Value of an undeveloped oil project, page-9

Pretty much yes.

FAR is reasonably valued at the current price IMO. 96 MMbbls of 2C, but as szaba's article points out not all 2Cs are equal. This is 2C that really should be 2P and will be soon.

So it's essentially undeveloped 2P and fair market value would be around $2-3/bbl usually. Taking the midpoint and current exchange rates that's around A$320M which is FAR's market cap.

But to take over FAR with the standard 40% premium you'd be paying $450M which is almost $5 a barrel. You would have to be pretty confident in the reservoir and the cost assumptions before you'd pay that much.

WPL's bid for CoP's share equates to $1.90/bbl which is reasonable.

Personally I struggle to see how FAR will be able to pre-empt WPL here. They are already up for 17% of development costs which net to them will be north of US$500M IMO. They could probably raise enough to pre-empt WPL but then they'd just have to sell down the majority of that stake anyway and hope they find a buyer willing to pay more than WPL. It's possible but seems pretty risky. FAR management have done an excellent job getting the company to this point, seems odd to gamble it all now.

Still, stranger things have happened. If they are feeling confident they might well go for it.