Hi all, I guess its interesting from a speculative position, but...

Hi all,

I guess its interesting from a speculative position, but the reality is that foreign big coys don't not like acquiring micro caps (<$1b) at all. There are obvious anomalies to this such as HDR/WPL but these were common jurisdiction or shareholder related. The fact is, the vast majority of Major to Junior/Micro oil corporate transactions, especially those from different jurisdictions, are undertaken at the project level.

Big oil simply hates having to explain itself, provide numbers/analysis to curtsy through a drawn out foreign compliance process to take out (not guaranteed) a micro cap. Provided there are no legal or tax complications at the project level, Big oil will deal at that level 9 times out of 10. Every M&A professional will advise a project level deal before the more complex/drawn out corporate level. Except (!!) when there is going to be an obvious challenge on project first rights by other project partners. But CNE really is a flea to the COP elephant, so I'm pretty sure CNE would step aside with little resistance if it came to a p*ssing competition for FAR's project interest.

Which brings me to another point. Project voting control in this JV is at 60%. So COP still wont gain control if it takes FAR at any level but it would stalemate the JV in COP's favour. Petrosen casting vote (if its a COP Vs CNE issue) will only result in action if it sides with COP (with FAR's 15% interest); Petrosen's 10% and CNE's 40% isn't enough to get a proposal through.

Strategically, the best corporate move would be for CNE to acquire FAR's interest (or at least a foot on it), but I just cant see the COP elephant allowing that to happen and even then, I cant draw the rational to trigger any project/corporate move before more of the shelf plays and deeper FAN are known. In this oil price environment, even big oil such as COP prefers having a junior sharing the risk and coughing up 16.7% of a program until within pitching distance of FID rather than having to fork out an additional, say, US$600-1000m for a project/corporate interest.

COP will have their own corporate analytics team keeping a very close watch on both FAR and CNE. They will be looking at an opportunity/risk matrix which is much more complex than some $/2P or NPV figure. They spend most of their work/effort on the strategic and political suitability. We all know that COP's African experiences to date have only got at best a pass mark so they will, naturally, be more cautious about how they proceed with Senegal and Petrosen who, along with its regulatory and tax system, are very raw, very nascent and likely to be very sensitive to any corporate/project games. COP certainly won't want to risk bugg*ring up a new important political relationship prematurely.

Simply put, I just cant see any political benefit of COP pulling a corporate strategy until either FID or unless one of the JV partners can't continue to fund the project forward.

Look, I'd like nothing more than to see a corporate p*ssing match for our FAR, but my corporate/big oil experience just cant reason it happening via the ASX nor before the other shelf and deeper Fan play have been examined. And as usual....very happy to prostrate and apologise to all if proven wrong.

But I love reading the T/O posts anyway way.

Cheers,