FAR 0.00% 1.1¢ far limited

all eyes on far

  1. 1,361 Posts.
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    Lets face it for a share that's sitting around 3.5cents it would have to be a damm good buy at the moment.....

    Apologies to the Fartie faithful who have already read this article but it helps to focus on why you would want to buy FAR ..

    HARDMAN Resources is one of the
    Australian upstream petroleum industry’s
    great success stories.
    Founded in 1996, the Perth-based explorer
    was a frontier specialist that opened up new
    petroleum provinces in Mauritania, West
    Africa and Uganda, East Africa.

    By 2006, Hardman’s success was attracting
    serious interest from predators and in late
    2006 it was taken over by London-listed
    Tullow Oil for $A1.47 billion, a 54% premium
    to its volume weighted average price of
    Hardman shares in the week prior to the
    agreement.

    Not bad for a company that listed only 10
    years previously with a market cap of $A10
    million.
    Now that Hardman has left the ASX, the
    question many investors are asking is: ‘Which
    company will be the next Hardman?’ Is there
    an ASX-listed junior that can emulate
    Hardman’s overseas frontier success story ?.....

    Eyes on the FAR horizon

    First Australian Resources makes no bones
    about aspiring to follow in Hardman’s
    footsteps.
    The Perth-based junior used to be best
    known for its low-risk, incremental projects
    in Louisiana, United States. But in January
    2006 it moved into deepwater acreage off
    Senegal on the northwest African margin, not
    far south of Hardman’s Mauritanian blocks.
    “We’re in the same basin where Hardman
    made their initial discovery,” FAR chairman
    Michael Evans said.

    “We are targeting prospects in deepwater
    turbidite sediments that could hold more
    than a hundred million barrels, and we expect
    to identify other, much bigger, targets in the
    500 million barrel range.”
    Following Hardman’s success in Mauritania,
    the majors and supermajors became
    interested in the north-west African margin
    and it took nimble footwork for FAR to grab
    its slice of Senegal, which spreads 14,981
    square kilometres over the shelf, slope, and
    basin floor.

    When contacts in Houston told FAR that
    Hunt Oil was looking to farm-out some
    exciting acreage covered by interesting 1980s
    Shell 2D seismic, Evans and the team moved
    quickly and decisively.
    “Being a smaller company we were able to
    make a quick decision in a competitive
    environment, beating majors to the stake,”
    Evans said.
    At first FAR considered taking just 10% in
    the three blocks, but with the backing of its
    financiers it raised the capital to take the
    whole 30% on offer.
    Since then, other players have moved into
    the region, including Brazil’s Petrobras,
    arguably the world leader in deepwater
    turbidite exploration, which has taken the
    permit immediately north of FAR’s blocks.
    “We’re rubbing shoulders with the
    heavyweights and are really an anomaly in
    this region,” Evans said.

    “People see names like Hunt, Woodside,
    Dana and Petrobras and wonder, ‘What the
    hell is FAR doing in there?’ We have such a
    small market cap compared to the other
    players. The next nearest company by value
    would be around $2 billion.”

    At first glance, the company may look like
    a misfit but Evans and his colleagues are
    feeling comfortable. Just as Hardman teamed
    up with Woodside and Dana, FAR has landed
    a big-hitting partner. US major Hunt Oil
    participates in major oil and gas production
    operations in North America. It is also
    involved in liquefied natural gas projects in
    Yemen and Peru, and operates the Peruvian
    project.
    Broker and analyst Hartleys says in FAR’s
    case, the Hardman analogy is more than just
    hype.

    “With success, FAR has the opportunity to
    become a significant company in much the
    same way as was achieved by Hardman,”
    Hartleys said in a report earlier this year.
    “The north-west African margin is relatively
    under-explored, but hosts numerous recent,
    sizeable discoveries including the Woodsideoperated
    Chinguetti and Tiof discoveries in
    adjacent Mauritania.
    “With unprecedented interest in highimpact
    acreage in West Africa, FAR has the
    opportunity to deliver significant value from
    its Senegal acreage. As a result of its solid
    equity position in three offshore blocks [30%,
    with Hunt having 60% and the Senegalese
    national oil company the remaining 10%],
    FAR has the flexibility to farm-out a portion
    of its equity to be free-carried through any
    offshore drill program should it so choose.”
    FAR could choose to farm-out or to raise
    more capital for its exploration commitments.
    Either way, its task will be made easier once
    recently acquired seismic has been
    processed.

    “We acquired a 3D shoot covering 2086
    square kilometres,” Evans said. “It was the
    largest survey off that section of the West
    African coast.”
    “The seismic is intended to validate existing
    targets and add new targets. We are looking
    to put together some very big targets in
    these turbidite fans.
    “We expect to finish processing and
    mapping late in the fourth quarter and will be
    looking for a rig by the end of year.”
    FAR also has a clutch of low-risk, lowreward
    assets in Louisiana, as well as a stake
    in a Roc Oil-operated offshore China oil field.
    These provide useful cashflow. But its
    Senegalese blocks overshadow all the other
    assets the company holds and, with FAR
    being a volatile stock that fluctuates in
    response to drilling programs, Evans expects
    a share price run-up as the junior moves into
    the drilling phase

    “These are the potential company-makers
    that could put us in the big league,” Evans
    said.
    Hartleys agrees, rating one offshore
    Senegal prospect alone, the N3 target, as
    being worth $2.12 to $7.37 per share to FAR.

    FAR has also tweaked the Hardman
    model by putting in place low-risk,
    incremental projects that will deliver short term
    cashflow, keeping the company solvent
    and investors calm while the groundwork is
    done on the high-risk, blue-sky projects.
    But as FAR’s Michael Evans points out, it is
    the blue sky stuff that gives a big lift to the
    share price and drives ambitious juniors into
    distant corners of the world.

    “Companies like Hardman have prompted
    many investors to look for a serious home
    run,” he says.
    “Small companies can really only get that
    magnitude of growth with large international
    plays.” Enough said....


 
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