Top post!! Have you suggested any of this to FAR? One hopes that RN, BC, GR and Cath are all over this ..... now that it has happened.
I have had an email from Cath that indicated that they were unaware that COP had progressed this far in negotiating a sale (they were expecting COP would sell at some stage as it had been clearly stated they were exiting deep water). So as you suggest, you would expect that FAR has been working on "scenarios" and funding options but that they may not yet be ready to act.
There's plenty of news expected "in coming weeks" (or months!) like FAR's statement on commerciality, most likely a resource upgrade (RISC is overdue for an update IMHO) and presumably updated prospective resource estimates for the JV blocks from seismic results. There could also be some news on the Djiffere seismic before too long (weeks/months?) as they have to decide whether to take up their option by October. But even if this news is good and it adds to the share price, raising capital for an increase in JV equity via a CR would be just too dilutive at this stage, so we still need other financing options to have any chance of acquiring more equity in the leases. I like your suggestion of a deal with WPL to finance a purchase of more equity in exchange for operatorship. From a strategic perspective FAR only needs to acquire 2-3% more equity to give the WPL/FAR block a majority interest (to counteract any back-in by Petrosen that would reduce FAR to 13.8%). Not sure how strong FAR's negotiating position is though. Maybe something like what WPL did with HDR may be a possibility ... they took a 19.9% position in HDR I think at a premium to protect them from being taken over. Also HDR bought equity off a JV partner who wanted out and onsold it for a large profit ... lessons there for FAR!
And it is good news that WPL will be more "motivated" than COP to go to development and possibly earlier production. In a way his purchase by WPL is an effective DoC! If we get DoC earlier that may open up funding options but I can't see that happening in the timeframes you suggest FAR needs to act.
Interesting times indeed!
H
FAR Price at posting:
7.7¢ Sentiment: Buy Disclosure: Held
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