with A$0.7M Substation Deal

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News